Debt recovery for outstanding rates - what about the costs?

LG Leader September 2019

Pursuing debt recovery action for outstanding rates, whilst important to ensure ratepayers are not subsiding the resultant loss to general revenue on an ongoing basis, is not without cost to councils. In some cases, councils simply seek to add these costs to the next rates notice for the relevant land. The question often arises as to whether this can lawfully occur.

There are limited circumstances when costs in connection with debt recovery action can be recovered from a ratepayer. The legal position is that a council is only able to recover costs arising from debt recovering action where –

• the costs are in connection with the sale of land for non-payment of rates under section 184 of the Local Government Act 1999 (in which case section 184(11) of the Act provides a right to recover these costs); or
• the council has successfully pursed debt recovery proceedings against a ratepayer and a Court has made an order in the council’s favour to award costs (including legal and Court fees) to the council on account of it having been successful in its claim; or

• a ratepayer agrees to pay these costs as part of any repayment plan agreed with the council. In this case, the terms of the repayment plan must provide for the repayment of these costs in addition to the outstanding rates debt.

Other than the circumstances outlined above, a council does not have a statutory right to recover costs incurred in taking debt recovery action for outstanding rates, including by way of adding them to a future rates notice for the relevant land.

For further information regarding councils rating powers or assistance recovering outstanding rates, please contact Cimon Burke on 08 8113 7105 or at cburke@kelledyjones.com.au.