Bankstown City Council v Le

By its class 4 application filed on 31 March 2003, the Applicant (the Council) seeks declaratory and injunctive relief in respect of the use by the Respondent of premises comprising the first floor or a building erected on lot 7 Deposited Plan 655411 and known as No 3 Padstow Parade, Padstow. The Council asserts that the premises are being used for the purposes of prostitution or a brothel contrary to the provisions of the Environmental Planning and Assessment Act 1979 (the EP&A Act).

The Respondent has defended the proceedings. She claims that the premises, of which she has been the tenant since March 2000, are being used for the purpose of remedial massage, which use is authorised by a development consent granted by the Council in 1999.

The affidavit evidence of Jason Kreipp, a former employee of the Council, establishes the following facts:

(i) the subject premises are included within Zone No 3(b) " Business Other Centres " created by Bankstown Local Environmental Plan 2001 (the LEP);

(ii) the LEP which applies to all land within the City of Bankstown came into force on 17 May 2002;

(iii) the LEP (cl 6(1)) adopts a number of definitions of various types of land use or developments, including the following definitions - brothel means premises habitually used for the purpose of prostitution, or designed for that purpose, even though used by only one prostitute for the purpose of prostitution. business premises means a building or place in which there is carried on an occupation, profession, service, light industry or trade which provides a service directly and regularly to the public, but (in the Table to clause 11) does not include a building or place elsewhere defined in this Schedule.

(iv) Clause 11 of the LEP specifies in respect of each of the zones created by it development that may be carried out only with development consent and development that is prohibited. Relevantly, for Zone No 3(b) " business premises ' is a permissible development and a " brothel " is a prohibited development. The effects of cl 11 of the LEP is that use of the subject premises as a brothel is prohibited development - see also the EP&A Act, s 76B

(v) On 11 March 1999 (ie before the current LEP came into force), the Council granted development consent to a development application made by Ms Zhong in respect of the subject premises for the use of the first floor for "Chinese traditional treatments, including therapeutic massage, acupuncture and moxibustion". The development consent was granted subject to a number of specified conditions. That development consent is the only consent relating to the subject premises that was revealed by a search of the Council's Register of Development Consents.

According to the affidavit evidence of the Respondent, she commenced to conduct her business at the subject premises on or about 12 March 2000. Her current lease of the premises (for a term of two years with an option to renew for a further term of two years) will expire on 6 March 2004.

She was aware that the subject premises were previously being illegally operated by Ms Zhong as a massage parlour. The Respondent had never met Ms Zhong and believed that the business was closed down by the Council.

The subject premises comprise four massage rooms, a waiting room, a reception and a lounge room/kitchen, bathroom and toilet.

The Respondent regularly advertises for business of remedial massage in the Daily Telegraph and a local newspaper and believes that most of her business comes from that advertising.

At any one time, the Respondent has two, three or four girls working at the premises as masseuses. The Respondent personally conducts interviews with the girls and they are told that "it is not a full service business and that no sex is allowed".

Paragraph 7 of the Respondent's affidavit states how the business is granted. It is in the following terms: The premises are used for massage and are not used for sex. The way the business is operated is as follows: A. The customer would ring and make an appointment and sometimes would call without appointment. Sometimes one customer may ask for a specific masseuse. If she is not present, another masseuse takes her place. B. The customer would wait in the waiting room and a girl would attend to him. He would either request for a particular masseuse and if she is present, the customer would then be asked to go to a massage room and wait. C. The customer would then discuss with the masseuse the type of massage and the length of time for his massage. The massage rates fees are displayed in the massage rooms. The customer would hand the appropriate money to the masseuse who would then go to her locker and place the money in her locker which is then locked by the masseuse. At the end of the shift the masseuse would then give me 50% of the total monies collected as per the scales as listed in the rooms. This is the basis of the monetary arrangement between the masseuse and me. D. The masseuses are not employees of mine and there is no superannuation which I pay on their behalf. For all purposes, they are sub-contractors. I carry public liability for the premises as part of a condition of the lease.

What is the evidence adduced by the Council in support of its allegation that the subject premises are being used unlawfully for the purposes of a brothel or prostitution?

