Council of the City of Sydney v The Owners Strata Plan No 18820

Background

1. The three-storey brick building the subject of these proceedings only had one exit from the first and second floors, and that was via the timber and concrete stairs. That is a historical anomaly which resulted from the building having been completed in the 1920s.
2. The specific works required pursuant to the fire safety order issued by Council were listed under five sub‑headings being: 1. the safety of persons in the event of a fire; 2. prevention of fire; 3. detection of fire; 4. the prevention of the spread of fire; and 5. the suppression of fire.
3. Each of those headings listed specific works ('terms') that were required to be undertaken and certifications obtained. Each of the terms was to be completed within three time frames referred to as "stage 1", "stage 2", and "stage 3" respectively.
4. The fire safety order was accompanied by specific "Reasons" ('Reasons') for giving the fire safety order which stated, inter alia: 1. the building is considered to be in an unsafe fire safety condition, lacking, among other things, proper provision for the detection, controlling and extinguishment of fire and adequate provision for escape in the event of an emergency; 2. certain unit entry doors within the Central Perk Lodge were of non fire‑resisting construction and did not have self‑closing devices in the event of a fire, which could cause or lead to the early and rapid spread of smoke throughout the public corridors and other fire exits; 3. the building is not constructed of fire-resistant materials that would otherwise maintain structural stability during fire; 4. the building is not provided with building elements which would avoid the spread of fire between buildings on adjoining allotments; 5. the building has such pipes and miscellaneous services rising through the building which penetrate fire-resisting building elements and are not adequately sealed to prevent or resist the vertical or horizontal spread of fire; and 6. the building is a three-storey building, having timber joist floors which have little resistance to the vertical spread of fire.
5. As a result of the respondent's non-compliance with the fire safety order, Class 4 proceedings were commenced on 2 December 2015. The Summons sought declaratory and consequential relief, in particular: 1. a declaration that the respondent has failed to comply with the terms of the fire safety order, which was described as the s 121B order; 2. a declaration that this failure to comply with the s 121B order is a breach of the Act; 3. that the respondent be ordered to comply with the s 121B Notice by certain dates; and 4. costs.
6. The proceedings did not proceed to contested hearing as the Court Orders were made by consent by Pain J on 5 February 2016. Mr Eric Foust, an employee of Kooper and Levi Strata Management Pty Ltd and strata manager of the premises, represented the respondent before Pain J. Council was represented by Mr Hawkes, a solicitor employed by Council. A copy of the transcript of 5 February 2016 is before the Court as Annexure D to the affidavit of Philip Kooper, sworn 24 May 2017. The transcript records that on 5 February 2016 Mr Hawkes informed her Honour that orders had been agreed between the parties, and indicated to her Honour, "It is a fire safety order where we have essentially agreed a further period for compliance... Essentially it is to do with a private hotel/backpackers on the first floor of a building with a sole wooden staircase to get out, and there are works which the body corporate has agreed it will do within a certain period." Her Honour noted Mr Foust's appearance, and stated: "Mr Foust, I should say to you in making these orders if they are breached, then you are potentially subject to contempt proceedings in the Court. So they are absolutely binding on you and the strata management body. So are you confident that you can meet these time frames?" Mr Foust says, "I believe so, your Honour." Her Honour then states, "I just need to stress to you the importance of complying with the order." To which Mr Foust responded, "Yes."
7. A sealed copy of the Court Orders was served on the respondent at the premises on 22 February 2016, and copies were provided to Mr Foust on the day of the hearing.
8. The Court Orders required identified works to be done in the "stages" referred to in the fire safety order, with a revised timetable for compliance as follows: 1. stage 1 works be completed by 30 March 2016 ('Order 1'); 2. stage 2 works to be completed by 30 May 2016 ('Order 2'); 3. stage 3 works to be completed by 30 July 2016 ('Order 3').
9. On 31 March 2016, an inspection of the premises by Council was carried out to ascertain whether Order 1 had been complied with. It had not, and following this inspection, details of the "deficiencies" (being non-compliances) were brought to the attention of Mr Foust by email.
10. Order 2 required that the stage 2 works under the fire safety order be completed by 30 May 2016. On 31 May, a further inspection of the premises was carried out by Council to ascertain whether Order 1 and Order 2 had been complied with. This inspection revealed that 12 specific terms had not been complied with including such matters as the display of fire safety notices; the construction of a fire‑resistant electrical switchboard; and certification of the existing fire monitoring system. Further, there had been no maintenance and certification of the existing fire doors, or installation of smoke seals. After the inspection on 31 May, further correspondence demanding compliance with the Court Orders was sent to Mr Foust.
11. By 30 July 2016, the Court Orders required that all the terms of the fire safety order were to have been completed. On 1 August 2016 an inspection was carried out at the premises to ascertain the level of compliance. This inspection revealed that there were 20 terms of the fire safety order outstanding.
12. On 12 December 2016, a further inspection of the premises was carried out to ascertain whether the Court Orders had been complied with. Again, the Court Orders had not been complied with, and there remained 17 terms of the fire safety order outstanding.
13. After that inspection, on 14 December 2016, a Notice of Motion was filed seeking the following orders: 1. that the respondent, The Owners of Strata Plan No 18820, be found guilty of contempt of court for failing to comply with orders made by the Court of 5 February 2016, in accordance with the Statement of Charge filed; 2. that The Owners of Strata Plan No 18820, be dealt with according to law for their contempt by way of fine, sequestration of property or both; 3. that The Owners of Strata Plan No 18820, pay the costs of and incidental to this Motion on an indemnity basis; and 4. such other orders as this honourable Court deems fit.
14. The Notice of Motion was accompanied by a Statement of Charge, which set out details of the charge in relation to the contempt.
15. The respondent entered a plea of guilty on 18 February 2017 and the matter was set down for sentence hearing before me on 7 June 2017. I note that this was the fourth time the Notice of Motion had been before the Court. The plea was entered 21 months after the fire safety order was originally issued and the evidence makes it clear that on that date, the works had still not been completed.
16. Although it was anticipated that the outstanding works would have been completed by the time of the hearing on 7 June 2017, they were not. Accordingly, I indicated to the parties that I remained concerned that the contempt had not been purged and as a result, I stood the matter over to 5 July 2017 to allow the respondent time to satisfy the fire safety order, and the parties' time to demonstrate that the contempt had been purged.
17. When the matter came before me again on 5 July 2017 Council tendered further evidence being the affidavit of Eyman Balta, senior building surveyor of Council, affirmed 3 July 2017. Mr Balta's further evidence was that his inspection undertaken on 3 July 2017 revealed that all the outstanding requirements under the Court Orders had been completed.
18. I have had the benefit of detailed written and oral submissions. I briefly summarise the submissions.

