Applicant v Respondents

2 The enforcement order was filed in this Court pursuant to s 122(1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the VCAT Act') and may therefore be enforced as an order of this Court ('the enforcement order') (s 122(3) of the VCAT Act).

3 While there has been some compliance with the enforcement order, it is not disputed that there has been substantial non-compliance by the first respondent, the Sidebottom Group Pty Ltd, and the second respondent, Australian Rubber Manufacturers Pty Ltd ('ARM').

4 ARM was deregistered by ASIC on 16 August 2015. ARM failed to pay ASIC its annual review fee and, as a result, was deregistered. Shanan James Sidebottom, a director of the Sidebottom Group and former director of ARM, deposes that ARM, at the time it was deregistered, had no cash or other assets.[1]

5 The Council filed the application by reason of the substantial non-compliance with the enforcement order. Mr Sidebottom has apologised for the first respondent's non-compliance, accepts that it is bound by the enforcement order, and is committed to complying with it if the Court grants the first respondent an opportunity to do so.[2]

6 The deadlines for compliance with the enforcement order have all passed. The Council seeks an order of this Court to fix a new deadline for compliance before the forthcoming summer. The respondents seek a timetable which would have compliance with the enforcement order by 19 January 2017.

7 The Council relies upon the affidavits of Patrick Dubuc dated:

8 The first respondent relies upon the affidavits of Shanan James Sidebottom dated:

9 By way of background, the Council made an application at the Tribunal for an enforcement order against the respondents, in respect of land situated at 7 and 25 Saxton Street West, Numurkah for continuing non-compliance by the respondents in the storage of materials, principally tyres, and use of the land for recycling materials at two sites in and near Numurkah in contravention of the Moira Planning Scheme. The CFA was joined to the VCAT enforcement proceeding at its request and supported the making of the enforcement order.

10 The following chronology was prepared by the Council and is not disputed. Relevantly:

(1) On 15 June 2007, the Council issued a planning permit allowing the land at 25 Saxton Street West, Numurkah to be used and developed for the purpose of a tyre recycling plant.

(2) On 14 August 2009, the Council granted an extension of time to Permit TP0700182 to provide that the buildings and works were to commence by 15 June 2010 and to be completed by 15 June 2012.

(3) On 17 September 2009, Permit TP0700182 was amended to allow for the use and development to occur in stages.

(4) On 24 May 2010, the Council issued a further planning permit, Permit TP1000071, allowing the use and development of the land at 7 Saxton Street West, Numurkah for the purpose of materials recycling (tyre recycling plant).

(5) On 9 May 2012, the director of the first and second respondents, Mr John Cronin, writes to the Council requesting an extension of time for two years for Permit TP1000071.

(6) On 4 April 2013, the CFA set out its concerns in relation to the storage of tyres on the land.

(7) On 2 May 2013, a number of tyres at the land contained within an area of approximately 50m2 caught fire, causing disruption to the Numurkah community.

(8) On 24 May 2013, the Council filed an application in the Tribunal for an enforcement order and an interim enforcement order under the Planning and Environment Act 1987 (Vic).

(9) On 11 June 2013, Deputy President Dwyer made an interim enforcement order as follows:

1. The Respondents [sic], Australian Rubber Manufacturers Pty Ltd and Sidebottom Group Pty Ltd, must in respect of the land at 7 & 25 Saxton Street West, Numurkah:

(a) within 90 days, remove and lawfully dispose of all tyres that are being stored on parts of the land not designated on the endorsed plans to planning permit TP0700182 as being 'Stock Tyre Storage' areas to the satisfaction of the Council;

(b) within 90 days, ensure that any stockpiles of tyres on parts of the land designated on the endorsed plans to planning permit TP0700182 as being 'Stock Tyre Storage' areas are no greater than 10m x 10m wide and 4m high, with a vehicle accessible gap of 5m between piles, to the satisfaction of the Council and the Country Fire Authority;

(c) within 30 days, prepare an Emergency Management Plan to the satisfaction of the Council and the Country Fire Authority;

(d) within 30 days, provide fire water tanks at the land to be situated at locations approved by the Council and the Country Fire Authority. The tanks must have a combined effective capacity of 288,000 litres, have approved CFA Storz fittings and meet the requirements of AS2419.1-2005; and

(e) within 60 days, install sprinkler systems suitable for fire fighting purposes around the stockpiles of tyres that remain at the land, to the satisfaction of the Council and the Country Fire Authority.

