Campbelltown City Council v Dunn and Anor

The factual background 9 I make the following findings of fact concerning the background to these proceedings. Indeed, none of these facts were really in dispute:

(1) Mrs Dunn was being trained in the art of traditional Chinese massage at a training college for the period from February 2001 until she gained her qualification in December 2001.

(2) Mr Dunn took possession of the premises at about the time he entered the lease, that is, in October 2001, and claimed that he and Mrs Dunn were using them for the purpose of conducting a business of providing traditional Chinese massage ("the business").

(3) A very short time after taking possession (a matter of days), Mr and Mrs Dunn decided to sell the business. Ms Zhang, a person who had been studying with Mrs Dunn at the training college and who had been working at the premises for Mr and Mrs Dunn, offered to buy the business for the asking price of $3000.

(4) A formal transfer of the business never took place, but various informal steps were taken. They were as follows: (a) On 2 November 2001, Mr Dunn and Ms Zhang met at the office of the owner's agent, Ms M Smith of M J Davis Real Estate, to arrange for a transfer of the lease. Ms Smith advised them that, before the lease could be transferred, Ms Zhang would need to establish her financial capacity to meet the rental payments by producing financial statements. No such financial statements were ever produced, and the lease was not formally transferred to Ms Zhang. However, according to Ms Smith, Mr Simitas knew that Ms Zhang had taken possession of the business and the premises, and was paying the rent under the lease as it fell due.

(b) According to Ms Smith, Ms Zhang paid the rent under the lease from December 2001 through to October 2002, when the lease expired.

(c) Some time in January 2002, Mr and Mrs Dunn signed an undated document purporting to attest to the sale of the business to Ms Zhang. They stated in this document that they had not been asked by the council to close the business down, nor had they received any correspondence with the council regarding the operation of the business.

(d) Ms Zhang paid the price of $3000 to Mrs Dunn at some time during December 2001.

(5) However, despite this informal sale of the business to Ms Zhang in October 2001, Mr Dunn continued to meet certain payments. He paid telephone charges until 6 January 2002 and electricity charges until 24 January 2002.

(6) Mr Dunn acknowledged that he remained liable under the lease as lessee until its expiry on 19 October 2002, but neither he nor Mrs Dunn attended at the premises after 25 December 2001.

(7) On 15 January 2002, the council served Mrs Dunn with notice of intention to issue an order under s 121B of the Environmental Planning and Assessment Act 1979 requiring her to cease using the premises for the purpose of massage or a brothel. On 8 February 2002, Mr Dunn's solicitors wrote to the council, denying that Ms Dunn was the lessee of the premises, denying that she had ever used the premises as a brothel, and notifying the council that the premises were now "subleased" .

(8) On 19 February 2002, the council gave a similar notice of intention to issue an order under s 121B, this time to Mr Dunn. He made no response, and, on 26 April 2002, the council served an order upon him requiring him to cease using the premises for the purposes of massage and/or a brothel by 21 May 2002. His solicitors wrote to the council on 1 May 2002, disputing the validity of the order, and stating that he could not comply with it as he had not occupied or used the premises since 15 January 2002.

(10) On 1 November 2002, the council commenced these proceedings.