Council's position

1. Council's submissions dealt with the nature of the contempt, the distinction between civil and criminal contempt, and the fact that contempt falls within three classes: technical, wilful, and/or contumacious. Council properly makes no submission that the contempt in the present matter is contumacious.
2. Council emphasised that the Central Perk Lodge accommodation contained 18 rooms on the upper floors, with one timber staircase, and that these stairs are the only way for those sleeping or occupying the upper floors to exit the building.
3. Council also submits that one of the lots below the accommodation is a restaurant, and that this may be a source of ignition in the building.
4. Council does not argue that it was a deliberate act of defiance, but emphasises that there was a real risk to occupants staying in the building, and that there was an element, to use Council's submission, of "slackness" in taking the Court Orders seriously.
5. Council disputed the respondent's submissions regarding Mr Foust's authority to agree to the Court Orders. Rather, Council submitted that, given the plea of guilty, the Statement of Charge, and the evidence in relation to the communication of the Court Orders, the Court would accept that the respondent was made aware of, and was in fact well aware of, its obligations under the Court Orders.
6. Council also made submissions in relation to the respondent's apology and expression of contrition, and accepts that, as at today's date, the contempt has been purged.

Respondent's position

1. Ms Byrne, counsel for the respondent, raised a concern relating to whether or not Mr Foust had authority to bind the respondent in entering into the Court Orders. As noted earlier, given the plea of guilty and the communications between the parties, I find that the respondent was made aware of the Court Orders.
2. Ms Byrne emphasised that her instructions were that the respondent expressed remorse that its conduct caused Council to approach the Court to achieve full compliance with the original fire safety order, and submitted that the respondent expressed deep regret. Ms Byrne pointed to the affidavit of Mr Tan Thieu (Matthew) Tram affirmed on 6 June 2017 as indicative of the respondent's remorse. Mr Tram, the secretary and shareholder of the company that owns Lot 3, which comprises the Central Perk Lodge, apologised to the Court (and to Council) for failing promptly to attend to the Court Orders. He deposed that he now realises how serious the orders are, and how important fire safety provisions are, and that he "…did not intend to put the safety of any person at risk".
3. In relation to the nature of the contempt, the respondent submitted that the contempt was casual, accidental, or unintentional, and not, in fact, wilful. Ms Byrne submitted that the respondent's conduct was certainly not deliberate and that there is no evidence that the respondent, to use her words, chose to "ignore" the Court Orders. Ms Byrne also drew attention to commentary in some earlier judgments where, even where the Court found that wilful conduct had occurred, because the respondent ultimately complied with the earlier court orders and entered a plea of guilty, the Court considered this sufficient and no fine was imposed.
4. While Ms Byrne submits that there was no deliberate disobedience in the present proceedings, Ms Byrne notes at par 14 of her written submissions, "the respondent does not state that it was not aware of the fire order". I consider that is a proper and reasonable concession.
5. Ms Byrne also notes that the respondent entered a plea at what she says is the earliest opportunity.
6. I accept that the plea was relatively early, at least soon after the respondent was legally represented.

