Land and Environment Court New South Wales

• Medium Neutral Citation: Meriton Apartments Pty Limited v Council of the City of Sydney (No 3) [2011] NSWLEC 65
• Decision date: 15 April 2011
• Before: Pepper J

Decision

In each of 40293 and 40957 of 2009 the further amended application is dismissed and Meriton is to pay the council's costs of the proceedings.

• Catchwords: Judicial Review:- whether fees charged by the council for the service of establishing Work Zones was a valid exercise of power by the council - whether the fees could be supported by another head of statutory power - whether the fees charged were manifestly unreasonable because they included both the direct and indirect costs to the council of providing the service - whether the council failed to take into account a mandatory relevant consideration in determining the fees - whether the council took into account an irrelevant consideration in determining the fees - whether the fees had as a component a penalty for development exceeding 12 months - whether, if unlawfully charged, Meriton was statute barred from recovering part of the fees - held fees validly determined and charged by the council; STATUTORY CONSTRUCTION:- whether the phrase "the cost to the council of providing the service" only includes direct costs; TAXATION:- whether the fees were for services provided by the council or whether they had the character of taxes; RESTITUTION:- whether, if unlawfully charged, Meriton was precluded from recovering the fees because they had been passed on - whether, if unlawfully charged, Meriton could recover the fees while retaining the benefit received from the council for their payment
• Legislation Cited: Interpretation Act 1987 s 21; Local Government Act 1993 ss 7(d), 8, 220, 608, 610, 674 and 676; Local Government Amendment (Legal Status) Act 2008; Recovery of Imposts Act 1963 ss 1A, 2, 4, 5, 6, 7(1); Roads Act 1993 ss 7(4),145, 223
• Cases Cited: Air Caledonie International v Commonwealth [1988] HCA 61; (1988) 165 CLR 462; Air Canada v British Columbia [1989] I SCR 1161; (1989) 59 DLR (4th) 161; Air Services Australia v Canadian International Airlines Ltd [1999] HCA 62; (1999) 202 CLR 133; ANZ Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662; Associated Provincial Picture Houses v Wednesbury Corporation [1984] 1 KB 223; [1947] 2 All ER 680; Australian Capital Territory v Queanbeyan City Council [2010] FCAFC 124; (2010) 188 FRC 54; Avon Product Pty Ltd v Commissioner of Taxation [2006] HCA 29; (2006) 230 CLR 356; Baulkham Hills Shire Council v Wrights Road Pty Ltd [2007] NSWCA 152; (2007) 153 LGERA 219; Chase Oyster Bay Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 272 ALR 750; CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384; Commissioner for State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; Deutsch Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558; [2006] UKHL 49; Douglas Shire Council v Queensland Ombudsman [2005] QSC 207; (2005) 141 LGERA 237; Gorczynski v Perera [2004] NSWCA 70; (2004) 132 LGERA 341; Harper v Minister for Sea Fisheries [1989] HCA 47; (1989) 168 CLR 314; Hematito Petroleum Pty Ltd v Victoria [1983] HCA 23; (1983) 151 CLR 559; John Holland Pty Ltd v Industrial Court of New South Wales; Parsons Brinckeroff (Australia) Pty Ltd v Industrial Court of New South Wales [2010] NSWCA 338; King Street Investments Ltd v New Brunswick [2007] I SCR 3; (2007) 276 DLR (4th) 342; Kirk v Industrial Relations Commission of New South Wales; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales [2010] HCA 1; (2010); 239 CLR 531; Mathews v Chicory Marketing Board (Vic) (1938) 60 CLR 263; Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24; Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611; Minister for Immigration and Citizenship v SZJGV [2009] HCA 40; (2009) 238 CLR 642; Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6; (2006) V ConvR 54-713; Pavey & Mathews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 280 CLR 516; Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252; VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2003] NSWCA 297; (2003) 58 NSWLR 631; Williams v Minister for Planning (No 2) [2011] NSWLEC 62; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70; [1992] 3 All ER 737
• Texts Cited: Mason & Carter's Restitution Law in Australia (2nd ed) (2008) (LexisNexis Butterworths, Australia)
• Category: Principal judgment
• Parties: Meriton Apartments Pty Limited (Applicant); Council of the City of Sydney (Respondent)
• Representation: Mr D Russell QC with Mr M Seymour (Applicant); Mr M Leeming SC with Ms J Shepard (Respondent); Meriton Group (Applicant); Council of the City of Sydney (Respondent)

JUDGMENT

Topic	Paragraph Number
Introduction	1
Factual Background	3
Issues	32
Disposition of the Proceedings	34
Statutory Framework of the LGA	35
Were the Fees Lawfully Charged?	37
As a Matter of Statutory Construction the Determination of the Fees Was Not Unlawful	38
The Fees Were Not Manifestly Unreasonable	53
There Was No Failure to Consider a Mandatory Relevant Consideration	79
The Fees Did Not Comprise a Penalty and the Council Did Not Take Into Account An Irrelevant Consideration	86
The Fees Were Authorised by the Roads Act	93
The Fees Are Not a Tax	106
The Imposts Act Applies to Defeat Meriton's Claim for the Recovery of the Fees	122
Meriton is Precluded From Recovering the Fees Because They Have Been Passed On	148
Meriton Has Received a Substantial Benefit at the Expense of the Public in Return for the Fees Paid	165
Conclusion and Orders	173

Introduction

1 This is a case, albeit comprising two sets of proceedings, about the lawfulness of a particular type of fee for service called a Work Zones Fee ("the fees") imposed by the Council of the City of Sydney ("the council"), on Meriton Apartments Pty Limited ("Meriton") for the establishment of Work Zones on the road outside construction sites pursuant to the Local Government Act 1993 ("the LGA").

2 As the two sets of proceedings raised the same issues and relied on the same evidence, an order was made that the evidence in one be evidence in the other.

Factual Background

3 It was uncontentious that Work Zones are a length of road to which a Work Zones sign applies. A driver of a vehicle cannot stop in a Work Zone unless the driver is driving a vehicle that is engaged in construction in, or near, the Work Zone. Councils administer Work Zones in their local government area as part of the functions delegated to them by the Roads Traffic Authority under s 50 of the Transport Administration Act 1988.

4 At all times the council was the "roads authority" pursuant to s 7(4) of the Roads Act 1993 ('the Roads Act"). As such, it owned and managed public roads in its area (other than freeways and crown roads) (s 145 of the Roads Act), including the roads the subject of the construction sites in question.

5 Work Zones are established by the council upon application by a developer wishing to use a public road for loading and unloading material in front of, or near, a construction site. Generally, it is a term of the relevant development approval that all loading and unloading of material takes place on the construction site. However, as in the present case, a development consent usually provides that the developer may apply to the council for a Work Zone to cater for circumstances where unloading and loading on site is not possible or is unviable.

6 According to the evidence of Mr Wayne Mackenzie, the Manger of the Construction Regulation Unit at the council, sworn 17 March 2010, the council is required to assess the application for a Work Zone, inspect the proposed site of the Work Zone and review the amenity impacts on the other road users and residents. The council must also submit a traffic management plan to the Local Traffic Committee (a statutory committee created under the Roads Act to advise the council on technical matters associated with traffic management). Once approved, the Work Zone is established and maintained by council employees or contractors.

7 Each Work Zone application requires consideration of the following factors:

(a) the nature and location of the site;

(b) the potential impact on traffic and the best way to minimise those impacts;

(c) the potential impact on access to surrounding sites having regard to the loss of parking or access for customers to adjacent businesses, the impact on deliveries or trade work required for adjacent premises and the loss of resident parking; and

(d) the potential impact on pedestrian safety.

8 The Work Zones themselves can range from relatively straightforward applications outside a Core Area involving a wide street with few traffic implications, to difficult and exceptional applications within a central city street.

9 The fees are comprised of four components:

(a) a charge for signposting;

(b) administrative fees (which include application fees, deposit and non-compliance charges);

(c) parking metre space removal; and

(d) a Non Core Area and Core Area Works Zone charge.

10 Mr Mackenzie stated that in his role as Manager of the Construction Regulation Unit, his input was required in relation to any proposed changes to the fees charged by the council in respect of Work Zones. Other than a CPI increase, no changes for the 2007/2008 to 2009/2010 Schedule of Fees and Charges were recommended by him to the council.

11 According to Mr Mackenzie, the rationale behind the fee structure for Works Zone fees rests on four general principles:

(i) to motivate construction to "get in and get out" and discourage and minimise lengthy disruption to traffic and pedestrians;

(ii) to reflect potential revenue (such as parking metres) foregone by Council during the period that there is a works zone in use;

(iii) to impose a penalty for not wholly constructing within the site; and

(iv) to encourage design so that more or the whole of construction can take place within the confines of the site with minimum impact.

12 The council's Finance Manager, Mr William Carter, deposed in an affidavit sworn 17 March 2010, that his primary responsibility was the preparation of the Schedule of Fees and Charges for review by the council. This included the Work Zones fees.

13 The general approach for setting fees prior to 2005 was for the council to have regard annually to:

(a) whether the existing fees were still required;

(b) whether new fees should be introduced or existing fees deleted;

(c) whether the existing fee structure remained appropriate;

(d) the appropriate pricing of individual fees;

(e) the cost of providing the service;

(f) whether the goods or services are supplied on a commercial basis;

(g) the importance of the service to the community;

(h) the capacity of the user to pay;

(i) competitive market prices; and

(j) prices dictated by legislation.

14 Thus, for example, the 2000/2001 Construction Zone fees (as they were then known) included a loading over and above any foregone parking revenue component to allow for:

The need to discourage the use of kerb space for construction zones except where absolutely necessary, due to their impacts on accessibility;

The high level of management and enforcement of construction zones necessary to ensure their proper operation;

Ticket parking is not possible at many sites, out of construction zone hours, due to conditions at the site. Therefore, parking spaces are often not available for ticket parking out of hours;

Some construction zones are in operation for longer than 8am-6pm; and

Significant additional maintenance of construction zone signs is required due to constant vandalism of signs.

15 From 2005 the annual process of reviewing the council's Schedule of Fees and Charges changed and an approach was adopted that, as a general rule, all established fees should increase by CPI.

16 According to Mr Carter, the general approach assumed that when each fee had been originally set, due consideration had been given to the council's legislative obligation to consider items (e)-(j) above.

