Burwood Council v Ruan

Ainsworth v Hanrahan (1991) 25 NSWLR 155 Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 Attorney-General (NSW) v John Fairfax & Sons Ltd [1980] 1 NSWLR 362 Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited (1986) 161 CLR 98 Bankstown City Council v Attalah [2000] NSWLEC 133 Blue Mountains City Council v Fowler [2007] NSWLEC 476 Campbelltown City Council v Toth [2005] NSWLEC 186 EPA v Thaler [2005] NSWLEC 109 Environment Protection Authority v Ableway Waste Management Pty Limited [2005] NSWLEC 469 Environment Protection Authority v Waight [2003] NSWLEC 124 Fairclough & Sons v Manchester Ship Canal Co (1897) 41 Sol Jo 225 Greater Hume Shire Council v J & L Cauchi Civil Contracting Pty Ltd [2006] NSWLEC 738 Harkianakis v Skalkos (No 2) (unreported, NSWCA, 15/10/07) Lade & Co. Pty Limited v Black [2006] 2 Qd R 531 CASES CITED: M v Home Office [1994] 1 AC 377 Manly Council v Arslan [2005] NSWLEC 646 Newcastle City Council v Leaway Pty Limited [2005] NSWLEC 305 Owners Strata Plan 37762 v Pham (No 2) [2007] NSWLEC 306 Parramatta City Council v Roy D R Services Pty Limited [2005] NSWLEC 756 Pelechowski v The Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 Principal Registrar of Supreme Court of NSW v Jando (2001) 53 NSWLR 527 Principal Registrar of Supreme Court (NSW) v Tran (2006) 166 A Crim R 393 R v Razzak (2006) 166 A Crim R 132 R v Thomson; R v Houlton (2000) 49 NSWLR 383 Registrar of the Court of Appeal v Maniam [No 2] (1992) 26 NSWLR 309 South Sydney City Council v Sunny Soon Kiat Liu [1998] NSWLEC 298 Steiner Products Ltd v Willy Steiner Ltd [1966] 1 WLR 986; [1966] 2 All ER 387 Witham v Holloway (1995) 183 CLR 525 Wood v Staunton (No 5) (1996) 86 A Crim R 183

APPLICANT: Mr T To, barrister SOLICITORS Houston Dearn O'Connor LEGAL REPRESENTATIVES: RESPONDENTS: Mr M Gelbert, barrister SOLICITORS McGrath Dicembre & Company

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

EX TEMPORE JUDGMENT 1 HIS HONOUR: The two respondents pleaded guilty, after the commencement of the hearing, to one charge of contempt of court by disobeying a court order made by consent on 24 November 2006. The issue now is one of sentence. The circumstances of the contempt 2 The parties have agreed on the following facts: (1) On 7 January 2004 development consent number 264 of 2003 ( the consent ) was granted for the use of 1A Belmore Street, Burwood ( the premises ) as a therapeutic massage clinic;

(2) the consent was subject to a condition that prohibited the use of the premises as a brothel or for any sex related activity ( condition TP2 );

(3) at all material times the respondents have occupied and used the premises and have been in control of the business and activities conducted on the premises;

(4) on 19 October 2006 these proceedings were commenced seeking, inter alia, orders restraining the respondents from breaching condition TP2 of the consent;

(5) on 24 November 2006 the Court made an order, by consent, that: The Respondents Han Wen Ruan and Xiang Hua Zhao forthwith are restrained from breaching the provisions of Town Planning Condition 2 of Development Consent No. 264/2003 dated 7 January 2004 granted with respect to the premises 1A Belmore Street, Burwood "the subject premises").

(6) the Court's order given on 24 November 2006 was personally served on the respondents on 22 December 2006;

(7) on 15 January 2008, at about 6.35pm, a private investigator (Mr McCombe) engaged by the applicant attended the premises.

