The Supreme Court of Queensland (Court) has set aside a resolution of the Mackay Regional Council (Council) that purported to impose differential rates based on whether or not a property was an owner’s principal place of residence. The Court held that the resolution was an improper exercise of the power by the Council as the differential related to a characteristic of the owners of land and not a characteristic of the land itself.


In its budget for 2013-2014, the Council introduced a new categorisation of land for the purposes of imposing differential rates. The categorisation was based on whether the owner used or intended the land to be used as his or her principal place of residence.

The applicants contended that such a rate (which was higher than the owner-occupied equivalent) took into account irrelevant matters.


The applicants alleged that the Council had impermissibly taken into account the capacity of landowners to pay increased rates. They argued that such a matter was an irrelevant consideration as it was a characteristic of the owners of the land and not a characteristic of the land itself.

The Council argued that the matters it had taken into account were a characteristic of the land. It also argued that the applicants could not rely on some of the evidence they had raised.

As such, the issues which were considered in the proceeding included:

  1. As a matter of evidence, what could be taken into account when determining which matters the Council had considered;
  2. The effect of the Xstrata Case and the proposition for which it stood; and
  3. Whether the matters taken into account by the Council were a characteristic of the land or a characteristic of the individual owners concerned.

The matters taken into account by the Council

The applicants argued that statements by the Mayor in her budget speech to Council and statements by the Mayor and a senior officer as reported in the press after the budget meeting showed matters that the Council had taken into account. The Council argued that the only evidence that could establish the matters it considered was its formally adopted revenue statement and revenue policy.

Ultimately, the Court found that it was not necessary to rule which evidence could be considered in determining the matters that Council had taken into account, as this was readily discernible from the formally adopted documents, the decision and its effect.

However, the Court made several pointed comments, stating that formal Council records would be the best evidence but doubting that Council could assert that other statements were inadmissible. It noted that Council had not alleged the statements were inaccurate.

The effect of the Xstrata case

Both parties sought to rely on Xstrata Coal QLD Pty Ltd & Ors v Council of the Shire of Bowen [2010] QCA 170 (Xstrata). The Court in Xstrata confirmed that only the characteristics of land are relevant in setting differential rates, not individual circumstances of owners (such as the owner’s ability to pay).

The Court in the Paton case held that the Council had even gone a step further than that in Xstrata, as it had imposed differential rates on the assumption that if residential land was not owner-occupied, the landowners conducted income earning businesses on that land and that people who owned more than one residential property were successful and could bear a greater rates burden.  

Whether the matters taken into account were a characteristic of the land or the owners

The Court held that the determining feature by which the Council sought to impose the differential rates was an owner’s presumed capacity to pay. It noted that identical blocks of land could be subject to different rates simply because one was tenanted and the other owner-occupied, even if both had the same burden on Council, highest and best use, and capacity to generate income – even if both were used as a residence in the same way.

The fact that one generated income while the other did not would be based on a decision of the owner, not on any differential characteristic of the land itself.

Ultimately, the Court held that the Council’s decision to levy a differential rate based on that consideration was an improper exercise of the power conferred on it by the LGA. The resolution and the rates notices issued to the applicants on the basis of the differential were set aside.


This decision does not ultimately change the effect of the  Xstrata decision, but provides an application of the principle and states that a characteristic which appears to be based on a land use (potentially a characteristic of the land), may actually involve an implicit assumption about the ownership of that land, and consideration of that factor would also be unlawful.

The decision also makes an interesting observation that statements by Councillors or Council officers, whether in speeches or to the press, may contain matters which the Council has considered, even if those matters have not been formally adopted in a resolution about differential rates.

This is not surprising, as resolutions of Council often do not record the entirety of the reasons for that resolution.