17 From 2005, it also became a requirement that a summary document be prepared for submission to council summarising the major changes to earlier Schedule of Fees and Charges and including a short rational for any proposed changes. This included changes above or below 5% or of significant dollar values. Otherwise, the draft Schedule of Fees and Charges was prepared as it had been prior to 2005 and circulated to the council for comment and adoption.

18 Pursuant to its legislative obligations under the LGA, the council published the Work Zones fees it proposes to charge in the following year in its draft Corporate Plan for public comment for a period of 28 days. The service description under which the fees were listed was "traffic operations". It was not in dispute that at no time did Meriton seek to avail itself of the opportunity to publicly comment on the draft fees.

19 Mr Carter deposed that for at least the past 25 years the council had relevantly charged Work Zones fees on a per linear metre per week basis. This evidence was consistent with the minutes and budgets of the council and with various Schedules of Fees and Charges that were put before the Court in a three volume agreed bundle of documents.

20 A fee per linear metre per week is now charged by the council based on three variables, thereby creating at least eight possible fee rates. These variables are:

(a) first, whether the Work Zone is in a Core or Non Core Area. A higher fee is charged for a Core Area;

(b) second, whether the Work Zone is used for a period of less than or greater than 12 months. If it is used for more than 12 months, a higher fee applies; and

(c) third, whether the Work Zone is to be in operation more than, or less than, 12 hours per day. Again, a higher fee is charged for more than 12 hours use per day.

21 Since 2006, the council's Core Area has been defined as all streets within the area bounded by Alfred Street, Macquarie Street, Elizabeth Street to Eddy Avenue, Broadway and Wattle Street and Kings Cross. The Non Core Area is that which remains that is not included in the Core Area.

22 Consistent with the general approach adopted in April 2005, there has been, in each subsequent year, a CPI increase. According to Mr Carter, the fees for the 2005/2006 to 2009/2010 years have only been amended for CPI rises. The council's determinations over the past five years contained in the agreed bundle of documents confirmed his evidence.

23 Mr Carter was able to calculate the current potential foregone parking revenue per lineal metre per week in the CBD for the 2009/2010 year at $72.97. He stated that the current fee structure for Work Zones in the Core Area ranged from $90-145 per lineal metre per week and for the Non Core Area the fees ranged from $62-95 per lineal metre per week. Mr Carter stated that while in theory it would be possible to set fees on an individual basis, this would be administratively impractical given the breadth of the council's fees across its diverse range of regulatory and service delivery responsibilities and would, moreover, be significantly less transparent thereby resulting in uncertainty as to the anticipated costs of undertaking any particular activity.

24 Fees were imposed in respect of three sites the subject of the proceedings:

(1) 420-426 Pitt Street, Haymarket, with an estimated construction cost of approximately $55 million ("the Pitt Street site");

(2) 4-10 Campbell Street, Haymarket, with an estimated construction cost of approximately $68 million ("the Campbell Street site"); and

(3) 5 Hutchinson Walk, Zetland, with an estimated construction cost of $85 million ("the Zetland site").

25 Each grant of development consent for the three sites included a condition of consent similar to the following:

The following requirements apply:

(a) All loading and unloading associated with construction must be accommodated on site.

...

(c) If, during excavation, it is not feasible for loading and unloading to take place on site, the provision of a construction zone may be considered by council.

...

(e) If a construction zone is warranted, such an application must be made to council prior to commencement of work on the site. An approval for a construction zone may be given for a specific period and certain hours of the days to reflect the particular need of the site for such facility at various stages of construction. The approval will be reviewed periodically for any adjustment necessitated by the progress of the construction activities.

26 Notwithstanding this condition, in his affidavit affirmed 25 February 2010, Mr Benjamin Levy, a Project Manager employed by Meriton, deposed that in relation to all three construction sites, because of the particular features of each site, the loading and unloading could not be accommodated on any of the sites and thus for each development Work Zone applications were required.

27 Under cross-examination Mr Levy did not resile from his evidence that at least in respect of the construction on the two sites in the CBD the loading and unloading could not be accommodated on site. This was because space was needed to accommodate large semitrailers used to house construction materials that could not be transported on smaller vehicles and to have an area to pour concrete in a manner that did not infringe road rules. Mr Levy accepted, however, that the Zetland site was not as constrained because Meriton owned the land across the road from the site, although he reiterated that it would be difficult to turn the semitrailers around notwithstanding that the site was located in a cul-de-sac.

28 But Mr Levy did concede that it was possible to re-design and stage the construction phase of a building so as to increase the area on the ground floor that was available for loading and unloading during development. The disadvantage of such an approach, however, was that it took longer and was more expensive than using the road to load and unload material. Mr Levy accepted that it could be done, using, by way of illustration, a building constructed by Meriton at Kent Street approximately three years ago where no Work Zones were used. Instead, in the initial pit that was dug a platform was affixed to sandstone walls on which trucks and cement mixers were located to build the lower levels of the building.

29 Applications, subsequently granted by the council, were made by Meriton for Work Zones to be established on the public roads fronting each of the three construction sites as follows:

(a) the Pitt Street site - on 13 February 2006, for use of 20 m of Campbell Street and on 14 March 2006, for use of 27.5 m of Pitt Street. The council granted the applications for a period of 26 weeks each on 17 March and 27 April 2006 respectively. Extensions to the Work Zones were granted for an additional 26 weeks;

(b) the Campbell Street site - on 20 July 2009, for the use of 21.5 m of that street which was granted on 20 August 2009 for a period of 26 weeks, subject to the conditions that the fee be paid for the establishment of the Work Zones; and

(c) the Zetland site - on 23 March 2009, for the use of two lengths of 30 m of Defries Avenue, Zetland. On 16 April 2009, the council granted the application for a period of 26 weeks, subject to the payment of a fee to establish the two Work Zones.

30 It was an agreed fact that the establishment of Work Zones constituted the provision of a "service" for the purposes of ss 608 and 610D of the LGA. It was also agreed that no additional service was provided by the council after the expiration of the first 12 months of the Work Zones.

31 Between 17 April 2007 and 22 February 2010, Meriton paid to the council the sum of $388,245 in fees in respect of the three sites. It is the payment of these fees that is the subject of challenge in the two sets of proceedings.

Issues

32 Meriton claims that the council had failed to validly create the fees for the years 2006/2007, 2007/2008, 2008/2009 and 2009/2010 in accordance with ss 608 and 610D of the LGA. It contends that as the fees were not validly charged, the council has no right to retain the money it has collected resulting in an unlawful exaction and that it should be ordered to return the money to Meriton. Understandably, the council refutes any suggestion of invalidity.

33 As a consequence, eight principal issues arise for determination:

(a) whether the fees were, as a matter of law and/or fact, validly imposed under s 608 of the LGA, or in the alternative, s 223 of the Roads Act 1993 ("the Roads Act");

(b) whether the fees charged were manifestly unreasonable;

(c) in determining the amount of fees to be charged, whether the council failed to take into account a mandatory relevant consideration under s 610D of the LGA, namely, the direct cost to the council of providing the service;

(d) in determining the amount of fees to be charged, whether the council took into account an irrelevant consideration, namely, that the fees should partly reflect a penalty for any construction exceeding 12 months;

(e) whether the fees amounted to taxes;

(f) whether, if the fees were unlawfully charged, the Recovery of Imposts Act 1963 ("the Imposts Act") applied to Meriton's claim to preclude it from recovering the fees paid in 2007 because any such right was statutorily time barred under that Act;

(g) whether, if the fees were unlawfully charged, Meriton could not recover the fees because it had failed to discharge the onus imposed in s 4 of the Imposts Act insofar as it could not satisfy the Court that the fees had not been, and would not be, passed onto a third party; and

(h) whether, as a matter of restitution, Meriton can claim a refund of the price it paid for a valuable commercial benefit, whilst nevertheless retaining the benefit.

Disposition of the Proceedings

34 For the reasons that follow, these issues have been resolved accordingly;

(a) the fees were validly imposed both as a matter of law and as a matter of fact pursuant to either s 608 of the LGA, or s 223 of the Roads Act;

(b) the fees charged were not manifestly unreasonable;

(c) the council neither failed to take into account a mandatory consideration, namely, the direct cost of supplying the service in the form of parking revenue forgone, nor did it take into account an irrelevant consideration, namely, the desire to penalise any development that exceeded 12 months in duration;

(d) the fees imposed by the council did not have the character of taxes;

(e) even if unlawfully imposed by the council, the Imposts Act applied to preclude Meriton from recovering the fees because, first, in relation to the fees charged in 2007, their recovery was statute barred pursuant to ss 2 and 5 of that Act, and second, because Meriton could not satisfy the Court that the fees had not been, and would not be, passed on to third parties; and

(f) even if unlawfully imposed, as a matter of restitution, Meriton could not claim a refund of the fees while retaining the benefit, namely, exclusive possession of the road and kerb, that it had obtained in consideration of the fees paid.

Statutory Framework of the LGA

35 The council imposed the fees pursuant to s 608 of the LGA. Section 608 of the LGA relevantly provides as follows:

608 Council fees for services

(1) A council may charge and recover an approved fee for any service it provides, other than a service provided, or proposed to be provided, on an annual basis for which it is authorised or required to make an annual charge under section 496 or 501.

(2) The services for which an approved fee may be charged include the following services provided under this Act or any other Act or the regulations by the council:

· supplying a service, product or commodity

· giving information

· providing a service in connection with the exercise of the council's regulatory functions-including receiving an application for approval, granting an approval, making an inspection and issuing a certificate

· allowing admission to any building or enclosure...

36 Section 610D of the same Act goes on to clarify how the council determines the amount of the fees charged:

610D How does a council determine the amount of a fee for a service?

(1) A council, if it determines the amount of a fee for a service, must take into consideration the following factors:

(a) the cost to the council of providing the service,

(b) the price suggested for that service by any relevant industry body or in any schedule of charges published, from time to time, by the Department,

(c) the importance of the service to the community,

(d) any factors specified in the regulations.

(2) The cost to the council of providing a service in connection with the exercise of a regulatory function need not be the only basis for determining the approved fee for that service.

(3) A higher fee or an additional fee may be charged for an expedited service provided, for example, in a case of urgency.

Were the Fees Lawfully Charged?