Initially, the Council's evidence was confined to that given by Mr Jason Kreipp of his inspection of the subject premises on 5 December 2002 and of his conversation with the Respondent and the affidavit of Mr Haitch Leach, a Licensed Private Enquiry Sub-Agent, deposing to what he observed and experienced when attending the subject premises on 28 November 2002.

The Respondent's Counsel had objected to the Court receiving into evidence the affidavit of Mr Leach on a number of grounds including the fact that he was not available for cross-examination. It was in these circumstances that the Respondent sought and obtained an adjournment of the hearing and did not object to the Court granting an interlocutory injunction restraining the Respondent, her agents and servants from using, suffering or permitting the subject premises to be used for the purposes of prostitution or as a brothel. This interlocutory injunction was granted "without any admissions by the Respondent". I gave directions to the filing of further evidence by the parties.

Upon resumption of the haring on 15 October, 2003, the Council's Solicitor informed the Court that Mr Leach was not available for cross-examination.

In these circumstances, I ruled that his affidavit was not admissible in evidence. In the meantime, the Council had filed two further affidavits, one by Mr Mark Turner, a Health and Building Surveyor in the employ of the Council and the other by Anthony Macinante, a licensed Private Enquiry Sub-Agent.

Both those witnesses were cross-examined, but in his closing address, the Respondent's Counsel urged me to exclude the evidence of the licensed Private Enquiry Sub-Agent pursuant to the discretion conferred upon the Court by the Evidence Act 1995, s 135 or s 138.

Mr Macinante's affidavit deposes to what occurred at the subject premises when he attended them at 12.25 pm on 27 August 2003 (a Wednesday) when he remained there for about 1 hour. During his stay, he chose one of the three girls who were at the premises who told him her name was "Anna". She took him into a room and shut the door and asked him how long he wished to stay. He asked for the prices and she pointed to the written sign displayed in the room. "1 hour - $110; 45 minutes - $80 and 30 minutes -$60". He said he would say for 45 minutes and she asked for $80 in cash which he gave to her. She then asked him to prepare himself for a shower. After taking a shower, he returned to the room where Anna was waiting for him. She told him to lie face down on the massage table. He removed the towel from his waste and lay naked on the massage table. He observed that Anna removed all of her clothes before commencing to massage his body. While this was happening, he deposes (par 30) to the following conversation with Anna: I said: I know the sign on the wall out there said strictly no full service but can you get sex here? She said That's up to each individual girl, they all do their own thing. I said: What about you? She said: Yes, for an extra $50.00 I said: Have you finished for the day? I said: Yes, I've got the afternoon off.

Thereafter, in paragraphs 31 and 32 of his affidavit, Mr Macinante describes how he was massaged by Anna for a further 25 minutes which activity included her climbing onto the massage table and rubbing her naked body against his naked body and her fondling his genitals before masturbating him.

In submitting that the Court should exclude the evidence of the licensed Private Enquiry Sub-Agent, the Respondent's Counsel referred to two decided cases where Courts have exercised discretion conferred by the Evidence Act, s 138 to exclude evidence that was "improperly obtained". In the first of the cited cases Bedford v Bedford BC 9805427, Windeyer J excluded evidence which was obtained by what his Honour described as most serious and deliberate misconduct on the part of a solicitor conducting a judgment debtor's examination.

In the other case Klein v Bryant (1998) ACTSC 89. Master Connolly of the Supreme Court of the Australian Capital Territory excluded the evidence comprising video surveillance material obtained by the operative trespassing onto private property. In his judgment, the Master refers to the judgment of the High Court in Ridgeway v the Queen (1995) 184 CLR 19 as having "reinforced the appropriateness, in considering the common law discretion to exclude illegally or improperly obtained evidence, of considering the need to discourage the conduct". The Master also made the following observation: It also seems appropriate to observe that, while police, as those charged with responsibility for law enforcement, are subject to an extensive regime of legislative and administrative oversight to ensure compliance with proper and detailed procedures, private surveillance operatives operate in an area relatively free of oversight and control. (See, generally, Discussion Paper, Issues and Policy Options in the Regulation of the A.C.T. Security (Protection) Industry , ACT Attorney General's Department, 1992). This seems to me to be a factor which increases the relevance of the need to discourage inappropriate behaviour in the exercise of the s.138 discretion.

Is there anything in evidence of Mr Macinante which slows that the evidence was improperly obtained and if so, whether in the exercise of the Court's discretion it should be excluded?