(8) Mr McCombe inquired about the nature of services offered at the premises and was informed of those services by an employee of the respondents, Eva, in the following terms: McCombe: What are the prices and what services do you provide? Eva: It is $35 for half an hour or $45 for an hour. This includes massage and hand relief

(9) McCombe gave to Eva the sum of $45, but left on a pretext before receiving any massage or hand relief;

(10) hand relief is a term meaning masturbation. On this occasion, a sexual service was offered to McCombe for reward.

(11) the offering of a sexual service as described above is contrary to condition TP2 of the Consent;

(12) the respondents express contrition and remorse for their breach of Order 1 given on 24 November 2006 by the entry of the plea. The applicant accepts that contrition and remorse are expressed;

(13) the respondents have ceased to use the premises pending the determination of an appeal to this Court for a development consent for the lawful use of the premises as a brothel.

(14) the respondents undertake to the applicant not to use the premises for any commercial purpose, including as a brothel or for any sex related activity, until the determination of an appeal to the Land and Environment Court in proceedings number 10330 of 2008 from the refusal of a development application of 29/2008;

(15) to the applicant's knowledge, the respondents have no prior convictions. 3 The respondents were put on notice of the possible serious consequences of disobedience because the order served on them was endorsed in accordance with r 40.6 of the Uniform Civil Procedure Rules 2005 (NSW) with a notice that it may be enforced by means of committal and sequestration of their property. In fact, neither of those punishments is sought. What is sought is a fine which is not referred to in that rule but which may be imposed under the separate rules governing contempt of court: Supreme Court Rules 1970 (NSW) Pt 55 r 13, incorporated by reference in Land and Environment Court Rules 2007 (NSW) Pt 3 r 9. 4 The consent order restrained the respondents from breaching condition TP2 of a development consent granted for the use of premises at 1A Belmore Street, Burwood as a therapeutic massage parlour. Condition TP2 prohibited the use of the premises as a brothel or for any sex related activity. The charge to which the respondents have pleaded guilty is that they breached condition TP2 and, therefore, the consent order.

5 The applicant submits that the consent order presupposes a use that was in breach of condition TP2 being a use as a brothel or for a sex related activity. Thus, it is submitted, the breach of the order to which the respondents have pleaded guilty constitutes a continuation of that use. The respondents submit that it would be dangerous to draw that inference and, alternatively, that it is not of assistance. I accept the applicant's submission. It is supported by the judgment of Preston CJ in Parramatta City Council v Roy D R Services Pty Limited [2005] NSWLEC 756 at [41]: The fact that these constitute only a few occasions, does not mean that there was not a use of the premises for a brothel. The Court orders that were made by consent on 12 October 2004 presupposed that there was a use of the premises for the purpose of a brothel. From that starting position, any further events where the premises are used in a way which permits sexual intercourse for reward to occur constitutes a continuation of the use for the purpose of a brothel.

Disobedience 6 Disobedience of a court order is a contempt of court. "There must, of course, be actual disobedience. There cannot be disobedience if the alleged contemnor does not know of the order which he or she is alleged to have breached. Nor could there be disobedience where the breach of the order occurs be reason of circumstances outside the control of the alleged contemnor": Lade & Co. Pty Limited v Black [2006] 2 Qd R 531 at [63] per Keane JA; applied in Greater Hume Shire Council v J & L Cauchi Civil Contracting Pty Ltd [2006] NSWLEC 738 at [32]-[33] by me; approved in Blue Mountains City Council v Fowler [2007] NSWLEC 476 at [15] (Jagot J).

7 There are three classes of contempt: technical, wilful and contumacious. Technical contempt is where disobedience of a court order (or undertaking to the court) is casual, accidental or unintentional. Wilful contempt is where the disobedience is more than that, but is not contumacious. Contumacious contempt is where there is a specific intention to disobey a court order or undertaking to the court, which evidences a conscious defiance of the court's authority. Although a contempt may be established, in the circumstances of the case the court may decide not to make any order. The element of intention is relevant to whether any order should be made and, if so, to punishment. These principles emerge, in my view, from the following authorities.