...

(10) On 30 September 2013, due to ongoing non-compliance with the interim enforcement order made on 11 June 2013, a further enforcement order was made by Deputy President Dwyer.

(11) After ongoing non-compliance with the interim enforcement order made on 30 September 2013, an enforcement order application was set down for final hearing on 30 June 2014.

(12) On 30 June 2014, a final hearing in the Tribunal was conducted and a final enforcement order was made on 2 July 2014, varying the interim orders. The final enforcement order required compliance with the first part of the first stage by 15 August 2014; compliance with the second part of the first stage of the enforcement order and the second stage of the enforcement order by 15 September 2014; compliance with the third stage of the enforcement order by 15 October 2014; compliance with the fourth stage of the enforcement order by 15 November 2014; and compliance with the fifth stage of the enforcement order by 15 December 2014 and compliance with the sixth and final stage of the enforcement order by 22 January 2015.

11 There has been substantial non-compliance with the enforcement order observed by the Council and, accordingly, the current application was made.[3]

12 In addition to the respondents' failure to comply with the enforcement order by 22 January 2015, additional time was allowed by the Council to comply until 4 March 2015.

13 The evidence establishes that, save for the submission of the emergency management plan and the fire fighting plan on 22 July 2015, which was originally required under the enforcement order to be submitted by 15 September 2014, the respondents have failed to comply with the enforcement order and continue to do so.[4]

14 Relevantly, in the reasons given by the Tribunal, the following was noted by Deputy Member Dwyer:

1. The breaches are serious, not least because of serious fire safety issues at both sites (and particularly at the Numurkah site bordering on that township) that has led to the involvement of the CFA in the proceedings. The respondents' explanations for their limited attempts at compliance to date, or their inability to meet previous time limits, have changed at each hearing to the point where they ring a little hollow.
2. The responsible authority's applications were first made to the Tribunal over a year ago, and the matter now requires some finality.
3. As I have indicated, the respondents now concede the contraventions of the Moira Planning Scheme. ...
4. At first blush, given what has transpired, the time limits proposed by the responsible authority and CFA appear reasonable - even perhaps generous in relation to the Numurkah site. Equally, though, I accept the affidavit evidence of John Cronin, and the submissions of the respondents' counsel, that the removal or relocation of large stockpiles of tyres is very expensive and logistically difficult. Mr Cronin is now apparently exploring an option to relocate his materials recycling business to Moama in NSW, and ultimately to transport the tyres there for processing. That would take time. But there have been several other options proposed by Mr Cronin over the past year, which he has been given time to pursue, and which have not proceeded or which have been abandoned. The respondents have already been given many opportunities to get their affairs in order.
5. I agree with the responsible authority that this matter needs finality, and I agree with the CFA that a serious fire safety risk cannot be allowed to continue indefinitely. I therefore propose to make enforcement orders setting a time period for compliance that accords more closely with that proposed by the responsible authority and CFA. ... the respondents provided little objective rationale for the extended time limits they sought.[5]

15 The Council submits that Mr Sidebottom's affidavits disclose only a minimal effort to remove the tyres from the land since 30 July 2015 at the rate of two truckloads (30 tonnes) of tyres per week at a cost of approximately $700 per week in circumstances where there are approximately 5,650 tonnes of tyres on the land. The Council submits that while Mr Sidebottom has deposed in his 5 October 2015 affidavit arrangements between the first respondent and Transpro Logistics Pty Ltd ('Transpro'), a related company, to provide capital contributions from its own cashflows to facilitate removal of all tyres by 19 January 2017, there is no explanation as to why such cashflows could not also service a loan from a third party commercial lender that could secure compliance at a significantly quicker rate.

16 The Council submits that the evidence does not disclose if there will be a capital injection of $745,000 to be made by Transpro to the first respondent and queries the assertion that some $600,000 of that money is to be repaid to Transpro.

17 The Council queries the reference to Marilyn Sidebottom's 'understanding' with respect to Transpro being able to secure a loan in circumstances where it has been, for 15 months, able to fund capital injections of approximately $50,000 per month to the first respondent. Further, the Council submits that there is no evidence that Transpro has tried to obtain a loan to assist the first respondent to remove the tyres in a timely way.

