Beeche v Smith Street Investments Pty Ltd

Supreme Court of NSW|2018-04-27|Before: McCallum J

Judgment

HER HONOUR: In 1943 the New South Wales Parliament passed legislation conferring authority on this Court in respect of "disorderly houses". Now named the Restricted Premises Act 1943 (NSW), the Act makes provision for the declaration of premises on which certain activities are suspected of being carried on. The effect of a declaration of premises is to expose the owner and occupier of the premises to criminal liability if those activities continue to be carried on and to confer broad search powers on police in respect of the premises.
By these proceedings, Detective Chief Inspector Darren Beeche of the New South Wales Police Force seeks a declaration in respect of premises at Emu Plains which he believes are being used as a club house of the Lone Wolf Outlaw Motor Cycle Gang (OMCG).
The application came before me as Duty Judge late last Friday afternoon. It was considered to have a measure of urgency due to escalating violence between the Lone Wolf OMCG and the Rebels OMCG and the suspected use of the club house as, in effect, a war room. The solicitor for the plaintiff estimated, with cheerful optimism, that the hearing would take about 10 minutes, notwithstanding the fact that he relied on affidavit material running to over 300 pages. Owing to the volume of the evidence, the complexity of the issues raised by the application and other urgent business of the duty list, it was necessary to reserve my decision over the weekend.
I am satisfied that it is appropriate to determine the application ex parte and that the declaration sought should be made, for the following reasons.

Indecent conduct and entertainment of a demoralising character

Detective Chief Inspector Beeche's suspicion as to the use of the premises for "indecent conduct" or "entertainment of a demoralising character" was based on observations he made during an inspection of the premises undertaken on 20 April 2018 under the Gaming and Liquor Administration Act 2007 (NSW). The principal matters relied upon are the fact that the premises are set up in the style of a bar with lounges and a "stripper pole"; the layout of the upstairs of the premises, which has the appearance of a brothel, and the arrival a female (while police were undertaking the inspection of the premises) who said she had been called to "come to have a drink and party with the boys". The upstairs area consists of six individual rooms each set up with a double bed and "sexual paraphernalia"; in those rooms police observed used and unused condoms, "scrunched up tissues" and containers of lubricant. The handbag of the woman who arrived during the inspection was found to contain 20 or 30 condoms and "drug paraphernalia". She appeared to be affected by drugs when she attended the premises.
Historically, the use of premises as a brothel, at least where the owner or occupier was profiting from the prostitution of another, was regarded as a sufficient basis for declaring premises to be a disorderly house: Sibuse Pty Ltd v Shaw (1988) 13 NSWLR 98. However, since that decision (indeed possibly as a result of that decision), the legislation has been amended so as to provide that a declaration under s 3 may not be made in respect of premises solely because the premises are a brothel: s 16 of the Restricted Premises Act. The introduction of that section signifies the view of Parliament that sexual activity with a prostitute will not, of itself, constitute indecent conduct or "entertainment of a demoralising character".
There is an additional matter relied upon in the present case, which is the presence of a "stripper pole" and the layout of the bar lounge area. It is relevant in this context to have regard to the contents of a second affidavit relied upon in support of the application, being the affidavit of Detective Sergeant Bruce Groenewegen sworn 26 April 2018. The affidavit is presented as expert opinion evidence concerning OMCGs and the Lone Wolf gang in particular. The affidavit contains a section concerning the role of women in OMCGs (paragraphs 65 to 74 of the affidavit). In particular, Detective Sergeant Groenewegen expresses the opinion that OMCG members generally put the club and their motor cycles before women in order of importance and that women are regarded as the property of a member or the club. The affidavit further states that women are not permitted to become members of OMCGs and that, while they may be "permitted to form support clubs", they would not be permitted to wear the all-important 1% patch or three piece patch. In this context I have also had regard to the evidence of Detective Sergeant Groenewegen that the Lone Wolf confers "status patches" which may be worn by members including "wings", which are believed to be earned for committing various sexual acts which are witnessed by a minimum of two members (paragraph 83(vii)(f) at page 106 of the affidavit).
The difficulty with this aspect of the application is that what constitutes "entertainment of a demoralising character" entails a value judgment. The combination of the evidence summarised above is probably enough to found the suspicion that the bar area of the club house is used for lewd entertainment. The question is whether such entertainment should be regarded as being "of a demoralising character" within the meaning of the Act. The term "demoralising" is clearly used in the Act in its archaic meaning of corrupting morals rather than referring to something that is dispiriting or depressing as it is now more commonly understood.
Setting aside my personal views and the likelihood that stripping for the entertainment of the male members of the Lone Wolf OMCG would be dispiriting or depressing for the women involved, I am not persuaded that the authority to make a declaration under s 3(1)(a) is enlivened on those grounds alone. I should record that Rothman J appears to have taken a different view in Sergeant Gary Broadhurst v Nomads Hunter Valley Motor Cycle Club Incorporated (ACN 076 396 391) [2018] NSWSC 256 at [28].