37 Meriton challenged the lawful imposition of the fees on several grounds which may be summarised as follows:

(a) first, that as a matter of construction, ss 608 when read with 610D(1) of the LGA permitted only the direct costs to the council of establishing the Work Zones fees to be charged. Similar considerations applied to the application of s 223 of the Roads Act, and therefore, the fees could not be supported by this alternative source of legislative as suggested by the council;

(b) second, the fees were so grossly disproportionate to the cost of any service provided by the council they were manifestly unreasonable;

(c) third, in determining the fees the council failed to take into account, as it was required to do under s 610D(1) of the LGA, only the direct cost to the council of providing the service of establishing the Work Zones, and any premium or loading above the direct cost of providing this service was not authorised;

(d) fourth, in determining the fees the council took into account an irrelevant consideration, namely, the desire to punish particular behaviour, viz , development exceeding a 12 month period; and

(e) fifth, by incorporating premiums to discourage particular behaviour and by including the indirect cost to the council of establishing the Work Zones, the fees were of the character of a tax and hence did not answer the description of a "fee for service".

As a Matter of Statutory Construction the Determination of the Fees Was Not Unlawful

38 The first issue raised by Meriton's challenge to the lawfulness of the fees charged was whether the power to impose a fee in s 608 of the LGA is qualified, as a matter of statutory construction, by a prohibition contained in s 610D(1) upon the fee exceeding the total direct cost to the council of supplying the service.

39 Meriton asserted that the inclusion within the structure of the fees of a significant amount that was not reflective of a direct cost to be recovered meant that, as a whole, the fee was not one for the service provided, and therefore, was beyond the legislative power of s 608 of the LGA.

40 Meriton relied on the expert evidence of Mr Brian Haratsis, an economist and planner, contained in a report dated 6 May 2010, together with additional material, in order to demonstrate that the methodology employed by the council to determine the fees impermissibly included the opportunity, or indirect, costs associated with establishing Work Zones.

41 In response, the council relied on an expert report from Mr Patrick Fensham dated 1 April 2010. Mr Fensham had expertise similar to that of Mr Haratsis.

42 For present purposes it was sufficient to accept, as I did, that the council's costs of providing the service of establishing the Work Zones included both direct and indirect cost components. These indirect costs included, for example, a congestion or disruption fee and what Mr Haratsis labelled a "deterrence" fee for Work Zones that were required for more than 12 months.

43 As a matter of statutory construction, Meriton's primary submission that s 610D(1) of the LGA operated as a fetter on the council's power to set fees in excess of the direct cost to the council of providing the service ought to be rejected.

44 First, there is nothing in the language of s 610D(1) of the LGA that speaks of a constraint on the power of the council to determine a fee that includes consideration of factors other than those mandated by (a)-(d) of s 610D(1). Even if the "cost" in s 610D(1)(a) were to be restricted to direct costs, as a matter of statutory construction, this would not preclude the council taking into account the indirect costs of providing the service together with other factors not explicitly referred to in s 610D(1). If these factors result in a fee being determined that exceeds the cost to the council of providing the service, this is neither verboten by s 610D(1) nor s 608(1) of the LGA. This is because all that s 610D(1) compels is that the factors listed therein are mandatory considerations, but not to the exclusion of any other factors that the council may also consider relevant.

45 Second, all doubts to the contrary must be swept away when regard is had to s 610D(2) of the LGA. Section 610D(2) expressly states that the basis for determining an approved fee for a service includes the cost to the council of providing the service but that this "need not be the only basis for determining the approved fee for that service".

46 If it is accepted, as it must be on the clear and unambiguous language of s 610D(1) and (2), that the council has the power to determine the amount of a fee for a service that includes factors such as, for example, the indirect cost to the council of providing the service or the cost to the community of the council providing the service, then it must logically follow that the council can determine this fee to be in excess of the direct cost to the council.

47 Third, I do not see the presence of s 610D(3) as in any way derogating from this analysis. On the contrary, the provision does no more than state in explicit terms that, contrary to the submissions of Meriton, the power to determine the amount of a fee in s 608(1) is not fettered by any implicit restriction contained in s 610(D)(1).

48 Fourth, the above construction, resulting from the combined operation of ss 608(1) and 610D, is consistent with the text of both provisions read in their context and read in light of the objects and purpose of the LGA, particularly when regard is had to ss 7 and 8 of that Act ( CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408, Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 272 ALR 750 at [42] and Minister for Immigration and Citizenship v SZJGV [2009] HCA 40; (2009) 238 CLR 642 at [47]).

49 The purposes of the LGA include giving councils (s 7(d)):

7 What are the Purposes of this Act?

...

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

...

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

50 The construction arrived at above is in conformity with these objects. It is similarly consonant with the council's charter contained in s 8 of the LGA, which relevantly includes:

8 The Council's Charter

...

• to provide directly... after due consultation, adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively

...

• 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...

51 To the extent that the charter states that the imposition of fees by the council should be "fair", this does not, in my opinion, proscribe against the council setting fees that are in excess of the direct cost of their provision. Again, there is no warrant for construing the legislation in this way. To do so would be to read into ss 608(1) and 610D words that, in my opinion, were not intended by the legislature.

52 As a matter of law, therefore, there is nothing preventing the council from taking into account both the direct and indirect costs to it of providing the service, in determining the fees to be charged for establishing Work Zones.

The Fees Were Not Manifestly Unreasonable

53 However, the fairness of the fees imposed does raise the second aspect of the challenge to the validity of the fees, that is, whether the council's exercise of the fee determination power in s 608 of the LGA was so unreasonable that no reasonable council could have exercised it, that is to say, Wednesbury unreasonableness ( Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223; [1947] 2 All ER 680 at 683 per Lord Greene MR and Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611 at [123]-[124] per Crennan and Bell JJ).

54 Meriton relied on the expert evidence of Mr Haratsis in support of this contention.

55 Mr Haratsis was in agreement with Mr Fensham that foregone parking meter revenue was the appropriate proxy to determine the costs associated with the creation of the Work Zones. But it was Mr Haratis' opinion that not only did the fees unreasonably include the opportunity costs of establishing the Work Zones, the methodology employed by the council in determining the fees was fundamentally flawed on several bases. First, it was his opinion that the council had not provided an appropriate or transparent method of calculating the fees. Second, he believed that the inclusion of indirect costs in the calculation of the fees incorporated premiums without justification and contained significant inconsistencies in their application. This was particularly acute in relation to the inclusion of the deterrence fee for Work Zones enduring for more than 12 months. Third, in his view, the fees were uniformly too high. According to Mr Haratsis, as at 2009/2010 the fees in the council's Core Area were at least 37% overpriced. Likewise, Mr Haratsis calculated that a premium of between 19-35.6% was being charged by the council for Work Zones both in Core and Non Core areas operating for more than 12 hours a day or exceeding 12 months. Fourth, the council had not, in setting its fees, properly accounted for the significant benefits that Work Zones provided. These benefits included an increase in localised expenditure and the renewal of the CBD.

56 It was Mr Haratsis' opinion that separate categories of fees should only be imposed on Core and Non Core Areas and for greater or less than 12 hours of operation. Furthermore, in each category, the fees should be directly linked to car parking metre rates calculated, at a maximum at the most expensive applicable periods. That is to say, the fees should be calculated on direct costs only, of which only one was relevant, namely, the cost of foregone parking revenue. This would, he opined, adequately account for congestion. The length in time in months of the development would have no impact on any disruptions at any given time because the adverse effects of a Work Zone were not cumulative. It was Mr Haratsis' view that because there were always Work Zones in place across the city of Sydney (in his estimate there were 100 or more always in operation), there was a "natural state of disruption" such that any localised or specific disruption caused by a particular Work Zone would be insignificant and would be compensated by there being less vehicular traffic as a result of the perpetual Work Zones in operation.

57 The significant points of difference between Mr Fensham and Mr Haratsis were that, first, Mr Fensham readily acknowledged that in addition to foregone parking revenue, the charges for Work Zones also covered the cost to the wider community for inconvenience and delay and the opportunity cost to the council of allocating road space to a Work Zone, rather than it being used for an alternate activity, for example, a bus stop or loading zone.

58 While the business owners on Campbell Street with whom Mr Fensham spoke on 24 February 2010, indicated to him that the Work Zones had limited adverse consequences on their trade, the discussions did reveal the potential for significant exacerbation of existing unloading problems by the removal of loading zones. This resulted in an increase in double parking, which in turn impacted upon traffic congestion.

59 Second, Mr Fensham was of the opinion that specific disruptions could not be dispersed across the entire network, but had to be examined and costed having regard to their localised disruptive effect. Moreover, it was entirely appropriate to have regard to, and cost, the negative impacts of Work Zones, which included not only a reduction in kerbside availability but also adversely impacted bus travellers, businesses, residents and pedestrians. It was, therefore, not inappropriate to apply a further premium, in addition to foregone parking revenue, to account for these additional disruptions.

60 Third, Mr Fensham rejected Mr Haratsis' analysis of purported benefits caused by the establishment of Work Zones. Mr Fensham supported the discouragement effect of an increase to the fees after 12 months. In his opinion, the "blighting" impact of the Work Zones in place for an extended period of time deserved acknowledgment in the setting of the charge because the localised adverse impacts became more onerous over time.

61 By way of illustration, Mr Fensham calculated the cost to passengers on a bus unable to access a bus lane due to the operation of a Work Zone. For a Work Zone in operation 8 hours a day, 240 days per year, and assuming a value of $28 per hour (80% of the average income per hour) for passengers, the delays amounted to $19,492 per year. This calculation was based on Mr Fensham's observations of recorded delays along George Street, between Goulburn Street and Campbell Street, on 23 February 2010.

62 Fourth, Mr Fensham emphasised the positive advantages for developers, of the council making available part of the road it owned to establish Work Zones. These included the avoidance of having part of the site used for loading and unloading, and therefore, no building taking place on it, and of having to lease land nearby to facilitate the construction process.

63 Under cross-examination, Mr Fensham accepted that the indirect costs referred to by him were not costs borne by the council itself, but were incurred by the wider community.

64 Under cross-examination, Mr Haratsis agreed that he had not attempted to quantify the indirect costs of the establishment of Work Zones fees, however, he reiterated that this was because there was no need to do so because the proxy for all costs was parking revenue forgone.

65 Mr Haratsis also refused to accept that a 25% increase in the number of Work Zones in the CBD would not have a measurable negative impact on public transport. This was because, in his opinion, the impact, if any in material terms, had to be measured across the entire Sydney public transport network and not merely at a localised level.