8 The phrase "casual, accidental or unintentional" was used by the High Court in Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited (1986) 161 CLR 98 at 107 (in the joint judgment of Gibbs CJ, Mason, Wilson and Deane JJ) and in Pelechowski v The Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 484 [147] fn [156] (by Kirby J). The phrase was originally coined in the slightly different conjunctive form "casual or accidental and unintentional" in Fairclough & Sons v Manchester Ship Canal Co (1897) 41 Sol Jo 225 (CA), which was quoted in Witham v Holloway (1995) 183 CLR 525 at 541 by McHugh J. The meaning of the word "casual" is unclear.

9 The three classes of contempt were recognised in the High Court by Kirby J in Pelechowski at 484-485 [147], by the NSW Court of Appeal in Registrar of the Court of Appeal v Maniam [No 2] (1992) 26 NSWLR 309 at 314-315 by Kirby P (Hope A-JA agreeing), and in Greater Hume Shire Council v J & L Cauchi Civil Contracting Pty Ltd [2006] NSWLEC 738 at [30] by me. In Pelechowski at 484-485 [147] Kirby J noted that technical contempts are sometimes called "casual, accidental or unintentional" contempts and said: The underlying purpose of the law on this form of contempt is to vindicate the due administration of justice. Contempts of the kind illustrated in this case may be technical, wilful but without a specific intent to defy the authority of the Court and contumacious. In the last category a serious act of deliberate defiance of judicial authority is evidenced. Conceding that such categories of contempt may sometimes overlap, in a case of a technical contempt, where the contemnor has offered an apology which the Court accepts, it will sometimes be sufficient to make a finding of contempt coupled with an order for the payment of costs. Where a wilful contempt is shown, in the sense of deliberate conduct but without specific intent to defy judicial authority, a finding of contempt and an order for the payment of costs may not be sufficient. In such a case, a fine (and sometimes more) may be needed to vindicate the authority of the court. But in a case of contumacious defiance of a court's orders and authority, it will frequently be appropriate for a custodial sentence to be imposed as a response to an apparent challenge to the authority of the law.

10 Earlier, in Maniam (above) at 314-315, Kirby P (Hope A-JA agreeing) made similar observations, noting that for technical contempts the court will usually accept an apology from the contemnor but may order the contemnor to pay costs. In Attorney-General (NSW) v John Fairfax & Sons Ltd [1980] 1 NSWLR 362 at 367 the Court (Street CJ, Hope and Reynolds JJA) stated: …[T]he development of a distinction between what Lord Diplock in Attorney-General v Times Newspapers Ltd called conduct which is within the general concept of 'contempt of court' (often called technical contempt ) and conduct included within that general concept, which a court regards as deserving of punishment in the particular circumstances of the case . This distinction was also referred to by Lord Reid: …there must be two questions; first, was there any contempt at all, and, secondly, was it sufficiently serious to require, or justify the court in making, an order against the respondent? … It would be wrong to assume that it follows that there are two forms of contempt, one being technical contempt and the other being actual contempt. Technical contempt is contempt. For a variety of reasons, although contempt is established, the court may decide not to exercise its summary jurisdiction . These words simply mean that in the circumstances of the case, the court may decide to take no action in the matter. In a long history of reported judgments, courts have expressed the reasons why they have decided to take action, or not to take action. Sometimes these reasons have tended to obscure whether the question being dealt with is what constitutes contempt, or what the court should do in the particular case. As Lord Reid pointed out in Times Newspapers Ltd case, it is confusing to import into the question whether there is any contempt at all, or into the definition of contempt, matters which are related to the course which the courts will take, contempt having been established. In considering the reported decisions, it is important to appreciate this possible source of confusion. They continued at 370:

If contempt has been established, the question arises whether the court should exercise its summary jurisdiction to punish. …Once contempt is established, the court has to decide what action it should take, in the light of all the circumstances of the particular case. It should not punish simply because contempt has been established; and it must be careful to satisfy itself that the circumstances require that it exercise its jurisdiction.

