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When Your Council Steps Out of Government and Into the Market: The Australian Consumer Law and Rate Payers
Introduction
Most Australians assume that dealings with their local council are purely governmental. Rates are paid, services are provided, permits are issued, and the council gets on with managing the district. The council is a public body. Surely consumer law does not apply.
That assumption is increasingly difficult to sustain. Since 1 July 1996, every local government council in Western Australia has been a body corporate – a legal person distinct from the Crown, created by statute, with specific powers and specific limits. It is not the Crown. It does not hold Crown immunity. And when it acts in a way that bears a commercial character – when it prices access to information, charges fees for services, enters contracts, or makes representations to ratepayers in a commercial context – the Australian Consumer Law may apply to it in exactly the same way it applies to any other body corporate.
This article examines when and how that happens, and what it means for every person who pays rates and deals with their local council.
The legal framework in brief
The Australian Consumer Law (ACL) is Schedule 2 to the Competition and Consumer Act 2010 (Cth). It applies uniformly across Australia and is adopted by each State through its own Fair Trading legislation – in Western Australia, the Fair Trading Act 2010 (WA).
The ACL applies to conduct “in trade or commerce.” That phrase has been interpreted consistently by Australian courts as covering activities which, of their nature, bear a trading or commercial character. It does not cover every act of every person or entity. A purely governmental or regulatory act – the exercise of a statutory power to impose rates, to approve or refuse a development application, to issue a compliance notice – will generally not be “in trade or commerce.” But conduct that is commercial in character, even if performed by a government body, will be.
The critical point established by case law is this: a local government council is not automatically protected from the ACL simply because it is a statutory body performing functions under the Local Government Act 1995 (WA). The ACL will apply when what the council does is commercial in character. The question is always: what is the nature of this specific conduct?
Why councils are not the Crown
Before examining the ACL specifically, it is necessary to understand that local government councils in WA are not the Crown and do not hold Crown immunity.
The High Court of Australia confirmed this principle in Chief Executive Officer, Aboriginal Areas Protection Authority v Director of National Parks [2024] HCA 16 in a unanimous judgment: statutory corporations “are not and never do become the Crown itself. Statutory corporations are creatures of statute, they have their own distinct legal personality, and their powers (and any immunities) are sourced in statute.” The court further confirmed that “incorporation, without express immunity, is a powerful contra-indicator of immunity.”
Under section 1.6 of the Local Government Act 1995 (WA), the Act itself states: “This Act does not bind the Crown except to the extent expressly stated in this Act.” This is Parliament’s own recognition that the council is not the Crown. The council and the Crown are legally separate. What the Crown may do, the council cannot automatically do.
A council cannot claim Crown immunity to shield itself from the ACL. Any immunity must be found expressly in the statute. None exists in the LGA 1995.
The distinction between governmental and commercial conduct
The leading Australian cases draw a consistent distinction.
In Plath v Snowy Monaro Regional Council [2019] NSWCATAP 165, the NSW Civil and Administrative Tribunal confirmed that the ACL applies to a council where its conduct is “in trade or commerce” – and that this is a lower threshold than “carrying on a business.” The Tribunal characterised waste collection and sewerage approvals as governmental statutory functions, not commercial activities. But it was explicit: the ACL threshold of “in trade or commerce” is lower than “carrying on a business,” and councils are not immune simply because they are statutory bodies.
In Murphy v State of Victoria [2014] VSC 404, the Supreme Court of Victoria held that a government authority’s conduct in publishing information about an infrastructure project was not in trade or commerce – it was the ordinary exercise of a governmental function. But the court did not hold that all government activity is immune.
The key test derives from the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594: the ACL is concerned with conduct “which, of its nature, bears a trading or commercial character.” That is the question that must be asked of each specific act of the council.
Where councils cross the line into trade or commerce
There is no exhaustive list. The characterisation depends on the specific conduct in each case. But the following categories consistently exhibit the commercial character that engages the ACL.
Fees and charges for services
Local governments in WA have broad power under section 6.16 of the LGA 1995 to impose fees and charges for services they provide. When a council charges a ratepayer for a service – waste collection, building certification, planning advice, use of a facility, processing of an application – that conduct bears a commercial character. The council is operating as a supplier of services for consideration. That is trade or commerce.
If the fee charged misrepresents what is included, or is not disclosed accurately, or exceeds what is permitted by the statute, the council may be in breach of the ACL’s prohibition on misleading or deceptive conduct under section 18, or the prohibition on false or misleading representations under section 29.