66 In my opinion, the evidence of Mr Fensham is to be preferred to that of Mr Hartsis. To focus only, as Mr Haratsis does, on the direct cost of parking foregone as the appropriate measure of calculation for the Work Zones fees is overly narrow in its disregard of the very real indirect costs to the council in establishing the Work Zones. As Mr Haratsis conceded, there are indirect costs to businesses, to residents and to commuters. I accept the evidence of Mr Fensham that these indirect costs can, and ought to be, calculated and integrated into the fees set by the council. In theory, there is nothing unreasonable about the council charging for these costs. While it must be acknowledged that the cost calculated by Mr Fensham to delayed bus passengers along George St was premised on a limited and partial study, the study nevertheless illustrates that these indirect costs are real and, as anyone who has ever been travelling on a bus along George Street in peak hour traffic knows, are readily appreciable.

67 I do not agree with Mr Haratsis that it is appropriate, at least in this instance, to measure the incremental disruptive effect or constraints created by the establishment of Work Zones only at a network level. If this were correct, then, depending on how widely the network was defined, any attendant adverse impacts would almost always be immaterial. Rather, I accept the evidence of Mr Fensham that constraints at a local level caused by Work Zones must be considered in analysing the total cost to the council in providing the service of establishing the Zones.

68 Mr Haratsis agreed that he had not attempted to value the benefits of the construction zones to Meriton. Thus he did not attempt to quantify the benefit to Meriton of constructing the building more quickly by paying fees to establish Work Zones, rather than loading and unloading goods and materials on site. In fact, Mr Haratsis was not even aware that it was a condition of the consent at all three sites that Meriton had to load and unload on site.

69 I reject Mr Haratsis' evidence that it could not be concluded that by purchasing the Work Zones Meriton was acting rationally to the extent that it perceived there to be a benefit in doing so. Given the condition of consent in all three developments that the construction phase was to take place on site, I accept that Meriton had a choice as to whether or not it applied for Work Zones. This is because I readily infer that had there not been some value to Meriton in purchasing the Work Zones, it would not have done so. I do not consider that the evidence of Mr Levy, discussed above, is not inconsistent with this finding.

70 During cross-examination Mr Haratsis conceded that the "deterrence" charges were in fact transparent, but refused to accept that they were rational. Again, I was not persuaded by Mr Haratsis' evidence in this regard. I find that it is entirely rational for the council to, by means of a pricing mechanism, encourage the expeditious completion of construction with all of its attendant disruption, particularly within a Core Area.

71 Mr Haratsis did accept that given the value of the construction across the three sites, a reduction of the fees, even in the order of that which he championed, and assuming the fees were set only on the basis of parking revenue foregone, "would not have an appreciable impact" on the economic decision to develop CBD property. Given the estimated construction costs of each of the three sites this must be correct.

72 Accepting, as I do, that the cost to the council in s 610D(1)(a) includes both direct and indirect costs, even though the only direct cost incurred by the council is the foregone parking revenue, given my preference of Mr Fensham's evidence over that of Mr Haratsis and in light of the evidence of Mr Mackenzie and Mr Carter concerning the composition and factors the council considers in determining the fees, I do not find that the fees the council charged were unreasonable, let alone so unreasonable that no reasonable council would have charged them.

73 Reinforcing this conclusion is the fact that since at least 1998, included in the indirect costs of providing the Work Zones is the potential for lost parking revenue and the need for the fees to value the loss of kerb space with all of its concomitant disruption. And, that since 2006 the fees have only been subject to CPI increases which did not necessitate a de novo examination by the council of its approach to setting fees. This did not, therefore, mean, as Meriton suggested during the course of the hearing (it was not pleaded as a separate ground of review), that there was no annual consideration of the fees. As the evidence of Mr Carter plainly demonstrates, which I accept, there was.

74 Even if s 610D(2) was ignored, I remain of the view that it was valid for the council, in setting its fees and charges, to have regard to considerations such as the need to discourage the exploitation of public assets for private gain to the detriment of road users and the public.

75 Again, I reach this conclusion irrespective of the evidence of Mr Levy that at least in respect of the two CBD construction sites, it was not feasible to comply with the condition of consent requiring loading and unloading to take place on site and that Work Zone applications were required. Having said this, this is not to say that I find that the making of the applications for Works Zones by Meriton was in any way involuntary.

76 Furthermore, if I were to accept the evidence of Mr Haratsis that the council had been overcharging its fees between 19-35.6% in excess of foregone parking revenue, I do not consider that this would meet the exacting standard required by Wednesbury unreasonableness so as to render the fees unlawful. As was recently observed by Pain J in Williams v Minister for Planning (No 2) [2011] NSWLEC 62, "many cases have observed that establishing that a decision-maker has made a decision that is manifestly unreasonable in the Wednesbury sense in a high threshold" (at [134] and see the authorities cited thereat and at [135]).

77 On any view it cannot, in my opinion, be properly concluded that the fees were grossly disproportionate to the service provided by the council.

78 In any event, while Meriton may disagree, as it does, with the quantum of and rationale for the fees imposed by the council for the establishment of Work Zones, provided that the council has acted within the limits of the statutory discretion conferred upon it, which I have found that it has, it is for the council to determine the appropriate weight to be given to each factor comprising the setting of the fees, including the direct and indirect cost components ( Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 41).

There Was No Failure to Consider a Mandatory Relevant Consideration

79 There are two aspects to the second ground of challenge. First, Meriton submitted that the power of the council to levy the fees was not at large under the LGA but was confined by the terms of ss 608(1) and 610D(1) of that Act. Thus once a decision was made by the council to determine the amount of fees for a service, the council had a mandatory obligation to take into consideration the matters contained in s 610D(1)(a)-(d) of the LGA, which include the cost of providing the service (s 610D(1)(a)).

80 Having regard to legislative structure of ss 608 and 610D there can be no doubt that it was mandatory that the council consider the factors listed in s 610D(1)(a)-(d) (the language of the statute is emphatic in this regard with its use of the command "must").

81 But the term "cost to the council" is not defined. Meriton submitted that this meant direct costs only. By contrast, the council contended that it included both indirect and direct costs. Consistent with the reasons given earlier I accept the submissions of the council.

82 More importantly, it is tolerably clear that the council did, as the affidavit evidence of both Mr Mackenzie and Mr Carter attested to (both of which were unchallenged), consider the direct cost of providing the service, albeit together with other factors. Moreover, the Revenue Policy at the front of the Adopted Schedule of Fees and Charges for each of the financial years 2006/2007 to 2009/2010, explicitly acknowledged that the full cost of providing the service had been considered and that the council intended to recover "the direct and indirect cost of provision" of the service and that for each financial year, the Work Zones fees had been set at a "full cost" recovery basis.

83 In reality this complaint recycles the construction argument dealt with above and must fail for the same reason.

84 Second, Meriton submitted that by not taking into account, as mandated by s 610D(1), only the direct costs to the council, to the extent that the council took into account other indirect costs resulting in a premium or loading above the direct cost of providing the service in determining the appropriate fees, this was not authorised by the LGA.

85 As this submission elides into the third ground of challenge, that the council took in into account an irrelevant consideration, that is, the desire to punish particular behaviour, namely, the use of Work Zones for longer than 12 months, it is convenient to deal with both issues together.

The Fees Did Not Comprise a Penalty and the Council Did Not Take Into Account An Irrelevant Consideration

86 Meriton argued that because a component of the fees involved a loading above and beyond the direct cost to the council of providing the service, including a penalty for development exceeding a 12 month period, the council took into account irrelevant matters in determining the fees.

87 Meriton argued that because no additional service was provided by the council after 12 months justifying a substantial increase in the fees after that period, of itself the increase was "powerful evidence" that the fees were a device intended to influence the behaviour of developers in carrying out the development insofar as it penalised development that was not completed within the 12 month period.

88 In support, Meriton relied on the evidence of Mr McKenzie and the council's internal working documents, both of which, Meriton submitted, disclosed the desire to include in the fees a loading above and beyond lost parking revenue in order to discourage the use of kerb space for construction zones, especially after the expiration of a year.

89 I do not accept the characterisation of any aspect of the fees as that of a penalty or of an unwarranted premium. The increase in fees after 12 months is no more than an incentive to complete the development as efficiently as possible. The increase reflects the recognition that the longer the development takes to complete, the greater the disruption on vehicular traffic, nearby businesses, pedestrians and residents. The evidence of Mr Mackenzie explicitly supports this view. As he stated, the only "penalty" imposed on developers included in the rationale for setting the Work Zones fees is for not carrying out the construction wholly on site. Logically this must be so given that it is this failure that necessitates the creation of the Work Zone; it is not for exceeding the 12 month period.

90 Even if I accepted, which I do not, that the fees did comprise a penalty component for development that exceeded a 12 month period, consonant with the analysis above concerning the proper construction of the statutory power of the council to set the fees contained in s 608(1) of the LGA, this would not, in any event, invalidate the fees charged.

91 Accordingly, I accept the submission of the council that there is nothing in the statutory language of either ss 608(1) or 610D of the LGA that would warrant the implication (for there is nothing expressed in either provision) that in seeking to regulate the use of a public good in the way that it did, the council took into account something so extraneous to the scope, subject matter or text of the statutory authorisation contained in s 608 that it would invalidate the council's exercise of power.

92 It follows that I reject the contention that in determining the fees in a way that included the council's opportunity costs of establishing the Work Zones, which included an increase in fees after 12 months of continued development, the council took into account an irrelevant consideration. Both components were, in my opinion, entirely relevant to the exercise of the council's power pursuant to s 608 of the LGA.

The Fees Were Authorised by the Roads Act

93 The council submitted that if, contrary to the foregoing, the LGA did not authorise the fees, s 223 of the Roads Act nevertheless did.

94 It was Meriton's submission that the two powers (s 608 of the LGA and s 223 of the Roads Act) were wholly mutually exclusive. But it is settled principle that an act purporting to be done under one statutory power may be entirely supported by another statutory power ( VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2003] NSWCA 297; (2003) 58 NSWLR 631 at [12]-[59] per Spigelman CJ, Gorczynski v Perera [2004] NSWCA 70; (2004) 132 LGERA 341 at [62]-[81] and John Holland Pty Ltd v Industrial Court of New South Wales ; Parsons Brinckeroff (Australia) Pty Ltd v Industrial Court of New South Wales [2010] NSWCA 338 at [95]).

