High Court confirms limitation period for commencing actions to claw back unpaid council rates

The High Court of Australia (High Court) unanimously dismissed an appeal brought by Brisbane City Council (the Council) where it sought to recover overdue and unpaid rates (with interest), levied upon the rateable land of Mr Amos (Amos) for the period 30 April 1999 to 9 January 2012.

The issue before the High Court in Brisbane City Council v Amos [2019] HCA 27 (the Decision) was which of two potentially applicable limitation periods under the Limitations of Actions Act 1974 (Qld) (the Queensland Limitations of Actions Act) applied.

The High Court determined that both of the relevant limitation periods under the Queensland Limitations of Actions Act applied to the Council’s action and were capable of concurrent operation. The result of the High Court’s finding was that Amos was free to invoke by way of defence the limitation period which was shorter and more advantageous to him, thereby avoiding his obligations to repay the overdue and unpaid council rates.

Facts

Pursuant to the City of Brisbane Act 2010 (Qld) (City of Brisbane Act), the Council has powers to levy rates and charges. Further, the Local Government Act 1993 (Qld) (the Queensland LG Act) provides that overdue rates and charges are a charge on the land.

The Council sought to recover overdue and unpaid rates with interest upon the rateable land of Amos, however, he resisted the Council’s claim on the basis that the action was brought after the expiration of the relevant limitation period pursuant to the Queensland Limitations of Actions Act.

The key issue in dispute was whether a 6 or 12 year limitation period would take priority. Pursuant to section 26 of the Queensland Limitations of Actions Act, actions to recover money secured by mortgage or charge on property (real or personal) or to recovery proceeds of the sale of land must be brought within 12 years from the date on which the right to receive the money accrued.

While section 10 of the Queensland Limitations of Actions Act provides actions founded on contract, tort, award or by the virtue of any enactment, shall not be brought after the expiration of 6 years from the date on which the case of action arose.

As the power for the Council to impose rates is sourced in an enactment, the 6 year limitation period in section 10 of the Queensland Limitations of Actions Act applied. However, the Council levied rates on Amos’ rateable land pursuant to section 95 of the City of Brisbane Act, which led the Council to believe that the 12 year limitation period should apply under section 26 of the Queensland Limitations of Actions Act.

Decision

Much of the High Court’s Decision involved an analysis of the history of the Queensland Limitations of Actions Act and the statutory interpretation of both of the limitation periods applicable to the Council’s claim.

The High Court referred to the decision of Barnes v Glenton [1899] 1 GB 885 (Barnes), which has been consistently followed by judicial authority, writers and legal practitioners for in excess of a century. The relevant principle which arose from Barnes was that the application of two limitation periods to personal claims meant that a defendant could plead the shorter limitation period. The Council urged the High Court to depart from the decision in Barnes, however, it refused to do so.

The High Court confirmed that the limitation periods under sections 10 and 26 of the Queensland Limitations of Actions Act are capable of concurrent operation in relation to the same action brought by the Council. Consistent with Barnes, Amos was therefore able to invoke by way of defence that the 6 year limitation period, being more advantageous to him, applied. The Council’s claim to recover the overdue and unpaid rates and interest therefore failed.

Impacts on local government councils in South Australia

Equivalent provisions of the Queensland Limitations of Actions Act exist within South Australia in the Limitations of Actions Act 1936 (SA) (SA Limitations of Actions Act). In particular, in South Australia, pursuant to section 33 of the SA Limitations of Actions Act, a limitation period of 15 years applies in respect of the recovery of money charged on land and legacies. This provision is equivalent to section 26 of the Queensland Limitations of Actions Act. Similarly, section 35 of the SA Limitations of Actions Act provides a 6 year limitation period for actions on contract and in tort. The effect of the Decision may therefore result in ramifications for local government councils in South Australia who wish to recover overdue rates from their ratepayers after a significant period of time.

We therefore recommend that councils take care to act quickly in respect of rates debts using the various tools available to them pursuant to the Local Government Act 1999 (SA) (the SA LG Act). For example, a council may write to the lessee or licensee of land in respect of which rates have fallen due and require them to pay to the council rent or other consideration in satisfaction of the liability. Further, if necessary, a council may sell land if the rates in respect of that land have been in arrears for three years or more.

For more specific information on any of the material contained in this article please contact Felice D’Agostino on 8210 1202 or FD’Agostino@normans.com.au or Dale Mazzachi on +61 8 8210 1221 or DMazzachi@normans.com.au.