11 The relevance of intention to punishment was emphasised in Ainsworth v Hanrahan (1991) 25 NSWLR 155. The opponent was found to have committed a technical contempt, and to have acted without intention to interfere with the administration of justice. Kirby P (Samuels and Handley JJA agreeing) said at 168: "Intention is always relevant to punishment for contempt. Clearly, this is not a case where any punishment is called for". A declaration was made that a contempt had occurred but the claimant was deprived of any costs. Similarly, in M v Home Office [1994] 1 AC 377 at 426-427 Lord Woolf approved the dictum of Lord Oliver in Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 217-218: The intention with which the act was done will, of course, be of the highest relevance in the determination of the penalty (if any) to be imposed by the court, but the liability here is a strict one in the sense that all that requires to be proved is service of the order and the subsequent doing by the party bound of that which is prohibited.

12 In Mudginberri (above) the High Court (in the joint judgment of Gibbs CJ, Mason, Wilson and Deane JJ) appeared to suggest that no punishment should be imposed (at least by way of fine) where the contempt is merely technical. They held:

More recent decisions indicate that a fine may be imposed when the contempt consists of wilful disobedience to a court order in the sense that the disobedience is not casual, accidental or unintentional (at 106-107).

In more recent times a strong stream of English and Australian authority has emerged to support the imposition of fines for disobedience to orders in circumstances where the disobedience is wilful (at 109).

…[T]he reasons supporting the recent decisions are compelling and they should be accepted by this Court. It follows that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional (at 113). 13 McHugh J took the same view in Witham v Holloway (1995) 183 CLR 525 at 541: But this Court has now authoritatively determined that in some circumstances courts do have power to fine for civil contempt ( Mudginberri …). That power exists where the breach has not been the result of casual, or accidental and unintentional disobedience ( Fairclough v Manchester Ship Canal Co (1897) 41 Sol Jo 225). If, therefore, the breach has been wilful, it is no answer to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order ( Stancomb v Trowbridge Urban Council [1910] 2 Ch 190 at 194). Thus, if the act or omission that constitutes the breach was done wilfully, the contemnor is now liable to be fined even if the breach was not contumacious. (some footnotes omitted)

14 In Lade & Co. Pty Limited v Black [2006] 2 Qd R 531 at 548 [57], Keane J A held: Under the general law, apart from statute, it was established that contempt lies in disobedience of a court's order . References in the authorities to the requirement that conduct be contumacious were concerned with the power to fine a contemnor by way of punishment for a contempt; they were not concerned with establishing whether a contempt had occurred.

15 Alleged contemnors should not be punished for exercising their right to put the claimant to proof. In Harkianakis v Skalkos (No 2) (unreported, NSWCA, 15/10/07), Mason P (Beazley JA agreeing) held at 6: Great care must be taken to ensure that the opponents are not punished for having exercised their right to put the claimant to proof, even vigorously. The opponents' conduct in the present proceedings cannot be used to exacerbate the circumstances of the proven offence, although it would deprive them of the credit associated with a timely plea of guilty… [T]he proffered apology was properly to be taken into account as relevant on the issue of particular deterrence.

16 In the present case the contempt was wilful but without a specific intent to defy the authority of the Court. That is, it was not contumacious. There is no evidence that the act constituting breach of the court order, namely the offer of a sexual service, was beyond the respondents' control. Sentencing factors for contempt 17 The general approach to sentencing for contempt was stated by Kirby P in Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 at 314: A conviction of contempt of court is a conviction of an offence, criminal in nature. Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the courts according to law. Thus, in determining the punishment which is apt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way.