18 The Council submits that there has been no genuine attempts by the respondent to investigate the possibility of relocating the tyres as compared to the recycling of the tyres. Reference is made to paragraph 9 of the enforcement order, which expressly contemplated temporary relocation by providing that:

... Where an action refers to a requirement to "lawfully dispose" of materials (including tyres), it will be sufficient compliance with that action if the respondents move those materials to a second restorage location on other land pending their ultimate disposal ...

19 The Council also submitted that the first respondent has not explored the use of a mobile shredder to come onsite and shred the tyres despite such a method having been used by the first respondent in relation to a separate property.[6]

20 The Council submits that it has, in the past, been prepared to accept in good faith the respondents' request for indulgences and previously consented to a two month extension to comply before the filing of the current application. The Council submits that, in circumstances where the respondents brought the tyres onto the land in contravention of the Planning Scheme, they made a commercial decision to do so and they cannot now raise financial reasons why they cannot comply with the enforcement order. The Council notes that the respondents have had more than two years to comply with consent orders made by the Tribunal and are now nine months late in complying with the enforcement order. Importantly, they note that there has been a breach of the order since 10 March 2015 and that Mr Sidebottom became the sole director of the first respondent on 7 May 2015 and the second respondent on 5 January 2015.

21 Further, the Council submits that there is grave concern amongst the community and that the primary consideration for the court should be the serious fire safety risk posed by the tyres remaining on the land.

22 The first respondent has provided an explanation for the default with the enforcement order. Mr Sidebottom deposes to the mismanagement by the former director of the respondents, Mr John Cronin, who was the sole director and secretary at the time the VCAT enforcement order was made. Mr Sidebottom deposes that it had been Cronin's responsibility to manage and operate the first respondent with a view to developing a commercial tyre recycling facility and that tyres were stockpiled on the land in anticipation of the development of operations. He deposes that this failed due to a lack of planning approval.[7]

23 Mr Sidebottom assumed operational control of the first respondent from Easter 2015 and became the sole registered director on 5 May 2015. He deposes that, upon assuming control, it became apparent that Cronin had mismanaged the company.

24 In particular, he deposes to the fact that records of the company were in piles of boxes on the floor and correspondence dating back over a year was unopened.[8]

25 Mr Sidebottom deposes that he did not become aware of the VCAT enforcement order or the breaches of the order until 3 June 2015 when he was served with the summons in this proceeding and supporting documentation.[9]

26 Mr Sidebottom deposes on behalf of the first respondent that he is committed to complying with the VCAT enforcement order and that the first respondent, at Mr Sidebottom's direction, has taken the following action since becoming aware of the order:

(a) since 30 July 2015, disposed of an average of two truckloads of tyres per week with tyre recycling Tyre Cycle Pty Ltd, with the result that approximately five stockpiles of tyres have now been removed from the land; and

(b) procured approval of the CFA and the Council to its emergency management plan and fire-fighting plan as required by the VCAT enforcement order.[10]

27 Mr Sidebottom deposes that the first respondent requires an extension of time to comply with the VCAT enforcement order until 19 January 2017 and that compliance within that timeframe will be at a cost of $971,508.50. Mr Sidebottom deposes that this extension will enable the first respondent to comply with the aspect of the VCAT enforcement order relating to the disposal of approximately 5,500 tonnes of tyres. Mr Sidebottom deposes that the reasons that such an extended time is required include:

(a) constraints in the Victorian tyre recycling market;

(c) financial limitations of the first respondent.[11]

28 On behalf of the respondents, Mr Sidebottom has contacted the Australian Tyre Recycling Association and attempted to contact each of its four members in Victoria. Mr Sidebottom deposes that Tyre Cycle can take four 20 tonne loads per week from 1 October 2015; Tyre-A-Way and Tyre Crumb Australia can take two 20 tonne loads per week. The fourth member did not return the first respondent's communications.[12]

29 In relation to truck capacity, Mr Sidebottom deposes that the first respondent uses a custom modified trailer provided by Transpro Logistics Pty Ltd and that it takes approximately 16 hours to load and unload each truck using a tele-handler. It is Mr Sidebottom's opinion that, given the truck turnaround times, driving, tyre recyclers only being open Monday to Friday, and loading and unloading time, it is not possible to dispose of tyres interstate. Mr Sidebottom deposes that it would cost approximately $350,000 to purchase a further prime mover and B-double trailer for removing tyres.[13]