Obviously Mr Macinante concealed from Anna the true purpose or reason for his attendance at the subject premises, which was to obtain evidence that the premises were being used for the purposes of prostitution. But I do not think the non-disclosure of his real purpose for attending the premises means that the evidence of what Anna told him about the availability of sexual services was improperly obtained. In particular, I do not think his undercover conduct amounted to entrapment. Nor does the evidence establish that he solicited Anna to perform sexual acts upon him.

In the result, I am of the opinion that the Respondent has not made out a case for the exclusion of Mr Macinante's evidence in the exercise of the discretion conferred by the Evidence Act, s 135 or s 138. The use of undercover agents to obtain evidence in brothel cases is generally normative. Except in cases where admissions are made, this type of evidence is customarily adduced to prove acts of prostitution etc. conducted in private.

The only evidence in rebuttal of Mr Macinante's evidence was that adduced by the Respondent who said that when she read Mr Macinante's affidavit she immediately dismissed Anna for what she had done. (This rather suggests an acceptance of Mr Macinante's evidence by the Respondent, rather than a rebuttal of it by the Respondent).

Additionally, there was tendered in the Respondent's evidence five documents (Exhibit G) apparently signed by girls who work in the Respondent's business as masseuses. Each of the documents is a printed form (to which there is added in handwriting the name and birth date of the signatory) which states as follows I (name) date of birth agrees that I am over the age of 18 and employed as a masseuse . My employer Hanh Thi Le at Relaxing Massage address 3 Padstow pd, Padstow 2211 does not allow any sexual intercourse between I and the client while on the premises at 3 Padstow pd, Padstow. And will follow the rules and regulations of the employer.

The other evidence adduced by the Council concerns the observations made by Council employees (in the case of Mr Kreipp, now a former employee) when they attended the subject premises for the purpose of conducting inspections. The first inspection was that conducted by Mr Kreipp at 1.45 pm on 5 December 2002 accompanied by another named Council employee. On that occasion Mr Kreipp spoke to the Respondent informing her that the Council had received a complaint that the premises were being used as a brothel. The Respondent, whose command of the English language is limited (she gave her testimony with the assistance of an Interpreter) responded by saying "No sex. Only massage".

After inspecting one of the rooms in the premises in which he observed a locked cupboard (it was opened by the Respondent to reveal 12 boxes of tissues and numerous small towels), Mr Kreipp asked the Respondent to engage in an interview with him noting that the contents of which might be used as evidence. The Respondent consented to participate in the interview in which she said that she was in charge of the business conducted at the premises, where services of full body massage were provided but not sex.

Mr Kreipp then showed the Respondent a copy of the development consent that had been granted by the Council in 1999 for the use of the premises. The Respondent, in answer to questions said that traditional Chinese treatments, acupuncture, and moxibustion were not provided and that the only service provided was therapeutic massage.

Thereafter, the Respondent showed Mr Kreipp the three rooms in which massage services were provided. He observed each room was fitted out in the same manner with a single massage table in the middle of the room. He observed that each of the rooms had heavy curtains over the windows. He also observed sexually explicit magazines placed on chairs in the rooms. He also observed signs displayed in the wall of the premises stating: Strictly no full service Massage prices20 minutes $50, 30 minutes $60, 45 minutes $80 and 1 hour $100.

Mr Mark Turner, a Health and Building Surveyor, attended the premises at 7 pm on 7 August 2003 in the company of officers of Bankstown Police and other officers of the Council and other officials.

Upon arrival, he immediately observed a naked female person leaving one of the rooms.

Thereafter, he spoke to the Respondent informing her that the Council was inspecting the premises because there had been reports that the premises were being used as a brothel and because the Council had concerns in relation to the requirements of the Public Health Act. The Respondent said that she would not answer questions without consulting her Solicitor. (I interpose that this inspection took place one week before the date of the allocated hearing of the present proceedings and accordingly, the Respondent's behaviour was unexceptional).

Mr Turner proceeded to inspect the various rooms observing in the four massage rooms a massage table and next to it a basket containing baby oil, tissues and a brown paper bag containing condoms. He took a photograph of the basket (Annexure B) but the photograph does not reveal the contents of the brown paper bag.