His Honour added at 316: It is appropriate to evaluate the opponent's conduct, relevant to punishment, by having regard to the objective seriousness of the offence found; the considerations relevant to his culpability; and the considerations relevant to demonstrating contrition or otherwise apt for evaluating his conduct.

18 In Wood v Staunton (No 5) (1996) 86 A Crim R 183 at 185 Dunford J set out ten factors to be considered in determining the appropriate punishment for contempt: 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. 19 Those factors were referred to in Owners Strata Plan 37762 v Pham (No 2) [2007] NSWLEC 306 at [20] by Pain J; Principal Registrar of Supreme Court of NSW v Jando (2001) 53 NSWLR 527 at 532-536 [17] - [35] by Studdert J; Principal Registrar of Supreme Court (NSW) v Tran (2006) 166 A Crim R 393 at [34] - [35] by Buddin J; and R v Razzak (2006) 166 A Crim R 132 [43] by Johnson J. In the present case factors 1, 2, 5, 7, 8, 9 and 10 are relevant. I shall now proceed to consider them.

20 The contempt in the present case was disobedience of a court order. It was serious, although not of the most serious kind. It was a wilful contempt, neither technical nor contumacious. Compared with cases where there has been multiple or serial offending or where there has been environmental harm or a threat to public safety or health, the matter is more towards the lower end of the scale. There is no evidence to suggest that the respondents did not also conduct lawful activities of therapeutic massage on the premises, in accordance with the development consent.

21 The respondents must be taken to have been aware of the serious consequences of the contempt. They were specifically put on notice of possible serious consequences in the form of imprisonment or sequestration arising from disobedience. They were legally represented at all material times.

22 There is no evidence as to the reason for the contempt. Although the person who engaged in the conduct was neither of the respondents but an employee, the respondents, in failing to comply with the court order, obtained a monetary benefit as a logical result of conducting a business from the premises. 23 Several matters are supportive of some degree of contrition. First, there is an expression of remorse and contrition through the entry of the guilty plea. This is entitled to full weight given that, to the applicant's knowledge, the respondents have no prior convictions. Secondly, use of the premises has ceased pending the obtaining of permission for lawful use of the premises as a brothel. An appeal from council refusal of a development application is pending in the Court. Thirdly, the respondents have given the applicant an undertaking not to use the premises for any commercial purpose until the appeal before the Court is determined. The undertaking includes the previous lawful operation of the therapeutic massage clinic.

24 On the evidence, nothing is known about the character of the respondents. However, to the applicant's knowledge they have no prior convictions.

25 A sufficiently serious punishment is required to serve as a specific deterrent to the respondents against re-offending as well as providing a warning to others. Section 21A of the Crimes (Sentencing Procedure) Act 1999 (NSW) sets out a list of aggravating factors and mitigating factors which a Court must take into account. Here, there are no aggravating circumstances as referred to in s 21A. As regards mitigating factors, the respondents have no record of previous convictions to the applicant's knowledge, they are unlikely to re-offend and there has been a plea of guilty. There is no evidence as to whether they are persons of good character and I am unable to pass judgment one way or the other in that respect. Comparable cases 26 The sentences in the cases referred to below concerning contempt by disobedience of court orders were cited by the applicant for the purpose of providing a comparative basis for arriving at an appropriate sentence in the present case. Comparisons should be made cautiously for all cases turn on their own facts to varying degrees. In Owners Strata Plan 37762 v Pham (No 2) [2007] NSWLEC 306 at [3] Pain J referred to a number of cases in this Court on sentencing for contempt where fines were enforced ranging from $7,500 to $50,000 for disobeying court orders.