30 In relation to the first respondent's financial limitations, Mr Sidebottom deposes that currently the only source of income for the first respondent is the rental income from Transpro's occupation of the first respondent's land.[14] Mr Sidebottom's evidence is that the payment of $971,508.50 would be sourced from:

(a) the limited rental income associated with Transpro's occupation of the first respondent's land as a truck depot; and

(b) capital contributions amounting to $745,000 from Transpro.[15]

31 Mr Sidebottom's evidence is that the Sidebottom family, as the owners and beneficiaries of the assets held by the first respondent, does not have access to a further source for capital contributions. Mr Sidebottom also deposes that as the main asset of the first respondent is subject to a mortgage, and due to the risk associated with the first respondent, in part due to this proceeding, it is unable to obtain loans from conventional lenders.[16] Accordingly, the first respondent considers that it cannot afford to dispose of tyres under a quicker timetable by engaging Tyre-A-Way and Tyre Crumb Australia to dispose of the tyres in addition to Tyre Cycle.

32 In a further affidavit sworn 6 October 2015, Mr Sidebottom deposes that Transpro will not make any profit in relation to the total truck costs of $512,088.50 which will be incurred in relation to the plan to dispose of the tyres by 19 January 2017. This amount will be paid by the first respondent to Transpro. The amount is required to reimburse the costs of Transpro in making the truck available to the first respondent for disposal of the tyres and is wholly accounted for by: maintenance costs, wages of Transpro's truck drivers and associated entitlements, wear and tear on the tyres of the truck, fuel and lease payments.[17]

33 Mr Sidebottom deposes that Transpro is a separate legal entity controlled by Marilyn Sidebottom, who is his mother. Mr Sidebottom deposes that Transpro has stated that it is unable to responsibly offer further capital contributions from the cashflow of Transpro without jeopardising that company and is unwilling to do so. Transpro is unwilling to incur debt to make further capital contributions to the first respondent and that, at this stage, banks will not lend to Transpro because it was incorporated in January this year, and it is Marilyn Sidebottom's understanding that any bank would require at least one year's financial records before considering lending to Transpro.[18]

34 In his affidavit dated 6 October 2015, Mr Sidebottom deposes that he is not aware of any location or service provider that could legally store used tyres on the scale required.[19]

35 The first respondent has failed to substantially comply with the enforcement order, even those aspects of the order to which it consented.

36 The breaches are serious and have been ongoing, requiring numerous applications by the Council. Importantly, the evidence is that the breaches pose a serious fire safety issue that has led to the involvement of the CFA in proceedings at the Tribunal. The Council's original applications were first made to the Tribunal in May 2013 and final orders were made in June 2014. As noted by the Tribunal, the matter requires finality, not least, because of the serious risk the tyres pose to the community.

37 The first respondent's submissions are that the recycling of the tyres cannot be completed before January 2017 because of the limited availability of such services in Victoria and that it would not be practical to have the tyres recycled interstate. Further, it is submitted that the estimated costs of recycling the tyres is such that the only way it could be financially achieved by the first respondent is by January 2017.

38 I accept that there has been, in the past, mismanagement by a former director of the first respondent and that Mr Sidebottom has only been aware of the enforcement order and breaches since June 2015 when he was served with the summons in this proceeding and supporting documentation. I also accept that Mr Sidebottom, on behalf of the first respondent, apologises and is committed to addressing the breaches and complying with any future orders.

39 The difficulty is that the first respondent wants orders which would see compliance delayed substantially to January 2017. At the heart of the extended timetable is the first respondent's financial ability to meet the costs of the exercise. The problem is that the evidence before the Court does not provide or allow for a detailed analysis of the first respondent or the associated company, Transpro's, ability, financial position or, more importantly, the extent to which either company can be financially stretched so as to meet the necessary costs to comply with the enforcement order. In relation to the option of relocating the tyres, it seems that at its highest, Mr Sidebottom is not aware of any secondary storage location that satisfies the requirements of Order 9 of the enforcement order. Mr Sidebottom only gives evidence of his experience with councils and their attitude to allowing land for the use of high volume tyre storage. There is no evidence of what the actual position is of any particular council or private land owner. At this late stage, given the seriousness of the breaches and the fire risk to the community, having made such limited inquiries, is not good enough.