He also observed within the waiting room pornographic magazines. During his inspection, he saw and conversed with a male person, who in response to Mr Turner's question of 'what are you doing here?" said: I have paid $80.00 for a massage and was about to pay an extra $20.00 for oral sex when you entered the premises for your inspection.

Mr Turner, accompanied by another Council employee returned to the subject premises at 10 am on 28 August 2003 (being a date during the adjournment of the hearing and while the interlocutory injunction that I have earlier referred to was in force). On this occasion, he was met by a female wearing red underwear who showed the two men to the waiting room where he observed similar pornographic magazines to what he had previously observed.

He told the female that they were from the Council and wished to inspect the premises. She told him that he may do so and that there was nobody in the rooms.

Upon entering the first massage room, he observed a massage table and next to it a tray containing baby oil, tissues and a brown paper bag containing condoms. His observations of the three other massage rooms noted in each case a tray containing baby oil and tissues but not any bag containing condoms.

Under cross-examination, Mr Turner revealed that on the occasion of his first attendance at the subject premises on 7 August 2003, he had been accompanied by five plain clothed police officers, three immigration officials and two CentreLink officers.

On that same evening, some 16 premises within the Bankstown City had been raided and that he had participated in eight of these raids/inspections.

In so conducting himself, he had purported to exercise the power of entry conferred upon him by the Public Health Act.

In rebuttal of the observations made by Mr Turner of the presence of condoms in brown paper bags on two occasions that he inspected the subject premises, the Respondent gave evidence that she had checked the premises but had not found any. (She had not checked on the night of the raid because it had made her nervous.)

She went on to say that each morning she asks the cleaner whether she has found any condoms in the premises and if so, "the person is sacked" (meaning, I presume the girl working in the massage room in which any condoms have been discovered).

In addition to the affidavit and oral testimony, the Council tendered extracts from advertisements published in the local newspaper "The Torch" on 9 July 2003, 23 July 2003 and 6 August 2003 respectively. Each of the advertisements appears under the heading "Personal Services" (in each case there are two or three columns in the newspaper so headed). The advertisements are similar in content. For example, that published on 6 August 2003 states the following: AT PADSTOW OPEN 7 DAYS -RELAXING MASSAGE - ANNA, European, 18yo SALLY, Indonesian, 20yo GYPSY, Aussie blonde, 24yo BIANCA, French, 18yo NICKY, Aussie blonde, 19yo MISTIE, Aussie, 20yo KYLA, kiwi, 19yo staff required No 3 Padstow Pde, Padstow, Rear entrance behind ANZ Bank PH 9792-7119

Finally, in relation to the ownership of the subject premises, I should note the contents of the affidavit sworn by Adam Seton on 20 February 2003 annexing correspondence he had with the owners of the building which comprises inter alia the subject premises. The title search indicates that the owners of the relevant property are George O'Young and Elizabeth O'Young as joint tenants in 6/10 Share, George O'Young Pty Ltd in 3/10 Share and Maria Chan in 1/10 Share - all as tenants in common.

By letter dated 25 November 2002, the Council's Solicitors (of which Mr Seton is a Partner) notified Mr George O'Young that the premises "would seem to be used for the purpose of a brothel" and requested details of the lessees etc and advised that unless informed to the contrary, the Council would assume that the owners were aware of the unauthorised use, and would be joined in the legal proceedings proposed to be brought by the Council.

Dr George O'Young responded by letter dated 29 November 2002 disclosing the lessees of the three different parts of the building, including the Respondent's lease of the subject premises. The letter contained the following advice: Please be aware that even though we are owners of the property, we are not involved in its management or any dealings with the lessees. If any of the lessees are found to be engaged in illegal activities within the premises or activities contrary to the terms of the lease, their lease will be terminated with appropriate penalty prescribed. D. HAS THE COUNCIL PROVED THAT the SUBJECT PREMISES ARE BEING UNLAWFULLY USED?

In my judgment, the totality evidence does not support a finding that the subject premises are habitually used for the purpose of prostitution (my emphasis).

In so concluding, it is to be recalled that the Respondent's use of the subject premises commenced in March 2000 and it was not until 13 December 2002 that the Council alleged that the premises were being used for the unlawful purpose of a brothel (see Annexure "D" to Mr Seton's affidavit). That allegation followed the inspection of the premises made by Mr Kneipp on 5 December 2002 and Mr Heath's attendance at the subject premises on 28 November 2002 as an undercover private investigator commissioned by the Council's Solicitor.