Representations to ratepayers about their accounts
When a council makes representations to a ratepayer about the amounts owed, the basis of those amounts, the services for which charges are imposed, or the rights the ratepayer has in relation to those amounts, those representations are not purely internal governmental communications. They are directed to a specific person in relation to a financial obligation. Where those representations are misleading – for example, where a council misrepresents the basis of a charge, or asserts that a fee is legally authorised when it is not – section 18 of the ACL is engaged.
Charging for access to the council’s own records
This is a critical area. Section 5.94 of the LGA 1995 gives every person the right to inspect the rates record of the local government free of charge. Section 5.96 provides that copies of information must be available at a price that does not exceed the cost of providing them.
When a local government acknowledges errors in a property account and then quotes a ratepayer $5,000 or more to “collate the information” needed to examine those errors, it is not performing a governmental function. It is making a commercial decision about the pricing of access to its own records. There is no provision in the LGA 1995 that authorises such a charge. The conduct is not the exercise of a statutory power. It is a commercial decision designed to make examination of the council’s own acknowledged mistakes unaffordable.
That conduct bears a commercial character. It involves the pricing of access to information. It uses the council’s position as the holder of all relevant records to extract a payment from the ratepayer as a condition of examining errors the council has already admitted. That is conduct in trade or commerce. The ACL is engaged.
Specifically, the conduct may constitute unconscionable conduct under section 21 of the ACL: the council holds all the records, the ratepayer has no practical alternative means of access, errors have been admitted, and a substantial fee is imposed to make examination practically impossible. That is a use of superior bargaining position in a manner that goes against conscience.
Commercial leasing and property dealings
When a council leases council property, enters into commercial contracts, or deals in land in a commercial context, it is clearly acting in trade or commerce. Representations made in that context – about the condition of property, the terms of a lease, the rights of the other party – are subject to the ACL in the same way as any other commercial entity.
Competitive services
When a council provides services that compete with private enterprise – operating a caravan park, running a child care centre, providing commercial cleaning services, operating a tourist facility – it is carrying on a business. The ACL and the competition provisions of the CCA both apply. The council cannot use its statutory position to gain a competitive advantage in commercial markets that the ACL is designed to keep fair.
Debt collection conduct
When a council pursues unpaid rates through debt collection processes, the manner in which it conducts that pursuit may engage the ACL. Representations made to ratepayers about the amounts owed, the consequences of non-payment, or the options available to them, must be accurate. Conduct that is coercive, misleading, or unconscionable in the course of debt collection is subject to the ACL regardless of whether the underlying debt is a statutory rate.
Representations about the council’s authority
This is the area with potentially the broadest application and the least litigation to date. When a council’s officers make representations to a ratepayer or landholder about what the council can require them to do, what the council has authority to enforce, or what penalties apply, those representations are directed outward to a specific person. Where those representations are false or misleading – for example, where an officer claims authority the council does not hold, or misrepresents the basis of a compliance requirement – the conduct may be misleading or deceptive under section 18 of the ACL.
The commercial character question is important here. An officer issuing a compliance notice under a properly delegated statutory power is performing a governmental function. But an officer who then misrepresents to the ratepayer what the council can do, what it will do, or what rights the ratepayer has, is making representations. If those representations are made in a context that has a commercial dimension – for example, where the council’s position will affect the ratepayer’s financial obligations, property dealings, or commercial activities – the representations may be in trade or commerce.
What the ACL requires of bodies corporate in trade or commerce
The principal provisions that apply to a body corporate acting in trade or commerce are these.
Section 18 – misleading or deceptive conduct: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. This provision is not limited to deliberate deception. Conduct that creates a false impression, even through omission or silence where there is a duty to speak, can be misleading. The test is the effect of the conduct on the reasonable person in the position of the recipient.
Section 21 – unconscionable conduct: A person must not, in trade or commerce, engage in conduct that is, in all circumstances, unconscionable. Relevant factors under section 22 include the relative bargaining positions of the parties; whether the stronger party used its position to extract unreasonable conditions; whether the affected party could practically obtain the goods or services elsewhere; and whether the conduct reflected good faith. A council that holds all relevant records, acknowledges errors, and then prices access to those records at a level designed to deter examination, may have difficulty demonstrating that its conduct reflects good faith.