The matters in contention 10 Against that background, it must at once be said that Mr Dunn has ceased using the premises for any purpose at the present time. The lease has expired, and neither he nor Mrs Dunn have any present connection with the premises. In the light of those facts, the Court could not make the declaration sought by the council, namely, that Mr Dunn is, presently, using the premises for the purposes of prostitution or a brothel. 11 However, at the end of its case, Mr Seton, appearing for the council, made a formal application for leave to amend the class 4 application by substituting the words "did use" for the words "are using" in its prayer for declaratory relief. That application was opposed by Mr Viney, appearing for Mr Dunn. In the interest of considering the real issue between the parties, I am prepared to grant leave for that amendment, and thereby proceed to deal with the only question which arises, namely, did Mr Dunn use the premises for the purposes or prostitution or a brothel in the period from October to January 2002. 12 I have referred to this period for the following reason. Mr and Mrs Dunn ceased using the premises for any purpose after January 2002. They ceased to occupy them physically after December 2002, but Mr Dunn met telephone and electricity charges until 24 January 2002. Nevertheless, after that time, Mr Dunn remained, at law, responsible as lessee under the lease, but that was his only connection with the premises. He was neither in occupation, nor did he pay the rent, nor did he pay the relevant outgoings. The inquiry must be directed, therefore, to the period during which Mr and Mrs Dunn were in the premises, either by way of physical occupation or paying the rent and relevant outgoings. That period is from October 2001 to January 2002, and I will refer to it as "the critical period". 13 Having regard to the critical period, the evidence adduced by Mr D A Rugless is irrelevant. He is a licensed private enquiry sub-agent. He deposed to the fact that he visited the premises on 30 June 2002, that is, after the critical period. Whatever occurred on that occasion, whether or not it was evidence of use of the premises for prostitution or a brothel, can have no relevance to the use of the premises by Mr Dunn. 14 Another matter which must be put aside is whether or not Mr and Mrs Dunn lawfully used the premises, during the critical period, for traditional Chinese massage. That use was prohibited, as I have set out in pars 6 - 8, being a use as "commercial premises". But the council has not sought declaratory or injunctive relief in relation to that use. It has confined its application for relief to use of the premises for the purposes of prostitution or a brothel. 15 I turn then to the evidence of the use of the premises during the critical period. 16 Mr and Mrs Dunn said they used the premises only for the purpose of traditional Chinese massage and not for the purposes of prostitution or a brothel. Mrs Dunn described traditional Chinese massage as involving "… a combination of Acupoint stimulation, soft tissue manipulation, tendon/joint alignment and life energy regulation through massage to restore balance and harmony of the body". She emphatically denied that traditional Chinese massage involved any services of a sexual nature, and she said that customers only removed clothing from the particular parts of the body being massaged. She said that no customer received massages from naked masseuses while she was running the business. 17 During the period between October 2001 and December 2001, Mr Dunn arranged for advertisements to be published in a newspaper. The advertisement noted the address of the premises, and gave a telephone number. It stated that the premises were "newly opened" and that the hours were 10am to 8 pm. It contained these words: "Attractive Asian Ladies. Sensual Body Relaxation". In giving oral evidence, each of Mr Dunn and Mrs Dunn stated that no reference to "massage" was included in the advertisement, because such a reference was not permitted by the newspaper unless Mrs Dunn had formally qualified as a masseuse. 18 Mrs Dunn deposed to the fact of having arranged for the premises to be furnished, including providing air conditioning, fans and heaters, six desks, two massage tables, 20 towels and one double bed. She stated that the double bed was located in a back room so that she and Ms Zhang could sit upon it and watch television when the business was not busy. 19 Mr Harris gave evidence of having inspected the premises on three occasions, being 28 November 2001, on 31 January 2002 and on 30 May 2002. I put aside his evidence of the last two visits as being outside the critical period. At his visit on 28 November 2001, he was accompanied by another council officer, Mr D Hogan. Mr Harris said that, at the premises, he observed two rooms, each containing a bed, a large number of tissue boxes, bottles of baby oil and towels. In cross-examination, he conceded that the beds that he saw were narrower than single beds, and he agreed that they may have been massage tables. He met Mrs Dunn on that occasion at the premises, and she showed him a driver's licence in her name. 20 Mr Seton asked the Court to infer that Mr Dunn used the premises for the purposes of prostitution or a brothel during the critical period. He submitted that the inference could be drawn from five pieces of evidence - first, the advertisements placed by Mr Dunn, which contained no reference to "massage" but did use the word "sensual"; secondly, the tissues and oil observed on the premises by Mr Harris; thirdly, that the lease was never formally assigned; fourthly, that Mr Dunn acquiesced in the use of the premises since he did not appeal the s 121B order nor make enquiries as to what was happening at the premises after he ceased to occupy them; and, fifthly, there was a double bed on the premises. 21 Mr Seton also submitted that, despite the fact that Mr Dunn is not presently connected with the premises, there is utility in granting the declaratory and injunctive relief sought by the council because, if the premises were used for the purposes of prostitution or a brothel, that is not merely a technical breach of the EP&A Act, and it is one that the council, in carrying out its public duties, should prevent. 22 In Polnibs Pty Ltd v Bankstown City Council [1997] NSWLEC 55, Sheahan J collected a number of authorities which dealt with the meaning of "prostitution". In particular, his Honour referred to passages from the judgment of Doyle CJ in the Supreme Court of South Australia in Begley v SA Police (No 2) (unreported, 24 October 1996). In that case, Doyle CJ said that "… the essence of prostitution is the offering of the body for hire for the gratification or satisfaction of sexual appetites". Doyle CJ held that the nude Thai massage described in the case before the court was an act of prostitution by reason of the combination of a masseuse engaging in physical contact with the client, that physical contact being a significant part of the whole process, and through that physical contact and the manner in which it is performed providing sexual gratification to the customer. 23 The evidence in this case is far from what is described in Begley v SA Police and the other authorities to which Sheahan J referred in Polnibs v Bankstown City Council. There is no evidence from which to safely draw the inference that Mr Dunn used the premises during the critical period for the purposes of prostitution or a brothel. There is no evidence of any sexual act or sexual gratification, nor is there any evidence from which any such act might be inferred. The use of the word "sensual" in the advertisements, and the tissues and oil on the premises, do not provide any foundation for drawing such an inference. Those matters might equally apply to a massage. Mrs Dunn's explanation for the presence of the double bed is fanciful, but in itself the mere presence of a double bed does not inevitably lead to an inference of prostitution. Mr Dunn's somewhat casual attitude to the lack of formal assignment of the lease and the council's s 121B orders is strange for a man who, in cross examination, professed himself to be a businessman, but it is not a basis for drawing the inference sought by the council. 24 For these reasons, I am not satisfied, on the balance of probabilities, that Mr Dunn used the premises during the critical period for the purposes of prostitution or a brothel. The council has not discharged the onus of proving its case, and accordingly, the class 4 application must be dismissed.

Orders 25 In accordance with the foregoing, I make the following formal orders:

(2) The council must pay the costs of the first respondent, Ian Dunn, as agreed or as assessed.

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