SOLICITORS:
S Simington (Applicant)
N/A (Respondent)
File Number(s): 40699/13, 40700/13
[2]
Judgment
The respondents have been found guilty of contempt of court arising from disobedience of order 3 made by the Court on 4 February 2014 in two civil enforcement proceedings (heard and determined together) relating to land at, respectively, Hamilton Street, Vineyard and 74 Melbourne Road, Riverstone: Blacktown City Council v The Penatrators Pty Limited (No 3) [2014] NSWLEC 4. They are now before the Court for sentencing. The respondents are The Penatrators Pty Limited (the company) and Mr Michael Galainy who is, and at all material times was, the company's sole director and shareholder and alter ego. The applicant is Blacktown City Council.
Both proceedings were bought against the company and Mr Galainy but orders were made only against the company (the first respondent). In each proceeding, orders 1 and 2 of 4 February 2014 comprise a declaration that the company had carried out development for the purposes of a waste disposal facility on the property and an order that the company by itself or its servants and agents, be restrained from carrying out development on the property for the purposes of a waste or resource management facility as defined under the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 including, without limitation, the receipt, storage, separating, sorting, processing or treating, compacting or distribution of waste or resources, except with consent under the Environmental Planning and Assessment Act 1979 or in compliance with order 3.
In the case of the Hamilton Street property, orders 3 and 4 are in the following terms:
(3) Order that the first respondent remove from the Property all waste materials stored on the Property and transport to a place lawfully authorised to receive that material within 60 days of the date of this order.
(4) Order that the first respondent procure a receipt and submit each receipt to the applicant in relation to each consignment of material removed from the Property in conformity with order 3, issued by the occupier of the place to which the material has been transferred.
In the case of the Melbourne Road property, orders 3 and 4 are in the same terms except that in order 3 the specified time for compliance was 30 days rather than 60 days.
Order 3 in each proceeding was not complied with within the specified time or at all.
Consequently, in each proceeding the applicant Council brought a motion for contempt of court against the company and Mr Galainy in respect of the failure to comply with order 3. In an ex tempore judgment, I held that the company was guilty of contempt in that it had failed to remove from each property all waste materials stored thereon, let alone transport to a place lawfully authorised to receive that material, within the time specified in order 3 or at all (there was a relatively minor qualification in relation to the Melbourne Road property); and that Mr Galainy was guilty of contempt (even though the orders were not made against him) in knowingly impeding the administration of justice because, with knowledge of order 3, he wilfully caused the company to fail to comply with that order: Blacktown City Council v The Penatrators Pty Limited (No 4) [2015] NSWLEC 8 at [11]-[14]. Mr Galainy was present in court at the time.
On the same date I made directions for the filing of evidence relevant to sentence. No evidence was filed or adduced by the respondents.
Building and demolition waste has remained on both properties since it was placed there by the company and still has not been removed.
[3]
SENTENCING PRINCIPLES
In Waverley Council v Tovir Investments Pty Ltd and Rappaport (No 4) [2013] NSWLEC 88, which was a case of contempt by disobeying a court order, I said at [17]-[19]:
17 The underlying purpose of the exercise of the power of the Court to punish for a contempt such as this is to protect the effective administration of justice by demonstrating that the Court's orders will be enforced. The following ten factors relevant to sentencing for contempt identified by the Court of Appeal in Wood v Staunton (No 5) (1996) 86 A Crim R 183 were endorsed by the Court of Appeal in Matthews v Australian Securities and Investments Commission [2009] NSWCA 155 and have been applied in this Court in a number of decisions (eg Burwood Council v Ruan [2008] NSWLEC 167, Liverpool City Council v Palerma Pty Ltd (No 2) [2009] NSWLEC 45 at [7]; Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) [2009] NSWLEC 210 at [92]; and Mosman Municipal Council v Kelly (No 6) [2010] NSWLEC 20 at [6]):
(1) the seriousness of the contempt proved;
(2) whether the contemnor was aware of the consequences to himself of what he did;
(3) the actual consequences of the contempt on the relevant trial or inquiry;
(4) whether the contempt was committed in the context of serious crime;
(5) the reason for the contempt;
(6) whether the contemnor has received any benefit by indicating an intention to give evidence;
(7) whether there has been any apology or public expression of contrition;
(8) the character and antecedents of the contemnor;
(9) general and personal deterrence; and
(10) denunciation of the contempt.
18 Wood v Staunton was concerned with a different species of contempt, namely refusing to answer questions at a Royal Commission. That influenced the precise formulation of the ten factors in that case, in particular the references "to himself" in factor (2) and "on the relevant trial or inquiry" in factor (3). Those factors require some adaptation in a case such as the present. Wood v Staunton predated the Crimes (Sentencing Procedure) Act 1999. That Act applies to criminal contempts but, in my view, applies by analogy to civil contempts such as this: Queanbeyan v Sun (No 2) [2013] NSWLEC 64 at [17] per (Biscoe J). The purposes for which a court may impose a sentence on an offender are listed in s 3A of that Act and relevantly include the following:
(a) to ensure that the offender is adequately punished for the offence,
(b) to prevent crime by deterring the offender and other persons from committing similar offences,
...
