What's the right decision?

We are struggling to make a decision this evening. Perhaps you could give some advice?

Our local Council just changed the cat ownership laws and they came into effect at the start of March. Prior to March you had to house your cat indoors between sunset and sundown and then the rest of the time was up to the owner's discretion.

We moved to a rural community from Melbourne in 2000. Our cats were each one year old then. They had acres of land to run around on and were always wearing their collars and bells to alert the wildlife of their approach. Yes, there were times they got hold of a tiny animal or bird, but this has been a rarity. There were no sunset/sundown laws in that Council area.

We moved to a semi-rurual township just over two years ago and the sunset/sundown rule came into effect. We locked the cats up inside at night - but after two months of nightly wailing/scratching - they scratched through carpet we put on the back on the laundry door - and general loss of sleep (us - with a new baby, too!), we were defeated and let them out at night time.

The new laws are that cats have to be on your property 24 HOURS A DAY. No jumping over fences - no nothing. As they are 11 years old it is not often they go elsewhere, but they do still roam occasionally. The Council brochure recommended wiring the fences to keep them in, putting curved rails up so they couldn't jump over any fences (removing trees, too) or building them a cat run to live in permanently.

Justin and I agreed they weren't a menace to society so we haven't done anything about them. We didn't think locking them up in a cat run at their age fair - and we can't put them down, either. We have called local animal welfare places to see if there is a local 'place' that takes cats for long term happy boarding, but there isn't.

And tonight we overheard one of our neighbours telling their guests they have a cat who defecates in their backyard and they are debating whether to call the ranger or "put it in a bucket and drown it". We don't get along well with these neighbours (you can probably tell why) so there is no use talking to them about this issue. It may not even be our cat - we doubt it;s ours, but we just don't know. The fine for not locking your cat up permanently is around $450 per cat from memory.

These are our options for Percy and Maple:

1. Build a cat run at a cost of $500-$1000 - at 11 years of age we think they will cry 24/7 and the neighbours will complain and we don't think it's ethical to lock them up, anyway
2. Have them put down
3. Keep going the way we are and risk almost $1000 in fines, should our neighbours (or another neighbour) complain

Any ideas? Our heads are swimming...