95 The council has been at all times the roads authority for the public roads in respect of which the fees were charged. As s 7(4) of the Roads Act states:

7 Roads authorities

(4) The council of a local government area is the roads authority for all public roads within the area, other than:

(a) any freeway or Crown road, and

(b) any public road for which some other public authority is declared by the regulations to be the roads authority.

96 Section s 223 of the Roads Act provides:

223 Roads authorities may charge fees for services

(1) A roads authority may charge and recover fees for any service it provides.

(2) The services for which a fee may be charged include the following provided under this Act or the regulations:

(a) supplying a service, product or commodity,

(b) giving information,

(c) considering an application for an approval, permit or consent,

(d) carrying out an inspection in connection with an application for an approval, permit or consent,

(e) granting an approval, permit or consent,

(f) issuing a certificate.

(3) The amount of a fee must not exceed the amount prescribed in respect of any such fee by or in accordance with the regulations.

97 There being no amount prescribed in respect of the Work Zones fees, the council submitted that its discretion to set fees under s 223(1) and (2) of the Roads Act in respect of the service it provided, namely, the provision of the Work Zones, was even broader than that conferred upon it by s 608 of the LGA.

98 In response, Meriton submitted that the appropriate construction of the Roads Act was that the cost of providing the service was a limiting factor to ensure that the fees imposed were only for the "service it provides". The service provided was the provision of the Work Zones, which, as the evidence demonstrated, consisted of the direct cost to the council of the parking revenue foregone. Hence to include the indirect costs would be to impose a fee for something other than the service provided by the council.

99 Alternatively, Meriton argued that because s 608(2) of the LGA recognises that service fees created by councils may be imposed under "any other Act", these fees required compliance with the code prescribed by Ch 15 of the LGA, which includes s 610D of that Act. Thus s 610D(1)(a) continued to apply as a fetter on the council's power to set fees for the provision of services under the Roads Act.

100 The first limb of Meriton's argument can be dispensed with for the same reasons expressed above concerning the proper construction of the ambit of the power contained in s 608. To the extent that Meriton relied on the decision in Douglas Shire Council v Queensland Ombudsman [2005] QSC 207; (2005) 141 LGERA 237, this case does not assist Meriton in my view.

101 In Douglas Shire Council , the Council had an exclusive right to provide a ferry service across the river and had entered into a contract with a company that operated the Daintree River Ferry. A resolution by the Council determined the fares to be paid by users of the ferry. These were structured to include a component that the applicant had to place in a conservation and infrastructure management fund, which was expended on conservation measures for land north of the river and on infrastructure to support the conservation values of that land. Section 36(2) of that State's equivalent to the LGA provided that "a local government [the Council] may, for example -... (c) charge for services and facilities it supplies, other than a service or facility for which a regulatory fee may be fixed; and (d) do all other things necessary or convenient to be done in the exercise of its jurisdiction."

102 Moynihan J held that the power contained in s 36(2) required a connection between the charge and the service for the facility supplied and because the conservation component fund was used for public purposes other than the provision of services or facilities by the ferry, it was invalid (at [27]-[34]). Significantly, his Honour did not object to the Council setting commercial charges for the provision of the service so long as, which was mandated by the section, the charges were "for" the service provided.

103 In the present case, the same connection is required, that is to say, the "approved fee" must be "for any service it provides" (s 608(1) of the LGA). However, unlike Douglas , there can be no doubt that the requisite nexus between the fees charged and the service provided, namely, the establishment of the Work Zones exists. There is no evidence that would permit the Court to infer that the fees are not to be used for any other purpose than the establishment of the Zones.

104 As for the second limb, Meriton seeks to insert an entire Chapter of the LGA into s 223 of the Roads Act. Neither as a matter of express words nor necessary statutory implication can this be justified. The words "or any other Act" in s 608(2) of the LGA do not have the effect of weaving Ch 15 of that Act into the fabric of the Roads Act. Instead, properly construed, the words do no more than state that an approved fee charged for a service may be supported under the LGA, or some other source of legislative power.

105 It therefore follows that even if I found the fees to be an unlawful exercise of power by the council contrary to the LGA, the imposition of the fees would nevertheless be valid as an exercise of power under s 223 of the Roads Act.

The Fees Are Not a Tax

106 Meriton submitted that the list of mandatory matters for a council to consider under s 610D(1) of the LGA did not include setting a price that would have a deterrent effect against specific consumer behaviour by the imposition of inflated fees unrelated to the service being provided, or in other words, a tax. Any fee that involved a substantial degree of revenue being raised without reference to the direct cost involved in providing the specific service underpinning the fee was not a fee at all, but was a tax, which could not be authorised by any exercise of power pursuant to s 608(1) of the LGA.

107 Much judicial energy has been expended on answering the very simple question of what constitutes a tax. For present purposes it is sufficient to note that a tax "is a compulsory exaction of money by a public authority for public purposes, enforceable by law and is not a payment for services" ( Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263 at 276 per Latham CJ).

108 This definition is by no means exhaustive. In Air Caledonie International v Commonwealth [1998] HCA 61; (1988) 165 CLR 462 (at 467) the High Court, after referring to the above quote of Latham CJ, went on to observe that:

...the negative attribute - "not a payment for services rendered" -should be seen as intended to be but an example of various special types of exaction which may not be taxes even though the positive attributes mentioned by Latham C.J. are all present. Thus, a charge for the acquisition or use of property, a fee for a privilege and a fine or penalty imposed for criminal conduct or breach of statutory obligation are other examples of special types of exactions of money which are unlikely to be properly characterised as a tax notwithstanding that they exhibit those positive attributes.

109 The High Court further stated (at 467):

...On the other hand, a compulsory and enforceable extraction of money by a public authority for public purposes will not necessarily be precluded from being properly seen as a tax merely because it is described as a "fee for services". If the person required to pay the extraction is given no choice about whether or not he acquires the services and the amount of the extraction has no discernible relationship with the value of what is acquired, the circumstances may be such that the exaction is, at least to the extent that it exceeds that value, properly to be seen as a tax.

110 These passages have been subsequently quoted and endorsed in Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 336-337, Airservices Australia v Canadian International Airlines Ltd [1999] HCA 62; (1999) 202 CLR 133 (at [135]-[136], [292] and [437]) and more recently in Australian Capital Territory v Queanbeyan City Council [2010] FCAFC 124; (2010) 188 FCR 54 (at [54]-[55] per Keane CJ).

111 In Harper , a regulation made under Tasmanian legislation prohibited the taking of abalone in State fishing waters except by the holder of a licence. The fee for the licence was fixed according to the quantity of abalone that the licensee was authorised to take. The High Court held that the fee was not a tax, and therefore, not a duty of excise. This was because abalone was a finite but renewable resource that could not be subjected to unrestricted commercial exploitation without endangering its continued existence. The fee paid was to obtain the privilege, analogous to a profit prendre in or over the property of another, of taking the abalone. As the amounts payable to obtain an abalone fishing licence were of the same character as a charge for an acquisition of property and because there was a discernable relationship between the quantum of the fees charged and the value of the privilege, the fees did not bear the character of taxes (at 325 and 335-336).

112 A similar result was arrived at in Airservices . At issue in that case was whether charges imposed by the Civil Aviation Authority ("the CAA"), fixed for determination under statute for air traffic, rescue, fire fighting and meteorological services, together with penalties, in respect of leased aircraft were taxes. The amounts or rates of charges had been determined by the CAA on a 'network' basis using formulae based substantially upon the maximum take-off weight of aircraft, and not in relation to the actual cost of providing services and facilities for individual aircraft, or at particular aerodromes, or to particular users. Section 67 of the Civil Aviation Act 1988 (Cth) provided that the amount or rate or charge "shall be reasonably related to the expenses incurred or to be incurred" by the CAA "in relation to the matters to which the charge relates and shall not be such as to amount to taxation."

113 Notwithstanding, on one view, the seemingly lack of a discernable relationship between the charge levied and the value of the particular service provided by the CAA, the High Court held that the charges did not amount to taxation and remained fees for services. The reason why was, as McHugh J explained (at [297]-[298] footnotes omitted):

297. But Air Caledonie and Harper v Minister for Sea Fisheries show that the emphasis in determining whether a fee for services is taxation has shifted from cost to value. Unless this shift had been made, it would have been difficult, if not impossible, to describe the charge in Harper v Minister for Sea Fisheries as a fee for services. In that case, the formula for determining the licensing fee was explicitly related to the market value of abalone taken in the previous licence period and there was no attempt to relate the amount of the licence fee to the cost of administering the licensing scheme

298. In my opinion, however, the shift from "cost" or "expenses" in the earlier cases to "value" in Air Caledonie and Harper v Minister for Sea Fisheries is not a conceptual shift. It is really a recognition of the fact that the cost of a service is merely evidence of whether the payment is for that service. Thus, the expenses incurred in providing, or the costs of providing, a service are simply one criterion of the relationship. In Harper v Minister for Sea Fisheries , on the other hand, market value, as promulgated by declaration in the Gazette by the Director of the relevant government department, was the relevant criterion for determining whether the payment was for the benefit acquired. In Air Caledonie , the issue of "value" did not arise, as the Court held that:

"[a] requirement that a returning citizen submit, in the public interest, to the inconvenience of such administrative procedures at the end of a journey cannot, however, properly be seen as the provision or rendering of 'services' to, or at the request or direction of, the citizen concerned."

114 Thus, as Gleeson CJ and Kirby J concluded (at [93]):

...there is no warrant for concluding that the charges amounted to taxation on the ground that they exceeded the value to particular users of particular services or the cost of providing particular services to particular users.

115 In Australian Capital Territory , it was held by the majority that an impost on water taken from the ACT for supply to ACTEW Corporation Ltd's ("ACTEW") customers, including Queanbeyan City Council, that was passed on to the Council by ACTEW, was not a tax because either the charge was a payment exacted as the quid pro quo in a voluntary transaction to acquire a right to an asset from public resources and was therefore akin to a profit prendre or a royalty (per Keane CJ at [81]-[82]), or because it was a fee for the right to take water, which absent a licence was prohibited, and thus it was a fee for a privilege (per Stone J at [168]-[176]).