(e) to make the offender accountable for his or her actions,
(f) to denounce the conduct of the offender,
...
19. There is a significant overlap between the sentencing factors identified in Wood and the sentencing factors set out in that Act.
[4]
CONSIDERATION
The contempt is objectively serious. The contempt was wilful. Some 15 months have elapsed since the orders were made and they still have not been complied with, notwithstanding that the respondents were found guilty of contempt some three months ago.
The only excuse or reason for the contempt proffered by Mr Galainy, from the bar table, was that it was difficult to comply with order 3 because the owner of the Hamilton Street property, Mr Charles Biady, had removed a truck and bobcat stored on that property by the contemnors, which they could have used to comply with order 3. That excuse or reason was based on the affidavit evidence of Mr Biady (read by the applicant Council) that in August or September 2014, at the Hamilton Street property, Mr Biady told Mr Galainy that he had allowed acquaintances to remove the truck and bobcat. However, Mr Biady's unchallenged evidence went much further than that. He told Mr Galainy on that occasion that he had allowed acquaintances to remove the truck and bobcat to encourage Mr Galainy to clean up the property. Mr Biady also told Mr Galainy that he would return the truck and bobcat if Mr Galainy agreed to clean up the property, but the work needed to be supervised because he did not trust Mr Galainy to do the work when unsupervised. In September or October 2014, when Mr Biady was in hospital, Mr Galainy made a verbal offer to Mr Biady to buy the Hamilton Street property for $150,000, Mr Biady agreed, they signed a piece of paper recording their agreement, and Mr Biady told Mr Galainy he could go on the property to remove the rubbish. He has not heard further from Mr Galainy about the purchase.
When Mr Biady got out of hospital he went to the Hamilton Street property and saw that the gate had been smashed down and the site was open (he had to pay a fencer to put the gate back up and fix the fence), and that a tipper body had been removed, which he subsequently found out was purchased by a third party from Mr Galainy. At no time did Mr Biady prevent Mr Galainy from entering the site to clean up the rubbish on it: the only requirement he asked for was that the work be supervised.
Further, Mr Galainy conceded before me that he had other equipment that could have been used to comply with order 3, apart from the truck and bobcat to which I have referrred.
Mr Galainy asserted from the bar table, without evidence, that he was concerned that supervision by Mr Biady may result in Mr Galainy's equipment going missing if he had to leave the equipment on the Hamilton Street property overnight; and that he was concerned about the safety of his family because Mr Biady's acquaintances were bikies. I do not accept that these concerns are well founded given Mr Biady's unchallenged evidence and the absence of supporting evidence from Mr Galainy. Even if there were any substance in the alleged concern about a risk of equipment going missing, it could be avoided by not leaving equipment on the Hamilton Street property overnight. It would be unacceptable if his alleged concerns were to effectively negate the orders.
In the circumstances, I do not accept that there has been, or is, any reasonable excuse or reason for the contempt.
Nevertheless, it would be appropriate for Council to communicate to Mr Biady that he should not do anything to interfere with the respondents' reasonable conduct in complying with the orders of the Court. I am not suggesting that he would interfere.
The contemnors were aware of the consequences to themselves of what they have done. They were served with a copy of the orders of 4 February 2014 bearing the prescribed endorsement under the Uniform Civil Procedure Rules 2005 r 40.7 stating consequences which may follow from a breach of the orders. Immediately after I delivered the contempt judgment in February 2015, I warned Mr Galainy, who was present in court, that failure to comply with the orders had potentially serious consequences for him and the company.
The potential environmental harm from continued storage of unsightly building waste materials on the Hamilton Street property, at least, is moderately serious. As I said in Blacktown City Council v The Penatrators Pty Limited (No 3) at [13]:
The material deposited on the Hamilton Street Land comprises building waste including building materials such as bricks and timber, carpet, garden waste, scrap metal, plastic, steel and mattresses. Although no material has been tested, it has also included material believed to be asbestos. The evidence before me includes the evidence that was before Pepper J on the interlocutory application, which her Honour summarised as follows:
(a) company searches indicate that Mr Galainy is the sole director of the company;
(b) the site is covered with stockpiles of construction and demolition waste, such as bricks, soil, concrete, timber, plastics, steel and other metals;
(c) approximately 70% of the site is covered with this waste, some of which is stockpiled underneath power lines and the height of which in places exceeds the fence surrounding the perimeter of the site;
(d) there is no equipment on the site that would indicate that the sorting and recycling of material, as claimed by Mr Galainy, is in fact taking place;
(e) some of the material stored on the site appears to be fibro and there is therefore a risk that asbestos is present within the accumulated waste that is not being appropriately managed;
(f) photographs taken during several inspections of the site indicate that:
(i) the quantity of waste being deposited on the site has increased dramatically during the past two weeks; and
(ii) vehicles registered to the company have been depositing excavation and building materials at the site;
(g) the site is burdened by an easement for an electricity transmission line vested in the New South Wales Electricity Transmission Authority (now formally "Transgrid"). Demolition material has been deposited in close proximity to these power lines and appears to be encroaching upon the easement;
...