Whereas the evidence clearly does not support a finding that the premises are "habitually used for the purpose of prostitution" (and hence it follows that there can be no finding that the premises are relevantly used as a "brothel" as that term is defined in the LEP) the evidence, if accepted, does support a finding that the premises have been used for the purpose of prostitution.

In this respect, I accept as true and reliable the evidence of Mr Macinante as to what occurred at the subject premises when he attended them on 27 August 2003 as an undercover private enquiry agent (commissioned by the Council's Solicitor to obtain evidence against the Respondent). Based upon that evidence, I am satisfied that an act of prostitution was on the occasion of Mr Macinante's attendance at the subject premises carried out by Anna. I also accept the Respondent's evidence that she soon thereafter dismissed Anna after reading Mr Macinante's affidavit filed in these proceedings.

In this respect, I would respectfully adopt the approach that was taken by Sheahan J in Polnibs Pty Ltd v Bankstown City Council (1997) NSWLEC 55 and by Pearlman CJ in Campbelltown City Council v Dunn (2003) NSWLEC 122 as to what is comprehended by the term "prostitution".

Both their Honours had adopted the judgment of Doyle CJ in the South Australian Full Court of the Supreme Court in Begley v SA Police (No 2) (unreported 24 October 1996) where the Chief Justice had said "the essence of prostitution is the offering of the body for hire for the gratification or satisfaction of sexual appetites".

The evidence of Mr Macinante which establishes that one act of prostitution was performed at the subject premises is corroborated by the observations made by the Council's employees on at least one occasion (sometimes on separate occasions) when carrying out unheralded inspections (or raids) of the subject premises of the presence on the premises of (i) a nude female and a female wearing only underwear; (ii) pornographic magazines; and (iii) trays located near the massage tables containing baby oil, paper tissues and bags containing condoms. Obviously, the presence of condoms is the most telling piece of circumstantial evidence that acts of prostitution were, at least, available at the subject premises.

It is also slightly corroborated by the advertisements placed in the local newspaper by the Respondent, although it is now commonplace for such advertising to appear, especially in local newspapers, and one cannot be sure of the precise services that are being offered.

Whereas this corroborative evidence (which I accept in view of my evaluation of Mr Turner as a truthful and reliable witness) is corroborative of the fact established by the evidence of Mr Macinante that an act of prostitution involving him had occurred at the subject premises, the combined weight of the totality of the Council's evidence does not satisfy me that the premises are habitually used for the purposes of prostitution.

Hence, I am not satisfied by the evidence that the subject premises are being used as a "brothel" as that term is defined by the LEP. In so concluding, I have given full effect to the Restricted Premises Act 1943, s 17A, sub (2) of which empowers the Court in proceedings such as the present proceedings to "rely on circumstantial evidence to find that particular premises are used as a brothel", but it does not justify a finding of "habitual" use for the purpose of prostitution.

The evidence, however satisfies me that isolated acts of prostitution have already occurred on the subject premises and are likely to occur in the future in view of the manner in which the Respondent operates her business and in particular, having regard to the inadequate nature and scope of control exercised by the Respondent over the activities of the girls who provide the massage services. The evidence in this respect indicates that whether massage services provided by the masseuses go beyond remedial massage to include sexual activities with the client is entirely dependent upon the will and decision of the masseuse, and that will and decision is not effectively controlled by the Respondent in the manner that she engages the masseuses in her business.

In so concluding, I accept the evidence given by the Respondent as to how she conducts her business, recognising that there is some doubt or ambiguity as to the precise nature of the legal relationship between the Respondent and the masseuses who provide the massage services to the Respondent's clients. However, I do not think this doubt alters the plain fact that it is the Respondent's business that is conducted at the subject premises by the girls she engages or contracts to provide massage services to the Respondent's clients. Nor in my opinion, does it affect the plain fact that the Respondent must be held responsible for how the business is conducted at the subject premises, including the occasions when acts of prostitution occur with the Respondent's clients. In respect of her responsibility for this matter, it matters not whether the girls performing the acts of prostitution are independent contractors or employees of the Respondent because it is through them that the Respondent conducts her business, and the business cannot be divorced from the mode in which the girls carry on that business, including where acts of prostitution are performed, notwithstanding the Respondent's standing instructions that no sexual services are to be provided. It is simply not the point to say that the girls do what they want to do, notwithstanding the Respondent's express instructions to the contrary. It is entirely through the girls' work that the Respondent conducts her business.