Consideration

1. This is a case of civil contempt. Apart from procedural differences, the distinction between civil and criminal contempt is largely illusory because in both cases the charge has to be proved beyond reasonable doubt and the usual outcome is punishment: see Waverley Council v Tovir Investments Pty Ltd and Rappaport (No 3) [2013] NSWLEC 35 at [23] (Biscoe J). However, disobedience with regard to a Court Order made in civil proceedings may become a criminal contempt if, per Mosman Municipal Council v Kelly (No 3) [2009] NSWLEC 92; (2009) 167 LGERA 91 at [58] (Biscoe J): 1. it is alleged (and proven) that the contempt was contumacious, insofar as it was wilfully and obstinately disobedient; or 2. the contempt proceedings only serve a punitive purpose insofar as they are a punishment for a past breach, and do not serve a remedial or coercive purpose.
2. Contempts fall within one of three classes, technical, wilful or contumacious. Contempts falling within the class referred to as "technical" are said to refer to breaches that were casual, accidental or unintentional.
3. Wilful contempt is where the disobedience is more than casual, accidental or unintentional, 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. In Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 at 315, Kirby P said: This class of contempt (contumacious) is reserved to cases where the behaviour of the contemnor has been shown to be aimed at the integrity of the courts and designed to degrade the administration of justice, as distinguished from a simple interference with property rights manifested by a court order. (Citations omitted)
4. Council does not submit that the contempt in this case is contumacious and the facts do not disclose an element of deliberate defiance of the Court Orders. Instead, Council submits, and I accept, that the contempt is wilful in the sense that, while it did not reveal a specific intent to defy the authority of the Court the respondent's conduct was not casual, accidental or unintentional.
5. I note that in relation to a protracted delay in attending to orders of the Court, Pain J in Fairfield City Council v Adams (No 2) [2010] NSWLEC 45, dealt with a contempt of orders made by consent in the Court's Class 4 jurisdiction requiring the removal of fill placed on land without consent. In determining the class of contempt, her Honour found that efforts were made intermittently over a lengthy period of time to comply with the orders. Her Honour found that, whilst there were efforts made, there was a period of inactivity, which was behaviour that her Honour found was best characterised as "wilful".
6. In Council of the City of Sydney v Owners Corporation - Strata Plan 18945 [2011] NSWLEC 79, Pepper J also dealt with a contempt of orders made by consent in the Court's Class 4 jurisdiction. In that case, the Class 4 proceedings were commenced seeking civil enforcement resulting from the respondent's failure to comply with a fire safety order, made under s121B of the EPA Act. The circumstances of that case resulted in a contempt occurring because there was a delay in the commencement of works due to the need for the body corporate to pass a resolution to approve a quotation. Council in that case conceded that the respondent was in the hands of its various contractors, and stated that the respondent had been naïve as to the time required to complete the works. Justice Pepper found that, in spite of a delay in the passing of the resolution to authorise the expenditure of works, the overwhelming delay was caused by the contractors. Her Honour found that the contempt was wilful because the respondent deliberately did not comply with the Court order, but did so without any intention to defy the Court's authority. Her Honour went onto say at [34]: ... I have no difficulty in characterising the contempt as sufficiently wilful that the imposition of a fine would, in my opinion, be within the power of the Court.
7. In the present matter, I find that the contempt was wilful in the sense that while it did not reveal a specific intent to defy the authority of the Court, the conduct of the respondent, was not casual, accidental, or unintentional.