Unlawful supply of liquor

The premises have no current or past liquor licence. Detective Chief Inspector Beeche described what he observed during the inspection, which included clear evidence to suggest that persons serve alcohol at the club house and maintain a ledger of amounts owed by people who consume the alcohol. I am satisfied that there are reasonable grounds for Detective Chief Inspector Beeche's suspicion that alcohol is unlawfully sold or supplied at the premises and is likely to be sold again.

Reputed Criminals

As already noted, the term "reputed criminal" is defined to include a person who has been convicted of an indictable offence. It is appropriate to have regard to the whole of the definition set out in s 2 of the Act, as follows: ""Reputed criminal" includes (without limitation) a person who: (a) has been convicted of an indictable offence (including an offence under section 93X of the Crimes Act 1900 ), or (b) is engaged in an organised criminal activity within the meaning of section 46AA of the Law Enforcement (Powers and Responsibilities) Act 2002 , or (c) is a controlled member of a declared organisation within the meaning of the Crimes (Criminal Organisations Control) Act 2012."
Whilst this issue was not specifically addressed in oral submissions, I understood the application to be based on the first limb of that definition. Detective Chief Inspector Beeche's affidavit annexed the criminal history of each of six men who were present inside the premises at the time of the inspection on 20 April 2018. The evidence is that each of those men identifies as a Lone Wolf member. At least four of those men have previously been convicted of an indictable offence.
Separately, it is appropriate to have regard to Detective Chief Inspector Beeche's characterisation of the premises as a Lone Wolf club house. The affidavit amply supports that characterisation. The presence of six Lone Wolf members at the time of the police inspection on 20 April 2018 provides further support for that conclusion. I am satisfied that there are reasonable grounds for Detective Chief Inspector Beeche's suspicion that persons who are "reputed criminals" within the meaning of the Restricted Premises Act have resorted and are likely to resort again to the premises.

Discretion to make the declaration sought

Section 3(1) of the Restricted Premises Act provides that, upon a senior police officer showing reasonable grounds for suspecting that any of the relevant conditions obtains with respect to the premises, the Court "may" declare the premises to be premises to which Part 2 of the Act applies. The nature and extent of the discretion conferred by the section was considered by the Court of Appeal in Sibuse Pty Ltd v Shaw cited above. Some care must be taken in considering the principles stated in that case, since it concerned a declaration based upon a suspicion that the premises were being used as a brothel. As already noted, the Restricted Premises Act now provides that a declaration under s 3 may not be made in respect of premises solely on that basis. The legislation that introduced those amendments came into force after the decision in Sibuse.
The solicitor for the plaintiff cited Sibuse as authority for the proposition that, if the Court finds the relevant factual matter (the existence of reasonable grounds for the relevant suspicion), the Court ought to exercise its discretion to make a declaration. With great respect to the author of the submission, I do not think Sibuse does stand for that proposition. The decision must be understood in its relevant historical context (being decided before the introduction of s 16). As I read the decision, the Court was unanimous as to the need, upon satisfaction of one of the elements in s 3(1), to undertake a separate exercise of considering whether to exercise the discretion to make the order sought. The separate judgment of the then Chief Justice, Street CJ, presents a compelling illustration of the evaluative nature of that assessment, concluding (at 103C) "it is better for the exercise of discretion to be in judicial hands when it comes to so drastic a step" (the consequences of a declaration have softened slightly since then, since the Act no longer makes it an offence for a member of the public to attend a disorderly house, but remain drastic for owners and occupiers). I would understand each judgment to recognise the existence of a discretion whether to make an order: at 102B per Street CJ; at 123C per McHugh JA; Priestley JA agreeing at 114F. Justices McHugh and Priestley differed from the Chief Justice only as to the factors relevant to the exercise of that discretion in the case of an application brought on the sole grounds that the premises were used as a (clean, neat and not disorderly) brothel.
The plaintiff's submission rested on the statement of McHugh JA at 123C that, "if the relevant suspicion is made out and no other facts are proved, the purpose of the legislation requires that a declaration should be made". That statement must be understood in the context of the issue on which the Court was divided, namely, the relevance of the issue whether the brothel was "disorderly" (the brothel the subject of the application was well-run and was not troubling anyone).
In any event, I am satisfied that it is appropriate to exercise the discretion to make a declaration in the present case. The predominant reason for reaching that conclusion is the apparent use of the premises as a meeting place for members of a gang which appears to be openly at war with another gang. There is ample evidence to support Detective Chief Inspector Beeche's characterisation of the premises as a club house used by the Lone Wolf OMCG. The Chief Inspector's affidavit, drawing in part on that of Detective Sergeant Groenewegen, records his belief that the Lone Wolf OMCG are in conflict with the Rebels OMCG and that "the violence has escalated to an emergency level, now involving specific threats to kill on site". The affidavit sets out a time line of recorded incidents evidencing this dispute.
The affidavit also addresses the question of weapons found at the premises. The premises themselves are heavily fortified, being located at the rear of an industrial unit complex and containing steel doors and a sophisticated CCTV system. That additional evidence persuades me that, having been satisfied that the conditions of s 3(1)(b) and (c) are met, it is appropriate to exercise the discretion to make the order sought.
As the predominant reason for that conclusion is founded on s 3(1)(c), it follows that the declaration I will make is a reputed criminal declaration.