Section 29 – false or misleading representations: A person must not make false or misleading representations about goods or services. This includes representations about the price of services, the rights of the person to whom the representation is made, and any guarantee, warranty, or condition in relation to the supply of services.
Section 56 – unfair contract terms: Standard form contracts offered by a body corporate to consumers must not contain terms that would cause a significant imbalance in the parties’ rights, that are not reasonably necessary to protect a legitimate interest, and that would cause detriment if relied on. A council that imposes standard terms on ratepayers in relation to discretionary services, which are one-sided or unreasonable, may be subject to this provision.
The penalties
The stakes are not trivial. Following the Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Act 2026 (Cth), which took effect from 28 March 2026, the maximum penalty for a body corporate for most ACL breaches is now the greater of $100 million; three times the benefit obtained from the conduct; or 30 per cent of adjusted turnover during the period of the breach. These are penalties for bodies corporate. A local government council is a body corporate.
Individual officers who are knowingly concerned in a breach may also face personal penalties. The maximum individual penalty for serious ACL breaches is $2.5 million.
Practical implications for rate payers
Understanding that the ACL may apply to council conduct in a commercial context gives ratepayers tools they may not have known existed.
First – representations must be accurate. If a council officer tells you that you owe a particular amount, that a particular fee is authorised, or that the council has a particular power, that representation must be true. If it is false or misleading and it is made in a commercial context, the ACL may apply.
Second – fees must be authorised. A council can only charge what it is authorised by statute to charge. If a council charges a fee that is not permitted by the LGA 1995 or another written law, or charges more than the cost of providing the service, that charge has no statutory foundation. Challenging an unauthorised charge is not merely a matter of consumer law – it is a matter of the council acting without lawful authority.
Third – access to records cannot be priced out of reach. Section 5.94 of the LGA 1995 provides the right to inspect the rates record free of charge. Section 5.96 provides that copies must be available at cost price only. A charge that exceeds these limits is inconsistent with the statute. Where the council has acknowledged errors and then prices access to its own records at a level designed to deter examination, the conduct may be both ultra vires the statute and unconscionable under the ACL.
Fourth – the Freedom of Information Act 1992 (WA) provides a parallel right. Section 5.97 of the LGA 1995 expressly preserves the operation of the FOI Act. A formal FOI application for access to accounting records, rate account histories, and internal documents relating to acknowledged errors, is subject to the FOI fee regime – which requires charges to be at the lowest reasonable cost and must not be used to discourage access or unnecessarily delay it.
Fifth – the distinction matters for remedies. If a council’s conduct is merely poor administration of a governmental function, the remedies are administrative – complaint to the council, to the Department of Local Government, Sport and Cultural Industries, to the Ombudsman, or review by the State Administrative Tribunal. But if the conduct is in trade or commerce, the remedies under the ACL are different and potentially more powerful: injunctions, declarations, compensation orders, and in appropriate cases civil penalties. Where the conduct is sufficiently serious, a complaint to Consumer Protection (WA) or the ACCC may be warranted.
What this does not mean
This article does not suggest that all council conduct is subject to the ACL or that rate payers can avoid their legal obligations to pay rates by characterising them as consumer transactions. Rates are a statutory obligation. The power to impose rates is a governmental function. The ACL does not override that obligation.
What it does mean is that the manner in which a council exercises its powers, and particularly any conduct that goes beyond the exercise of a statutory power into commercial territory, is not automatically shielded from consumer law simply because the council is a statutory body. The body corporate character of the council cuts both ways: it gives the council legal personality to act in commercial contexts, and it exposes the council to the legal obligations that come with acting commercially.
The line between governmental function and commercial conduct is not always obvious. It is drawn by the nature of the specific act in question, not by the identity of the party performing it. Where that line falls in any given case requires careful analysis of the specific conduct, its statutory basis (or lack of it), and the context in which it occurs.
What is clear is that the line exists, that courts have recognised it, and that ratepayers who find themselves on the wrong end of conduct that crosses that line are not without recourse.
This article is for general information purposes only. It does not constitute legal advice. All statutory references are to the Local Government Act 1995 (WA) and the Competition and Consumer Act 2010 (Cth) unless otherwise stated. Readers should obtain independent legal advice in relation to their specific circumstances. The law in this area continues to develop and readers should verify the current position before acting.
Res ipsa loquitur – the thing speaks for itself. When a body corporate uses its control of records to price a ratepayer out of examining its own acknowledged mistakes, little more need be said about the commercial character of that conduct.
Last Updated 5 months ago
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