40 This is further underlined by the lack of enquiries by the first respondent as to the potential disposal of at least part of the tyres on the first respondent's land through the use of mobile shredders. The Council raised in its submissions that such a method had been used by the first respondent in relation to a separate property, but the first respondent did not provide any submissions in response on this point.

41 Even if the only option available to the first respondent is to organise the recycling of the tyres at the estimated costs given by Mr Sidebottom, I am not satisfied that there is sufficient evidence before the Court that the exercise cannot be achieved. The documents exhibited to the affidavits in support of the first respondent's claims do not allow the Court to make an accurate assessment of the first respondent and/or its associated companies' financial positions. There is no forensic accounting evidence to support the first respondent's assertion, and again the Court is left having to speculate as to what the genuine financial position is. The first respondent has at least a related company, Transpro, which is currently paying $50,000 per month rent. Transpro's ability or inability to assist are based on Mr Sidebottom's understanding following conversations with his mother, Marilyn Sidebottom, the director of Transpro. The evidence is equivocal as to the first respondent's financial position and Transpro's ability to assist.

42 The breaches have been ongoing for a significant period of time. The breaches have been caused by the first respondent's failure to comply with permits and mismanagement by the first respondent's former director. Significantly, and perhaps most importantly, is the serious fire risk that the tyres currently pose to the community of Numurkah.

43 The first respondent now seeks an indulgence of an extension of time which puts the community of Numurkah at risk for a further 15 months. This community has been at risk from at least May 2013 when the first applications were made by the Council, and it is perhaps just good fortune that the risk has not eventuated. The further 15 months will traverse two summers, at which time common sense dictates that the fire risk will be high.

44 The first respondent is responsible for the initial contravention and the breaches of the enforcement order. Its financial position, while relevant, cannot be the overriding factor in determining the extension to the current enforcement order. I am not satisfied that all options have been properly explored by the first respondent as to alternatives to recycling and/or funding the costs of the compliance with the order. I have no doubt that compliance with the enforcement order will be onerous and expensive. However, the first respondent is the author of its current circumstances, and any level of burden the enforcement order places upon the first respondent must be considered in light of the fire risk to the community of Numurkah. It is incumbent upon the first respondent to explore numerous ways to comply with the enforcement order, including the use of a mobile shredder on its land, and the potential relocation of the tyres. The need for the first respondent to undertake extensive measures is amplified by the potential closure of tyre recycling businesses over the festive period.

45 In the circumstances, I will provide the first respondent with a greater period of time to comply with the enforcement order than that sought by the Council. I will make orders extending the time for compliance within 90 days of this order. This allows the first respondent three months to fully comply with the enforcement order and ensures that such compliance occurs by the beginning of the summer period, therefore minimising the potential fire risk to the community.

46 I will hear the parties as to costs and the form of order.

[1] Further affidavit of Shanan James Sidebottom sworn 18 September 2015, [19].

[3] Affidavit of Patrick Dubuc affirmed 6 March 2015; Affidavit of Patrick Dubuc affirmed 24 September 2015.

[4] Affidavit of Patrick Dubuc affirmed 6 March 2015 [7]-[27], Exhibits PD-3 to PD-11; Affidavit of Patrick Dubuc affirmed 4 August 2015 [3]-[7]; Affidavit of Patrick Dubuc affirmed 24 September 2015 [3]-[11], Exhibits PD-1 to PD-4.

[5] Affidavit of Patrick Dubuc affirmed 6 March 2015, Exhibit PD-1.

[6] Transcript of Proceedings, Moira Shire Council v Sidebottom Group Pty Ltd & Australian Rubber Manufacturers Pty Ltd (Supreme Court of Victoria, S CI 2015 01051, Zammit J, 6 October 2015) ('T') 38, Lines ('LL') 1-10.

[7] Affidavit of Shanan James Sidebottom sworn 18 September 2015, [3]-[11].

[11] Ibid, [26]-[38], Exhibit S29, Exhibit SS35.

[12] Ibid, [24]-[25], [29]-[34].

[13] Ibid, [27(d)], [35], [37(b)].

[14] Affidavit of Shanan James Sidebottom sworn 5 October 2015, [5].

[15] Ibid, [7]-[8], [13], [16], Exhibit SS35.

[17] Affidavit of Shanan James Sidebottom sworn 6 October 2015, [4(a), (b)].