Reasons for determining the application ex parte

A declaration under the Act is made in respect of premises, not persons. However, as explained above, the declaration has significant consequences for the owner and occupier of the premises. The plaintiff relied on the provisions of Schedule 10 to the Uniform Civil Procedure Rules 2005 (NSW), which provides that the court may make a declaration under s 3(1) of the Act even if the summons has not been served on the owner or occupier of the premises.
In a recent decision of this Court in which a declaration under s 3 was made, Schmidt J recorded the acceptance by the Commissioner of Police that the Court should not deal with an application of this kind ex parte except in emergency situations: Commissioner of Police, New South Wales Police Force v WX Fortune Pty Ltd [2017] NSWSC 1632 at [6] citing Lisafa Holdings Pty Ltd v Commissioner of Police (1988) 15 NSWLR 1 at 24 to 25. The decision in Lisafa was not drawn to my attention at the hearing of the present application and probably ought to have been. In any event, I am persuaded that there is a measure of urgency in the present application, owing to the risk of violence between the two gangs. Further, the decision in Lisafa holds that, leaving aside any issue of emergency, an order for an interim declaration may be made if in the circumstances it is not possible to give notice to the persons affected.
The defendant named in the summons filed in Court on Friday is Smith Street Investments Pty Ltd. That company was deregistered on 6 February 2017. A recent company search records the reason for deregistration as "Section 601AB", which is a reference to deregistration initiated by ASIC under that section of the Corporations Act 2001 (Cth). Prior to its deregistration, the sole director and shareholder of the company was Ryan John James Burt. He is not referred to in the evidence before the Court.
The effect of the deregistration is that the company has ceased to exist: s 601AD of the Corporations Act. Any property the company held on trust has vested in the Commonwealth; any other property has vested in ASIC: s 601AD(1A) and (2). There is nothing in the evidence (which includes a land title search) to suggest the premises were held by the company on trust. Section 601AD(4) provides that ASIC "has all the powers of an owner" over property vested in it under subsection (2). However, I do not think it follows that ASIC is the "owner" of the premises within the meaning of the Restricted Premises Act. That would be an absurd construction. ASIC has indicated that it does not oppose the relief sought in these proceedings on that premise.
It follows, in my view, that it is not possible to give notice of the application to Smith Street Investments Pty Ltd (since it does not exist). Further, it is not possible to give notice of the application to the occupier, since there is no identified or identifiable person in that role.
Separately, the evidence of Detective Chief Inspector Beeche to which I have referred establishes a sufficient degree of urgency to warrant making the declaration promptly.
In the event that Mr Burt or some other person claiming the status of owner or occupier of premises wishes to be heard as to the continuation of the declaration, an application may be brought under s 4 of the Restricted Premises Act for its rescission. If that application is to be brought in the name of Smith Street Investments Pty Ltd, it will be necessary first for Mr Burt to make an application to ASIC to have that company reinstated to the register.
In the meantime, as the defendant named in the summons does not exist, an order should be made under r 6.29 of the Uniform Civil Procedure Rules removing it as a party. The declaration and a copy of this judgment should be provided to ASIC and police should use their best endeavours to serve a copy on Mr Burt.
For those reasons I make the following orders: 1. Pursuant to 3(3) of the Restricted Premises Act 1948 (NSW), I declare that the premises identified in NSW Land Registry Services folio 2/SP39554, commonly known as Unit 2 of 13 Smith Street, Emu Plains in the State of New South Wales, are premises to which Part 2 of the Restricted Premises Act applies. 2. I note that, since the predominant reason for that declaration is that reputed criminals have attended or are likely to attend the premises, the declaration takes effect as a reputed criminal declaration. 3. Pursuant to r 6.29 of the UCPR, I direct that Smith Street Investments Pty Ltd be removed as defendant. I direct the plaintiff to use his best endeavours to serve a copy of these orders and this judgment on Mr Burt within 7 days. 4. I note that the terms of s 4 of the Restricted Premises Act provide as follows: "4 Rescission of declaration (1) Any such declaration may be rescinded by the appropriate Court subject to such terms as the Court thinks fit, on application being made to it: (a) by the owner or occupier of the premises, the subject of the declaration, on proof that the owner or occupier has not at any time allowed any of the conditions referred to in subsection (1) of section 3 to obtain in relation to such premises, or (b) by a senior police officer on proof that there is no reasonable ground for suspecting that any of the conditions referred to in subsection (1) of section 3 obtain in relation to such premises. (2) Where an application under this section is made by the owner or occupier of the premises notice in writing of intention to make the same shall be served on a senior police officer two days at least before the hearing of such application."

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 April 2018

Restricted Premises Act 1948(NSW)

Restricted Premises Act 1943(NSW)ss 2, 3, 4, 16

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