Background

In 2017, the respondent (Geldard) purchased ‘Lower Heatherley’ from Australian Pacific LNG Pty Ltd, which had 8 operational and 14 non-operational coal seam gas wells on the land. The land was categorised for rating purposes as 4/31 Petroleum Other (>400HA) by the appellant, Western Downs Regional Council (WDRC).

Geldard used the land for solely rural purposes and lodged a notice of objection against the categorisation, contending that the subject land be categorised as 3/16 Rural. WDRC overruled the objection, so Geldard appealed the decision to the Land Court. Geldard was successful with the Court deciding that the land should be categorised as 3/16 Rural.

WDRC appealed the decision on the following grounds:

• The Court erred in focusing on what the owner used the land for, rather than what the land was being used for. Reference should be made to its use by all persons, not just the owner.
• It was not necessary for the land to be principally or predominantly used for gas extraction. The rating category for Petroleum Other is satisfied for use “in whole or in part” and whether “predominantly or not”.
• Category 3/16 Rural only applies to land ‘not otherwise categorised’, and this land is otherwise categorised as 4/31 Petroleum Other (>400HA).

The respondent submitted, amongst other things:

• The appellants interpretation results in inconsistent and unintended rating outcomes. Under this interpretation, an easement for a gas pipeline on the edge of a large grazing property would result in the property attracting a rating category of 4/31 Petroleum Other (>400HA).

• As gas extraction is undertaken under a statutory authority and not under an agreement with the landowner, it is not undertaken by or on behalf of the landowner. The landowner has no control over infrastructure or extraction and does not receive royalties (only compensation as mandated by statute).
• The appellants inconsistent rating of adjoining land illustrates the respondent’s interpretation of the revenue statement.

Appeal Decision

The Land Appeal Court held that rates are a tax on the land, not the owner. The relevant “use” is derived from some characteristic of the land. The Land Court’s approach was held to be in error and inconsistent with a proper determination of the appropriate rating category for that land. The Court provided the following considerations.

It is the use of the land, not solely the principal activity of the owner of the land, that determines categorisation. It need not be used exclusively, wholly or predominantly for gas extraction and associated activities.

Owners of land that is used, in part, for the extraction of gas and associated activities, are liable for the payment of rates having regard to that use of the land. This was considered an appropriate exercise of a local government’s power to levy differential general rates on land within its local government area having regard to its use.  The appellants categorisation of neighbouring land in the rural category was held irrelevant.

Orders

The Court held that Geldard’s land fell within category 4/31 Petroleum Other (>400HA). Even though it is used for another purpose (grazing and associated activities), it does not fall within category 3/16 Rural.

The Court contended that:

1. it is land;
2. other than a petroleum lease;
3. that is above the requisite size; and
4. used in part for gas extraction and associated activities.

This appeal was allowed, and the orders of the Land Court were set aside.

Considerations for Landowners

Landowners should review their existing Conduct and Compensation Agreements to ensure there are terms that protect them against additional charges as a result of any changes in rating categorisation of their land.

If you are unsure, contact P&E Law to discuss your position and how you can better protect yourself in the future.

Published 2 April 2020