116 Having regard to the authorities, in my opinion, the present fees were not taxes. This is because, first, notwithstanding the evidence of Mr Levy, I am of the view that, as stated above, in relation to each site Meriton voluntarily applied for the Work Zones as an alternative to compliance with the condition of the development approval that the unloading and loading of the materials take place on site. As Mr Levy conceded, and as the construction of the Kent Street building illustrated, construction sites can be designed so as to obviate (or at the very least reduce reliance upon) the need to rely on Work Zones permits and their associated fees. The real issues are those of convenience and expense. In the present case, there was no compulsory exaction of the fee. Meriton could have complied with the condition, or re-designed the construction site, or elected not to proceed with the development, or, as it did, apply for Work Zones permits. I have no hesitation in finding that in respect of each construction site it did so because Meriton believed that the economic benefits of paying the fees for the Work Zones outweighed the economic detriments of complying with the condition of consent.

117 Second, merely because the fees exceed the direct cost to the council of the foregone parking revenue, the fees did not cease to be fees for service. Employing the language of Air Caladonie , the fees cannot be said to have "no discernable relationship" to the value of what was provided by the council or to the value of the service to Meriton. The test to be met by Meriton in this regard is onerous. As was noted in Australian Capital Territory (at [87]), the High Court did not posit that the relationship be "fair" or "equitable" or even "reasonable". In my view, the fees bear more than a reasonable relationship to both the cost to the council of the provision of the service, such cost including, as the evidence of Mr Carter and Mr Fensham both demonstrated, both direct and indirect costs, and the value of the service to the user, particularly when the quantum of the fees is compared to the estimated overall development cost of the three sites (see Airservices Australia at [93] and [297]-[298]).

118 Third, it must further be borne in mind that it is entirely appropriate for the value of the service to reflect the fact that the user is appropriating a limited public resource for its private commercial exploitation ( Harper at 316, Airservices Australia at [297]-[298] and Australian Capital Territory at [81]). In this sense, the fees are exacted in return for the grant of rights over a public resource, namely, the exclusive use (albeit subject to conditions) of the road and kerb; a resource that Meriton chose to acquire. The payment of the fee is therefore a condition of appropriating the resource, or alternatively, a fee for the privilege of acquiring this exclusive use, rather than a tax upon any activity ( Australian Capital Territory at [82] per Keane CJ and [168] per Stone J). The "discernable relationship" between the indirect costs of the service to the council and the setting of the Work Zones fees was more than adequately established by the evidence of Mr Carter.

119 Fourth, the decision of Hematite Petroleum Pty Ltd v Victoria [1983] HCA 23; (1983) 151 CLR 599, upon which Meriton relied, may be distinguished. In Hematite , a majority of the High Court held that the Pipelines (Fees) Act 1981 (Vic) purported to impose a duty of excise contrary to s 90 of the Constitution and was, therefore, invalid. In that case the principal features of the legislative scheme were that the pipeline licence fee was imposed only on the pipeline carrying hydrocarbons in the course of production and there was a vast disparity between the fee for that pipeline and fees charged in respect of other pipelines. Thus the size of the impost and its discriminatory operation were what attracted the characterisation of the impost as a tax.

120 The charge in Hematite may be contrasted with the fees charged for the establishment of the Work Zones in these proceedings in several critical aspects. First, as a condition of the consent, Meriton was never otherwise entitled to use the road and kerb to load and unload. Second, payment of the fees imposed was not a condition of the development consent. Third, the quantum of the fees was referable to the length of the road and kerb to be utilised by Meriton, to the length of time it was to be used and to the time of day it was to be used. Fourth, there was no discrimination, other than whether the Work Zone is sought to be established in a Core Area or a Non Core Area, between developers who apply for the establishment of a Work Zone. As the evidence demonstrates, the fees were set annually by the council and were applied uniformly in respect of all applications. Fifth, the purported disparity between the cost of providing the service by the council in terms of foregone parking revenue and the fees actually charged, bore no resemblance to the disproportionate impost imposed on the hydrocarbon pipeline in Hematite .

121 It follows that I do not find the fees have the character of a tax.

The Imposts Act Applies to Defeat Meriton's Claim for the Recovery of the Fees

122 Because of the conclusion I have reached above that the imposition of the fees was a lawful exercise of the council's power, it is strictly not necessary to consider the defences raised by the council in the event that Meriton were successful in its primary contentions. However, in case I am wrong, and given that they were the subject of evidence and full argument before me, I will nevertheless proceed to consider the defences raised.

123 The council submits that if the fees were unlawfully charged by it in respect of the three sites the subject of the proceedings, that by force of ss 2 and 5 of the Imposts Act any right to recover fees paid by Meriton with respect to the Pitt Street site is time barred because while Meriton commenced proceedings on 8 May 2009, it paid the fees relating to this site in April and May 2007, that is to say, more than 12 months prior to filing its claims.

124 Sections 1A, 2 and 5 of the Imposts Act state (emphasis added):

1A Definitions

In this Act:

invalidity of taxation legislation includes invalidity of a portion of the legislation or of an application of the legislation. pay a tax includes recover the tax by legal proceedings.

proceedings includes proceedings for an order in the nature of prohibition, certiorari or mandamus or for a declaration or injunction or for any other relief.

tax includes a fee, charge or other impost.

taxation legislation means:

(a) an Act imposing or relating to a tax, or

(b) a provision of such an Act, or

(c) a regulation under such an Act, or

(d) a provision of such a regulation.

2 Limitation on time for the bringing of proceedings to recover taxes

(1) No proceedings shall be brought to recover from the Crown or the Government or the State of New South Wales or any Minister of the Crown, or from any corporation, officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount paid by way of tax or purported tax and recoverable on restitutionary grounds (including but not limited to mistake of law or fact):

(a) in the case of a payment made before the commencement of this Act, after the expiration of the time within which such proceedings but for the enactment of this Act might have been brought or the expiration of twelve months after the date of the commencement of this Act, whichever period first expires, or

(b) in the case of a payment made subsequent to the commencement of this Act, after the expiration of twelve months after the date of payment.

(2) Subsection (1) does not apply to any proceedings brought pursuant to any specific provisions of any Act:

(a) providing for the mode of challenging the validity or for the recovery of the whole or any part of any tax actually paid, and

(b) specifying a different period within which such proceedings must be brought.

(3) Without affecting the generality of this section, and for the avoidance of doubt, it is declared that this section applies to proceedings for the recovery of money (paid by way of tax or purported tax) on the ground of, or on grounds that include, the invalidity of taxation legislation. ...

5 Ending of right of recovery

If because of this Act money paid by way of tax or purported tax ceases to be or is not recoverable, the right to recover the money is extinguished.

125 Meriton argued that s 2(1) of the Imposts Act has no application to it for a number of reasons. While several were disavowed or resiled from by Meriton in its final submissions, for the sake of costs I have nevertheless dealt with all of the contentions agitated before me.

126 First, Meriton submitted that, because its claims for declaratory relief in the further amended applications are neither "proceedings...to recover...[an] amount paid by way of tax" within the meaning of s 2(1) of the Imposts Act nor "proceedings for the recovery of money" within s 2(3) of that Act the Imposts Act did not apply. That is to say, because declarations are sought as remedies for breaches of public law obligations, the Imposts Act is not engaged.

127 Second, the claim is not one brought against "the Crown or the Government or the State of New South Wales or any Minister of the Crown" or brought against "any corporation, officer or person or out of any fund to whom or which it was paid" in s 2(1) of the Imposts Act.

128 Meriton further relied on the transitional provisions contained in cl 92 of Pt 30 of Sch 8 of the LGA concerning the new legal status of existing councils from bodies corporate to bodies politic pursuant to the Local Government Amendment (Legal Status) Act 2008 ("the Status Amendment Act"). It submitted that because the transitional provisions were silent on the effect of the amendments with respect to the operation (or otherwise) of s 2(1) of the Imposts Act that therefore as a matter of statutory construction, the provision did not apply because when the proceedings were filed on 8 May 2009, the Status Amendment Act was in force and the status of the council did not match any entity listed in s 2(1) of the Act. That is to say, by that stage, the council was no longer a "body corporate" as expressly provided for in s 2(1) of the Imposts Act, but was a "body politic" about which no reference was made in s 2(1).

129 Third, the amendments changing the council's legal status (pursuant to the Status Amendment Act) meant that s 2(1) of the Imposts Act was procedural only in nature and did not deprive the Court of jurisdiction with respect to the matter before it, rather it merely conferred on the council a right to plead the expiration of the limitation period as a defence. The parties acknowledged that this issue arose only if the Court concluded that the payment of fees to a local council, which was a body politic, did not attract the Imposts Act, but the payment of fees to a local council that was a body corporate, did.

130 Fourth, s 2(1) of the Imposts Act did not apply because of the operation of s 2(2) of that Act and ss 674 and 676 of the LGA. That is to say, the open standing procedures permitted under ss 674 and 676 of the LGA to obtain orders for breach of the LGA provided a specific and exclusive mechanism for the recovery of invalid imposts created under that Act. Thus by operation of s 2(2) of the Imposts Act, s 2(1) had no application.

131 Fifth, Meriton's claim to recover the money was based on an allegation that the fees were invalidly levied by the council as a "fee for service" under s 608 of the LGA. Such charges were levied as part of a contractual or quasi-contractual relationship between Meriton and the council and were not payments required by reason of the authority or purported authority of an Act of Parliament.

132 Sixth, in any event the Imposts Act did not provide protection to a statutory authority, such as the council, that failed to make a bona fide attempt to set fees under s 608 of the LGA. If the legislation did, that is to say, if the Imposts Act prevented the Court from exercising judicial review over the powers of local authorities in these circumstances, then it was contrary to the principles espoused in Kirk v Industrial Relations Commission of New South Wales; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales [2010] HCA 1; (2010) 239 CLR 531.

133 Seventh, s 2 of the Imposts Act only applies to voluntary payments and not payments made under protest, such as the fees in question.

134 And eighth, even if s 2 of the Imposts Act did apply, it applies only to limit the amount of money that can be recovered by Meriton from the council.

135 Rejecting each submission in turn, first, the prohibition in s 2(1) of the Imposts Act attaches to proceedings to recover amounts paid by way of a "tax" or a "purported tax". But s 1A defines the term "tax" as including "a fee, charge or other impost", which plainly attaches to the fees in question. There is no warrant for construing the word "fee" in s 1A as to be equivalent to the term "tax" ( Baulkham Hills Shire Council v Wrights Road Pty Ltd [2007] NSWCA 152; (2007) 153 LGERA 219). That Meriton has claimed declaratory relief in respect of alleged breaches of s 608 of the LGA is irrelevant because in its further amended applications it has specifically sought orders that the council repay the fees it has charged in contravention of the Act. Further, the definition of "proceedings" in s 1A expressly includes "proceedings for...a declaration". Accordingly, on any basis the Imposts Act is engaged and s 2(1) applies.