27 The following cases of wilful contempt involved environmental harm or the risk of environmental harm, and tended to attract higher fines:

(a) In Newcastle City Council v Leaway Pty Limited [2005] NSWLEC 305 the contempt concerned use of land as a waste transfer station which caused offensive odours and noise to neighbours. A fine of $50,000 was imposed. (b) In EPA v Thaler [2005] NSWLEC 109 the contempt concerned the management of a waste disposal business dealing primarily in motor vehicle batteries. A fine of $50,000 was imposed although there was no actual environmental harm. (c) In Environment Protection Authority v Ableway Waste Management Pty Limited [2005] NSWLEC 469 the contempt concerned stockpiling of tyres in breach of orders, which presented a serious fire risk. A fine of $50,000 was considered appropriate but was reduced by 30 percent to take into account all mitigating factors. (d) In Environment Protection Authority v Waight [2003] NSWLEC 124 remediation orders designed to restore environmental damage caused by the commission of offences were disobeyed. A fine of $15,000 was imposed. However a factor taken into account was that fines of $150,000 had been imposed on the defendant in connection with the original offence.

28 The following were cases of wilful contempts involving departures from lawful use as permitted by development consents but not involving environmental harm, and tended to attract lower fines:

(a) In Manly Council v Arslan [2005] NSWLEC 646 a fine of $10,000 was imposed, which took into account mitigating circumstances. The Court indicated that otherwise the penalty could have been as high as $20,000. (b) In Campbelltown City Council v Toth [2005] NSWLEC 186 a fine of $7,500 was imposed. (c) In Parramatta City Council v Roy D R Services Pty Limited [2005] NSWLEC 756 the contempt was concerned with an order to cease the use of the premises as a brothel. Preston CJ found three instances of sexual intercourse for reward. A fine of $7,500 was imposed. There was taken into account that the contemnor had put in place arrangements to sell the business and transfer the lease although those arrangements had not been finalised for reasons not within the contemnor's control.

29 The following contempt cases concerned brothels, prostitution or sexual activity:

(a) In Bankstown City Council v Attalah [2000] NSWLEC 133 an owner was restrained from use or leasing use of premises for a brothel. The owner was personally involved in unlawful construction and in a brothel use on occasions. A fine of $25,000 was imposed. (b) In South Sydney City Council v Sunny Soon Kiat Liu [1998] NSWLEC 298 an owner was restrained from permitting a lessee to conduct that a brothel use. The Court acknowledged that the contemnor acted correctly when properly advised. A fine of $10,000 was imposed. Apportionment 30 The parties submit and I accept that the appropriate penalty is a fine.

31 The respondents submit that any fine should be apportioned equally between the respondents. The applicant contests apportionment. The respondents were each individually bound by the order. In my opinion, where individual respondents have been individually bound by an order and are in contempt by disobeying the order, the fine that would otherwise be attracted if there were only one respondent should not be apportioned between them. Amount of fine 32 The respondents submit that, in the circumstances, a fine in the order of $5,000 to $7,500 would be appropriate. The applicant submits that the appropriate fine is $15,000 having regard to the following factors:

(a) the respondents have been in control of the use of, and activities at, the premises at all material times; (b) the use has been for a commercial purpose and the specific breach involved monetary gain; (c) there is no evidence or reasons why the approved use could not be lawfully conducted; (d) the use constituting the contempt is one incident; (e) the respondents have belatedly sought development consent to authorise the brothel use and ceased use of the premises pending resolution of an appeal to this Court; (f) there is a need for an appropriately serious penalty to achieve general deterrence and to denounce the conduct in an emphatic way. 33 In accordance with the guideline judgment in R v Thomson; R v Houlton (2000) 49 NSWLR 383, the utilitarian value of a plea of guilty generally lies in the range of 10 to 25 percent. In the present case, the plea having been given at the latest opportunity, a discount in the order of only 10 percent is warranted. In my opinion, the appropriate fine for each respondent, after taking into account the circumstances and factors to which I have referred and the utilitarian value of the plea, is $10,000. Orders 34 The orders of the Court are as follows. The respondents are guilty of the offence charged. They are each fined the sum of $10,000. They must pay the applicant's costs.

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