A number of questions arise concerning my finding that isolated acts of prostitution have occurred and probably will occur in the future, whilever the Respondent conducts the business in the manner that she does by exclusively relying upon the actions of the masseuses, which are effectively uncontrolled and uncontrollable by the Respondent save for her instructions to the girls not to provide sexual services and save for the signs to that effect that are displayed at the premises.

Firstly, does the incidence of the proven and probable isolated acts of prostitution mean that the Respondent is unlawfully using the premises for the purpose of prostitution?

Secondly, what is the effect of those acts of prostitution on the approved use of the subject premises for the purposes of remedial massage.

Finally, should there be granted any injunctive relief in respect of the use of the subject premises for prostitution?

All three questions are somewhat interrelated. In large measure, the answers depend upon relevant findings concerning the relationships between the incidence of the approved therapeutic massage use and the incidence of the prostitution use.

Although the evidence in the present case does not establish that acts of prostitution are habitually or commonly or even frequently committed (rather, it establishes that such acts occur on an isolated basis) the potential for acts of prostitution to occur during the private massage sessions conducted in a closed room environment, where the nature of the service is separately negotiated between client and masseuse, is virtually unlimited.

The only realistic limitations are the degree of control and supervision that the Respondent exerts or may exert over the practices and behaviour of her masseuses and her clients, combined with the integrity and compliance of the masseuses with the Respondent's instructions.

In these circumstances, I find that there is considerable potential for acts of prostitution to occur in the private massage sessions conducted at the subject premises and this potential can only be realistically curtailed by a far greater degree of supervision, control and training of girls on the part of the Respondent, whose efforts to date on this score, have been patently deficient.

It follows from this finding that I am of the opinion that the potential acts of prostitution are neither minor nor ancillary nor subservient to the approved use of the subject premises for therapeutic massage. In this respect, I would again refer to Chief Justice Doyle's decision in Begly No 2 where he distinguishes between the beneficial effects of massage in providing clients with relaxation and relief from stress and the additional effect of providing sexual gratification to clients by virtue of the manner in which the massage was carried out. Clearly sexual gratification is not the normal incident of therapeutic massage and it cannot be reasonably regarded as being ancillary or subsidiary to the approved use of the subject premises for therapeutic massage.

In the light of these findings, I am of the opinion that a case has been made out by the Council for some form of injunctive relief, the nature of which I must now determine.

In my judgment, the Council has established that the Respondent's approved business for providing therapeutic massage services has involved and is likely to involve isolated acts of prostitution. Such acts are not ancillary or incidental to the approved use and are not authorised by the approved use.

In large measure, if the Respondent desires to conduct her authorised business, she is in the position of control and supervision whereby she can ensure that the business is lawfully conducted, without the unlawful activity of acts of prostitution occurring in the conduct of the business.

However effectively the Respondent may choose to deal with this problem of supervision and control the Council has established its present entitlement to injunctive relief to restrain the unlawful conduct of the business by virtue of the occurrence of acts of prostitution.

Accordingly, I propose to restrain the Respondent from conducting the business or suffering or permitting the business to be conducted in a manner whereby acts of prostitution occur at the subject premises and in the course of the conduct of the business of therapeutic massage services.

However, the relief to be granted does not justify an order closing down the Respondent's approved use. If she wishes to continue to conduct the approved business, she must ensure that no acts of prostitution be permitted to occur. She of course is at risk if the injunction is breached. Her legal advisors must fully inform her of her responsibilities in the conduct of her business so that there be no violation of the injunction that I propose to grant and the grave risk to which she will be exposed if there be any violation of the injunction.

For all of the foregoing reasons, I make the following orders:

1. Declare that the use for therapeutic massage of the premises comprising the first floor of the building erected on land known as No 3 Padstow Parade, Padstow has involved the unlawful activity of prostitution.

2. Restrain the Respondent by herself, her employees, agents and contractors from using the said premises for any purpose of prostitution.

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