136 Second, Meriton is correct that as at 19 November 2008 the council was a "body corporate" (s 220 LGA) and that thereafter, on 20 November 2008, it became a "body politic" pursuant to the Status Amendment Act (it was not in dispute that the council was not the Crown for the purpose of s 2(1) of the Imposts Act). However, whether or not the transitional provisions make express reference to a "body politic" is irrelevant, in my opinion. This is because s 2(1) of the Imposts Act always attached to a "person" and the council, whether as a body corporate or as a body politic, was, pursuant to s 21 of the Interpretation Act 1987, always a "person" with the legal capacity and power of an individual for the purpose of s 2(1) (s 21 of the Interpretation Act defines "person" as " person includes an individual, a corporation and a body corporate or politic").

137 In any event, s 220(4) as amended provides that:

A law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation).

138 It follows that there can be no doubt whatsoever that s 2(1) of the Imposts Act applies.

139 In relation to the third contention, because of the conclusion I have reached above concerning the status of the council and the application of s 2(1) of the Imposts Act to Meriton, this issue does not arise. However, even if it did, given that the amendments effected by the Status Amendment Act occurred more than 12 months after the 2007 payments, acceptance of Meriton's submission would have the consequence that the limitation period which had expired and the cause of action that had been extinguished by s 5 of the Imposts Act, would be revived. Such a result would be contrary to both the language (particularly s 6 of the Imposts Act, which states that "the provisions of this Act are to be regarded as part of the substantive law of the State", emphasis added), objects and purpose of the Imposts Act. The Imposts Act is plainly designed to limit the circumstances in which taxes, imposts and fees may be recovered by a claimant. This is presumably to afford a degree of financial certainty to, in this instance, the council. The text and purpose of the Status Amendment Act could, similarly, not support such an outcome.

140 Furthermore, I accept the submission of the council that s 2(1) of the Imposts Act is substantive rather than procedural in nature. The fact that the Act expressly extinguishes the right to recover fees unlawfully imposed is strongly suggestive, contrary to Meriton's submission, of this outcome (as s 6 of that Act explicitly states). In any event, Meriton's submission is misconceived insofar as it targets the retrospective operation of the Imposts Act. That Act has, at all material times, applied to Meriton for the reasons discussed above. The question must therefore be whether the Status Amendment Act has retrospective operation. Not only can this query be answered in the negative, it is, in my view, besides the point.

141 Fourth, ss 674 and 676 of the LGA provide as follows:

674 Remedy or restraint of breaches of this Act-other persons

(1) Any person may bring proceedings in the Land and Environment Court for an order to remedy or restrain a breach of this Act.

(2) The proceedings may be brought by a person on the person's own behalf or on behalf of the person and on behalf of other persons (with their consent), or a body corporate or unincorporated (with the consent of its committee or other controlling or governing body), having like or common interests in those proceedings.

(3) Any person on whose behalf proceedings are brought is entitled to contribute to or provide for the payment of the legal costs and expenses incurred by the person bringing the proceedings.

(4) Subsection (1) does not apply in relation to an alleged contravention of Part 2 (Duties of disclosure) of Chapter 14 (Honesty and disclosure of interests).

(5) Subsection (1) does not apply in relation to anything done or omitted to be done under Division 3 of Part 1 of Chapter 14.

676 Functions of the Land and Environment Court

(1) If the Land and Environment Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach.

(2) If a breach of this Act would not have been committed but for the failure to obtain an approval under Part 1 of Chapter 7, the Court on application being made by the defendant, may:

(a) adjourn the proceedings to enable an application to be made under Part 1 of Chapter 7 to obtain that approval, and

(b) in its discretion, by interlocutory order, restrain the continuance of the commission of the breach while the proceedings are adjourned.

(3) The functions of the Court under this section are in addition to and not in derogation of any other functions of the Court.

142 In order for s 2(2) of the Imposts Act to be engaged, both (a) and (b) must be satisfied. However, and decisively, there is nothing in either ss 674 or 676 of the LGA that specifies a different period or limitation within which proceedings must be brought to challenge the validity of the fees imposed under s 608 (s 2(2)(b)). On this basis alone, s 2(2) of the Imposts Act does not apply. Furthermore, ss 674 and 676 provide no more than a general source of relief for breaches of the LGA, rather than any specific provision for "challenging the validity or for the recovery of the whole or any part of any tax actually paid" (s 2(2)(a)). It follows that s 2(1) of the Imposts Act is not displaced by the operation of s 2(2).

143 Fifth, the fees were levied not as part of any contractual arrangement between the council and Meriton, but were imposed pursuant to the power vested in the council to change such fees for the service of establishing a Work Zone in s 608 of the LGA. It cannot be correct, as Meriton suggests, that the payment of the fees was not under the authority or purported authority of the LGA. In any event, s 7(1) of the Imposts Act states that the Act applies "whether or not the payment was made under the authority or purported authority of any Act".

144 Sixth, for the reasons given earlier in the judgment, I find, contrary to Meriton's submissions, that the council's determination in setting the fees was entirely bona fide . It is, therefore, neither necessary nor appropriate for me to determine whether Kirk would apply to s 2(1) of the Imposts Act to permit judicial review into the reasonableness or rationality of the council's decision to set the fees notwithstanding that it is time barred in relation to the imposition of the 2007 fees. In this regard, I note, in any event, that s 2(1) does not operate as a bar to judicial review for a period of 12 months.

145 Seventh, s 7(1) of the Imposts Act expressly and unequivocally states that the Act "applies to money paid whether voluntarily or under compulsion".

146 Finally and eighth, as Baulkham Hills Shire Council illustrates, the operative effect of ss 2(1) and 5 of the Imposts Act is that had Meriton succeeded in demonstrating invalidity in the imposition of the fees, its claim for recovery of the fees paid in 2007 would be time barred.

147 Therefore, having satisfied me that all the elements of s 2(1) of the Imposts Act have been met, I find that s 5 of that Act extinguishes Meriton's cause of action in relation to the 2007 payments.

Meriton is Precluded From Recovering the Fees Because They Have Been Passed On

148 The council pleads that Meriton's claims are not maintainable by reason of s 4 of the Imposts Act because it cannot satisfy the Court that it has not, or will not, pass on the fees to third parties. It was accepted by both parties that Meriton bore the onus of establishing that it had not done so.

149 Section 4 of the Imposts Act provides:

4 Passing on of tax

(1) Proceedings referred to in section 2 or 3 (4) to recover an amount paid are however maintainable only to the extent that the person bringing the proceedings ( the claimant ) satisfies the court that the claimant has not charged to or recovered from, and will not charge to or recover from, any other person any amount in respect of the whole or any part of the amount paid. This applies whether or not any such amount has been itemised or otherwise separately identified in any invoice or other documentation.

(2) A reference in this section to the claimant extends to a predecessor, successor or assignee of the claimant.

(3) This section has effect despite anything in section 2 or 3, or in any other Act.

150 Meriton submitted that the council could not establish this restitutionary defence either as a matter of law or as a matter of evidence.

151 As a matter of law, Meriton relied on the decisions of Air Canada v British Columbia [1989] I SCR 1161; (1989) 59 DLR (4 th ) 161 and Commissioner for State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51.

152 In Air Canada s 3 of the Gasoline Tax Act 1948 ("the Gas Act") imposed a tax on the purchasers of gasoline in such a way that the tax was impermissibly indirect, and therefore, the Gas Act was invalid. The Gas Act was amended to cure the defect by making the tax direct, thereby validating the Act. The issue that arose was whether the legislature could avoid repaying the taxes extracted pursuant to the Gas Act in the intervening period. The majority held (per La Forest J, Lamer and L'Heureux-Dube JJ concurring) that the amendment of the Gas Act was a proper exercise of legislative power and that the amounts paid were not recoverable under the law of restitution because the airline had passed on their tax burden to their customers.

153 However, Wilson J, dissenting in part, found that the amendments were intended to achieve indirectly what could not be achieved directly, namely, to impose an ultra vires tax. This was beyond the legislative competence of the province. In particular, his Honour held that payments made under unconstitutional legislation are not voluntary and that the mistake of law doctrine should not be extended to these payments and they ought to be recoverable (at 169).

154 In Royal Insurance , s 111(1) of the Stamps Act 1958 (Vic) provided that where the Comptroller of Stamps found that the duty had been over-paid he "may refund ... the amount of duty found to be overpaid." Between 1985 and 1989 Royal Insurance overpaid stamp duty in the sum of nearly $2 million in ignorance of amendments to the Act exempting premiums on certain policies. The Comptroller found that the duty had been overpaid but decided against making a refund of the monies. The High Court held that s 111 gave rise to an enforceable obligation to refund the duty. Mason CJ regarded the payments as having been paid under a mistake of law by reason of the legislative amendments (at 74-75). Brennan J (with whom Toohey and McHugh JJ agreed) held that the payments were recoverable in restitution either because of a mistake of law, or because they were paid provisionally in circumstances calling for later adjustments (at 89-90). Dawson J held that s 111 conferred no discretion in the circumstances and expressed the view that a statute should not be construed as authorising the retention of monies received without any entitlement unless such an intention was made explicit (at 99).

155 Shortly after Royal Insurance was handed down, the House of Lords decided Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70; [1992] 3 AII ER 737. In that case a building society paid tax on interest and dividends that Inland Revenue had statutorily demanded. Woolwich successfully challenged the validity of the regulation pursuant to which the tax was levied. In the interim it paid the tax to avoid any adverse publicity and to avoid penalties and interest. By majority, the House of Lords held that the tax ought to be repaid by reason of an absence of consideration for the payment (at 166, 197-198 and 201-202). Their Lordships cited the constitutional principle enshrined in the Bill of Rights 1688 (Imp) that taxes ought not be imposed absent the authority of Parliament. Lord Goff, in particular, relied on the principles of unjust enrichment and noted the injustice of Inland Revenue retaining the interest earned on money to which it was never lawfully entitled.

156 Woolwich has been subsequently endorsed by the House of Lords ( Deutsch Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558; [2006] UKHL 49) and the Canadian Supreme Court in relation to taxes demanded under an unconstitutional law ( Kingstreet Investments Ltd v New Brunswick [2007] 1 SCR 3; (2007) 276 DLR (4 th ) 342. Cf Air Canada ).