(j) a search of the council records reveals no record of any development consent, including any complying development certificate, having been issued in relation to this site. ...these records indicate that there is no development application before the council for the current use of the site to receive and store waste;
(k) there is no protection for surrounding properties if fragments of the material stored on the site become airborne; and
(l) the council has received approximately 30 telephone calls from members of the community complaining about the activities on this site.
The contemnors have benefited from non-compliance with the orders to the extent that they have not been burdened by the cost of complying with them, and have benefited from the original statutory breaches by obtaining payments from customers from the unlawful use of the properties.
At the sentencing hearing, Mr Galainy apologised for not cleaning up the properties.
There is no evidence of prior convictions of the contemnors for offences of this character. However, there is evidence that Mr Galainy was convicted of and fined for the offence of intimidation under the Crimes (Domestic and Personal Violence) Act 2007 of Mr Glenn Apps, the Council officer carrying out his responsibilities of investigating the breaches by the company and Mr Galainy. An adverse inference may also be drawn concerning Mr Galainy's character from the transcript of evidence at an interlocutory hearing in the present proceedings before Pepper J on 3 October 2013 in relation to the Hamilton Street property where he denied from the bar table that either he or the company was responsible for bringing waste to that property. There is clear evidence from invoices from the company with an email address "galainy@gmail.com" invoicing for the receipt of waste.
There is a need for specific personal deterrence so that Mr Galainy understands the seriousness of failure to comply with Court orders. There is also a need for general deterrence to ensure the effective enforcement of planning laws and to protect the effective administration of justice by demonstrating that the Court's orders will be enforced. For otherwise serious and lasting damage to the fabric of the law may result.
There is no suggestion of any limited capacity of the contemnors to pay a fine. There are no filed financial records indicating what the assets or income of the company is. However, in September 2014 in Local Court proceedings, Mr Galainy indicated to the magistrate that the company employs 14 people and that he derives an income from its turnover of about $150,000 to $200,000 per annum. Also, Mr Galainy offered Mr Biady $150,000 to purchase the Hamilton Street property.
The applicant Council seeks the imposition of a fine and, in order to ensure that the orders are ultimately complied with, a further weekly or monthly fine so long as the orders are not complied with.
A fine and a daily fine so long as breach of a court order continued were upheld by the High Court in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46, 161 CLR 98, and have been imposed in a number of decisions of this Court. In Burwood Council v Ruan [2008] NSWLEC 167 I cited a number of decisions of this Court where fines of $50,000 were imposed for contempt concerning the use of land as a waste transfer station, a waste disposal business or for the stockpiling of tyres presenting a serious fire risk.
In my opinion, in addition to a fine, the contemnors should be ordered to pay the applicant Council's costs on an indemnity basis to mark the Court's condemnation of the breach of its orders and so as not to discourage the bringing of contempt proceedings by leaving the applicant out of pocket: Queanbeyan City Council v Sun (No 2) [2013] NSWLEC 64 195 LGERA 14 at [47]-[49].
Synthesising all the circumstances, I have reached the conclusion that in each proceeding the contemnors should be fined $50,000 payable by 31 May 2015, and thereafter fined $25,000 per month or part thereof so long as order 3 is not complied with; and, given that Mr Galainy is the alter ego of the company, that they should be jointly and severally liable for payment of the fines and costs.
[5]
ORDERS
The orders of the Court in each of the proceedings 40699 of 2013 and 40700 of 2013 are as follows:
In proceeding 40699 of 2013 -
1. The respondents are fined the sum of $50,000, to be paid to the Registrar of the Court by 31 May 2015.
2. If and so long as order 3 made by the Court on 4 February 2014 is not complied with after 31 May 2015, the respondents are fined the further sum of $25,000 per calendar month or part thereof commencing on 1 June 2015, to be paid to the Registrar of the Court by the end of the following calendar month.
3. The respondents are to pay the applicant's costs on an indemnity basis as agreed or assessed.
4. The respondents are jointly and severally liable for payment of the said fines and costs.
5. The exhibits are to be returned.
In proceeding 40700 of 2013 -
1. The respondents are fined the sum of $50,000, to be paid to the Registrar of the Court by 31 May 2015.
2. If and so long as order 3 made by the Court on 4 February 2014 is not complied with after 31 May 2015, the respondents are fined the further sum of $25,000 per calendar month or part thereof commencing on 1 June 2015, to be paid to the Registrar of the Court by the end of the following calendar month.
3. The respondents are to pay the applicant's costs on an indemnity basis as agreed or assessed.
4. The respondents are jointly and severally liable for payment of the said fines and costs.
5. The exhibits are to be returned.
[6]
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Decision last updated: 23 April 2015