In recent years, a number of decisions of Queensland’s Supreme Court and Court of Appeal have given rise to uncertainty regarding the scope of the power of local governments to levy differential rates.[1]

On 19 August 2015, Jackson J of the Supreme Court delivered judgment in Ostwald Accommodation Pty Ltd v Western Downs Regional Council, concerning a landowner’s challenge to a differential rate imposed by the Western Downs Regional Council.

The Supreme Court dismissed the challenge and also provided much-needed clarification of the relevant principles.


In its 2014/2015 budget, the Council imposed a differential rate on land used, wholly or partly, for the intensive accommodation of 100-200 persons (other than ordinary travellers). Essentially, this resulted in a higher rate applying to land used for intensive worker’s accommodation (Use).

The applicant sought to challenge this differential rate, broadly on three grounds:

  1. that the differential rate was unreasonable because it applied to land that was only partly used for the Use and was disproportionate to rates imposed on similar uses;
  2. that the differential rate was unreasonable, or otherwise unlawful, because the Council had based its decision to levy the rate on an incorrect factual finding that the Use generated higher demands than similar uses; and
  3. that the differential rate unlawfully targeted land occupied by particular persons (ie workers) or a particular business model, rather than a land use.


The Court dismissed the applicant’s challenge, and upheld the Council’s differential rate.

Ground 1

The Court emphasised that the levying of differential rates is ultimately a political decision, which in some instances has been characterised as “quasi-legislative”.

On that basis, the Court considered that, provided a local government complies with the requirements of the Local Government Act 2009 (Qld) (LGA) and Local Government Regulation 2012 (Qld) (LGR) in determining its rating categories, any argument that a rate is excessive, or disproportionate is a matter for politics, rather than the Court.

Accordingly, provided that the Council’s differential rating category itself was lawful (see discussion below regarding Grounds 2 and 3), questions of fairness or proportionality were matters for the Council’s political judgment and not subject to judicial review.

Ground 2

The Council’s 2014/2015 revenue statement contained no specific reasons for the differential rate imposed on the Use. Instead, it merely contained a broad explanation the purpose of differential rating was to recognise differing demand levels, in a fair and consistent manner, and taking into account all relevant considerations.

In contrast, the 2013/2014 revenue statement had included specific comments indicating that the Use was considered to generate higher levels of demands.

The applicant sought to rely upon the general explanation in the 2014/2015 revenue statement, in combination with the more specific 2013/2014 comments, to infer that the Council had based its 2014/2015 differential rate on an incorrect factual finding that the Use generated higher levels of demand. However, the Court did not accept that the 2013/2014 comments could be used for this purpose.

Given the lack of any specific comments in the 2014/2015 statement, the applicant also argued that the Council had acted unlawfully in failing to provide specific reasons.

However, although the LGR requires revenue statements to include an “explanation” for rates and charges, the Court held that this did not mean that the Council was required to provide “reasons” for the differential rate.

His Honour noted that the judicial review legislation expressly exempts decisions relating to taxes, duties and the like (eg rates) from the general requirement to provide reasons. This was “understandable”, as rating decisions are inherently political, and made by multiple councillors for varying, potentially inconsistent, reasons. It would often be difficult, if not impossible, for a local government to provide a statement of reasons.

More fundamentally, the Court commented that even if the Council had made an incorrect finding of fact regarding the Use, it would be no more than a factual error and would not necessarily have invalidated the differential rate.

Ground 3

Under this ground, the applicant relied on the earlier decisions ofXstrata[2] and Paton[3] to argue that the differential rate was unlawful because it targeted the financial capacity of the landowner, rather than any characteristic of the use of land.

  • In Xstrata, a differential rate imposed on land used for coal mining was invalidated, in circumstances where the Council’s revenue statement indicated that the Council had based its decision on the financial capacity of coal miners.
  • In Paton, which followed Xstrata, a differential rate on residential land that was not owner-occupied was invalidated because it targeted an attribute of the landowner rather than the use of land.

By analogy, the applicant argued that the differential rate was invalid because, by treating worker’s accommodation differently to other modes of accommodation, the rate targeted a particular business model, rather than a land use.

After a careful analysis of Xstrata, the Court concluded that Xstratadoes not establish a general rule that financial considerations cannot be taken into account. Rather, Xstrata only establishes that the “personal capacity of the owner” [emphasis added] is irrelevant.

Accordingly, “the economic use and value of land” and “the use of land for a major income earning activity” can be taken into account in determining differential rates. Provided the use of land is targeted, rather than the landowner, the rate will be lawful.

Although the Court acknowledged that similarities between uses in different industry sectors may “give pause for thought”, this was a political matter for local government, which was not to be limited by “the Court’s notions of equity or fairness”.

Given this, while the Use may have shared many objective similarities with other uses, it was not unlawful for the Council to impose a higher differential rate for the Use on the basis of its perceived revenue-generating capacity.


While the decision does not fundamentally alter the legal position, the Court’s reasoning provides a clear analysis of the relevant legal principles, in particular:-

  1. The levying of differential rates is an essentially political matter. Provided a local government complies with the LGA and LGR, determining rating categories and amounts is a matter for political judgment. While it may be widely understood that differential rates are meant to respond to differing demands, this is a matter of politics and governance rather than a legal requirement.
  2. There is no requirement for a local government to provide specific reasons for a differential rate. While local governments are required to include an explanation for rates and charges in their revenue statements, specific reasons are not required.
  3. Even if there is evidence that a differential rate was based on an incorrect factual finding, this will not necessarily invalidate the differential rate.
  4. It is unlawful for a local government to levy a differential rate on the basis of the characteristics of a landowner (eg the landowner’s financial capacity). However, the this restriction is limited in scope; it is lawful for a local government to levy a differential rate on the basis that a particular land use is considered to have greater income-generating capacity than similar uses.

While the decision may provide a level of comfort to local governments, because this area of law is contentious and not uncommonly litigated, care should still be taken in relation to levying of differential rates and preparation of revenue statements, to ensure that any differential rate is lawful and protected from potential challenge