157 In Australia, the principle in Woolwich has not been recognised by the High Court, although I note that it is the view of the learned authors of Mason & Carter's Restitution Law in Australia (2 nd ed) (2008) (LexisNexis Butterworths, Australia) that it will be (at [2020]-[2032]). They also offer the opinion that the principle espoused in Woolwich extends to local government bodies, such as councils (at [2034]). Having said this, the authors go on to note that even if Woolwich is applicable in Australia, not all unlawful imposts will be recoverable, and more significantly, as is discussed below, some imposts will readily attract defences obviating repayment irrespective of their invalidity.

158 In my opinion, it is neither necessary nor desirable to resolve whether or not the principle in Woolwich should be applied to the present facts. Suffice it to say, that the application of s 4 of the Imposts Act and a defence to the restitutionary claim Meriton makes in relation to the fees, means that this issue can be left for another day. Thus whatever the position is at common law, s 4 of the Imposts Act makes it tolerably clear that Meriton's recovery of the fees is limited to the extent that fees have not, and will not, be passed on.

159 Accordingly, in Avon Product Pty Ltd v Commissioner of Taxation [2006] HCA 29; (2006) 230 CLR 356 the High Court stated (at [9]-[10] footnotes omitted) in relation to Commonwealth legislation that was not materially different from s 4 of the Imposts Act and a sales tax not materially different from the fees:

9 That sales tax is expected to be passed on depends upon the circumstance that sales of goods occur within an economy geared to making profit. It is the profit-making motive of business which, in the nature of things, generally results in sales tax being passed on. This is because, leaving aside rare cases where sales tax is separately identified and superadded to the invoice price after sale, sales tax can only be passed on indirectly through the price mechanism. In a profit-making structure, businesses will set prices so as to ensure at least that all foreseeable costs are recovered, anything above this being conceptualised as a margin of profit. Because sales tax is levied upon the vendor prior to the ultimate sale by retail in the manner explained by Dixon J in Ellis & Clark , it forms part of the cost structure of doing business. There is nothing extraordinary in the proposition that in the usual course of things sales tax will be passed on.

10 As has been explained, it is for the taxpayer to establish a circumstance out of the ordinary, namely that the amount of the overpayment of sales tax has not been passed on. Where the whole or part of the economic burden of sales tax may have been passed on indirectly through prices, the inquiry in this regard is likely to be complex. The complexity arises because prices may be set with reference to a wide range of factors (including considerations of cost of production, competitive advantage, operational cash flow and customer goodwill). However the starting point must be the seller's pricing policy and practice.

160 In light of the limited recourse that ought to be made to extrinsic materials in construing statutes ( Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 at [32]-[34]), I note only in passing that the reasoning articulated by the High Court is consistent with the Explanatory Note to the Limitation of Actions (Recovery of Imposts) Amendment Bill 1993. It is this Bill that amended the Imposts Act to made it explicit "that s 4 prevents recovery of taxes unless the claimant satisfies the court that they have not been passed on, and will not be passed on, to another person."

161 Therefore, based on legal principle, I do not accept that the fees must, as a matter of law, be refunded irrespective of whether or not they have been, or will be, passed on.

162 As a matter of evidence, Meriton relied on an affidavit of Mr Peter Spira sworn 10 December 2009. Mr Spira is the General Manager of Meriton. In his affidavit Mr Spira stated that the Work Zones fees were included in the total expected construction costs calculated by Meriton for a development. He also stated that Meriton did not make decisions about prices of apartments based on the actual cost of construction and that it did not set a price for apartments that are sold based on a need to pass on any specific cost of construction to the purchaser. In particular, Mr Spira confirmed that "Meriton does not pass on the construction zone charge to any subcontractor or other third party."

163 Mr Spira was cross-examined. Given its brevity and the centrality of Mr Spira's evidence to the success of this defence, it has been reproduced in full:

CROSS-EXAMINATION BY MR LEEMING

Q. Mr Spira the company that's employed you, Meriton Apartments, is in the business of making money, correct?

A. That's correct.

Q. And when Meriton is investigating acquiring a site and building high density residential accommodation upon it then Meriton will as best it can assess the total costs of construction for that site, correct?

A. Correct.

Q. And having formed that sum it'll work out whether for the capital and effort contributed to that site there is going to be an appropriate rate of return based on your projections then about what you'd be able to sell or lease the apartments for?

A. Yes that's correct.

Q. Nothing controversial about that?

A. No.

Q. That's put you in no different position from any other large builder, right?

A. That's correct.

Q. When, as you say, you're doing as best you can to assess construction costs you're including, if the mode of construction includes using a work zone on the public street, those fees payable to Sydney City Council?

A. That's correct.

Q. They go into the mix?

A. Yes they would.

Q. And if Meriton formed the view that it wasn't likely to make a profit to obtain a sufficient internal rate of return at whatever you thought the likely selling price of these apartments would be you wouldn't go ahead with the site?

A. That's correct.

Q. And the only way you can make a profit of course is by purchases of the individual apartments paying more than all of the costs that Meriton has incurred in the course of construction?

A. That's correct.

NO RE-EXAMINATION

THE WITNESS WITHDREW

164 While not a complete capitulation of Mr Spira's emphatic written evidence that Meriton did not pass on the Work Zones fees to any subcontractor or third party, the cross-examination was sufficient, in my opinion, to ensure that Meriton did not discharge its onus of proof in respect of s 4(1) of the Imposts Act. Taken in its totality, the honest and forthright answers given by Mr Spira are to the effect that the fees form part of the construction costs, which, once calculated, are central to the decision by Meriton to proceed with the development. If Meriton does not believe that it can pass on the construction costs and make a profit in doing so, then, as Mr Spira stated, Meriton "wouldn't go ahead with the site". I therefore do not find on the evidence before me that in respect of the three development sites the subject of these proceedings, Meriton did not, or will not, recover from third persons, either the whole or any part of, the fees paid by it to the council in return for the establishment of the Work Zones.

Meriton Has Received a Substantial Benefit at the Expense of the Public in Return for the Fees Paid

165 Relying on the Victorian Court of Appeal decision in Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6; (2006) V ConvR 54-713 (at [16]-[21], [31] and [45]-[47]), the council submitted, in answer to the whole of the proceedings, that Meriton was not entitled to claim a refund of the fees because in return for the fees paid it had received a substantial benefit at the expense of the public, namely, the right to use Work Zones in close proximity to its development sites.

166 In Ovidio an order was made that the landlord pay its tenant, Dog Depot Pty Ltd, almost $65,000 by way of restitution, this sum being the amount that the tenant claimed was mistakenly paid by it as rent under a commercial lease. The claim was based on s 8(2) of the Retail Tenancies Reform Act 1998 (Vic) ("the RTRA"), which stated that the tenant was not liable to pay the rent attributable to the period before the landlord gave the tenant a copy of the disclosure statement. The tenant claimed that, never having received a copy of the disclosure statement, it had paid rent ignorant of its rights under the provision.

167 After discussing the leading authorities (such as Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, ANZ Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662, David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 and Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516) the Victorian Court of Appeal held that the landlord had a good defence to the tenant's claim for restitution because, unlike the position of the payers in David Securities or Roxborough , the tenant had received good consideration for the money it paid, namely, exclusive possession of the premises that were of use and benefit to it. The question was "not whether the landlord was under such an obligation, but rather whether the tenant gained or accepted a benefit in the form of exclusive use of the premises (as a quid pro quo for the payments in question)" (at [21]).

168 As Nettle JA put it (at [33]):

33 ... Whereas in Davids Securities the borrower got nothing in return for its payment of the grossing-up amount, and in Roxborough v Rothmans of Pall Mall the tobacco retailer got nothing in return for its payment of the tobacco licence fees, in this case the respondent got the benefit of the use and occupation of the demised premises in return for the rent which it paid. As I see it, that is the benefit which it had in view - the benefit for which it bargained - when it agreed to pay the rent. It is true that the respondent was not under a legal duty to pay the rent and, therefore, it is true that the payment of what it perceived to be rent did not discharge it from an obligation to pay rent. But as I have said, I do not consider that s 8(2) prohibits the lessor receiving or recovering any consideration in respect of the lessee's use and occupation of the demised premises. There does not seem to be any statutory imperative for concluding that the tenant was intended to have the benefit of free use and occupation. And it is to be noted that no other basis has been suggested. It follows, in terms of a conventional analysis, there has not been a total failure of consideration.

169 Meriton submitted that the present transaction was not a commercial transaction and that different restitutionary principles should apply to it than those espoused in Ovidio. It also submitted that acceptance of the council's position would entitle it to set and retain fees at unlawful levels.

170 I do not agree. First, clearly the transactions in question can only be characterised as commercial transactions. The fact that a public body such as the council was one of the transacting parties does not alter its character in this regard.

171 Second, recognising the validity of the council's defence to Meriton's restitutionary claim in no way permits the council to impose fees at a grossly disproportionate amount to the services rendered, or to use Meriton's language, "at unlawful levels". Plainly there must be a relationship between the fees paid and the benefit received. An exorbitant fee would obviate any such relationship and the consideration would cease to be 'good'.

172 Third, as the learned authors of Mason & Carter's Restitution Law in Australia (2 nd ed) (at [2041]) state, assuming invalidity, recovery of the fees after enjoyment of the rights for which consideration had been given would promote and not, as Meriton argued, prevent unjust enrichment. In the present case, Meriton has had the benefit of the exclusive use of the kerb and road the subject of the Work Zones for unloading and loading on the road. It would be inequitable for Meriton to recover the fees paid whilst retaining the benefit. In my opinion to do so would be, contrary to Meriton's submission, against public policy.

Conclusion and Orders

173 It follows from the reasons above that the further amended application in each of proceedings no 40293 and 40957 of 2009 must be dismissed.

174 Further, because costs follow the event in proceedings litigated in Class 4 of the Court's jurisdiction and because Meriton has been wholly unsuccessful, it must pay the councils costs in each sets of proceedings.

175 Accordingly, in 40293/2009 the orders are:

1. the further amended application is dismissed;

2. Meriton is to pay the council's costs of the proceedings; and

3. the exhibits are returned.

176 And in 40957/2009 the orders are:

1. the further amended application is dismissed;

2. Meriton is to pay the council's costs of the proceedings; and

3. the exhibits are returned.

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Decision last updated: 20 April 2011