Sentencing principles

1. The relevant sentencing principles in civil contempt cases are well known. The underlying purpose of the Court's power to punish for contempt is to protect the effective administration of justice by demonstrating that the Court's order will be enforced; see Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; [1986] HCA 46 at 106 (Gibbs CJ, Mason, Wilson and Deane JJ, with Brennan J agreeing on this point).
2. The following ten factors relevant to sentencing for contempt were identified by Dunford J in Wood v Staunton (No 5) (1996) 86 A Crim R 183 at 185 ('Wood v Staunton'): 1. the seriousness of the contempt proved; 2. whether the contemnor was aware of the consequences to himself or herself of what he or she 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.
3. These factors have been applied by this Court in a number of decisions, including Hutley v Cosco [2016] NSWLEC 15 at [32] (Pain J) ('Hutley'); Burwood Council v Wanless [2014] NSWLEC 20 at [19] (Preston CJ of LEC); Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) [2009] NSWLEC 210 at [92] (Pepper J) ('Brown Brothers'); Burwood Council v Ruan [2008] NSWLEC 167 at [18] (Biscoe J) ('Ruan'); Canterbury City Council v Ali Ahmed [2016] NSWLEC 160 at [17] (Robson J). These principles are also broadly consistent with those outlined by Tobias JA in Matthews v Australian Securities and Investments Commission [2009] NSWCA 155 at [129].
4. Of the factors identified in Wood v Staunton Council submits, and I accept, that (1), (2), (7), (8) and (9) are of some relevance in these proceedings.
5. Whilst there is fertile ground for debate as to whether the Crimes (Sentencing Procedure) Act 1999 (NSW) ('Sentencing Act') applies to civil contempt proceedings (see Menzies v Paccar Financial Pty Ltd (2016) 93 NSWLR 88; [2016] NSWCA 280 at [15] (Meagher JA)), it has been applied generally (see Hutley at [32] (Pain J); Re Mycorp Pty Ltd [2014] NSWSC 1180 at [4] (Black J)) and by analogy (see Queanbeyan City Council v Sun (No 2) [2013] NSWLEC 64; (2013) 195 LGERA 14 at [17] (Biscoe J) ('Queanbeyan'); Canterbury City Council v Ali Ahmed [2016] NSWLEC 160 at [19] (Robson J); Cumberland Council v Khoury [2017] NSWLEC 14; (2017) 222 LGERA 78 at [42] (Moore J)). As such, I consider that the Sentencing Act at least provides both guidelines and a framework to the Court when it is considering civil contempt.
6. The purposes for which a court may impose a sentence on an offender are listed in s 3A of the Sentencing Act and include the following which are relevant in the present case: (a) to ensure that the offender is adequately punished for the offence, … (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, …
7. There is clearly some overlap between the factors identified by Dunford J as relevant in Wood v Staunton and the relevant factors set out in s 3A of the Sentencing Act. Insofar as they are relevant, I consider them below.

Seriousness of the contempt

1. The contempt relates to orders made by the Court more than 17 months ago in relation to fire safety. The premises contains a private hotel with 18 rooms on the upper floors, with a timber stair leading from the first floor to the second floor and concrete stairs from the ground floor to the first floor. As noted earlier, this is the only egress for those sleeping on the upper floors. Additionally, on the ground floor are two retail lots, one of which is a Thai restaurant which, as submitted by Council, is a possible source of fire.
2. Whilst Council does not seek to argue that there was any deliberate act of defiance on the part of the respondent in not complying with the Court Orders, the failure to comply resulted in continuing unsafe conditions in the building, a matter I find to be of serious concern.
3. Given the above, I find that the contempt was of moderate seriousness.

Awareness of the consequences and actual consequences

1. Whilst there is some conjecture as to the authority of Mr Foust as strata manager to represent the respondent in Court, he was authorised to affix the seal to documents and the affixing of the seal of the Owners' Corporation to the orders handed up to Pain J on 5 February 2016 is taken to have been done with the authority of the Owners' Corporation.
2. Although not seriously suggested otherwise, I am satisfied that the respondent was aware of the Court Orders and, importantly, as time passed, was aware of the deficiencies in compliance with the Court Orders. Further, in any event, the warning given to Mr Foust by Pain J on 5 February 2016 ought properly to be considered to be a warning given to the respondent regarding the consequences of non-compliance.

Contrition and apology

1. The respondent engaged legal representation on 31 January 2017 and a plea of guilty was entered on 18 February 2017. Since that time, works have been undertaken to complete a number of the outstanding works required by the Court Orders. The entering of the plea is considered in the respondent's favour as some expression of contrition.
2. I accept that the respondent expresses remorse that Council needed to approach the Court to achieve compliance with the fire safety order, and that the respondent deeply regrets that the subsequent Court Orders were not fully complied with in the time set by the Court.

Character and antecedents

1. There is no evidence before the Court as to the character of the respondent, and I do not draw any adverse inference.

Deterrence

1. General deterrence is a significant consideration in the imposition of a penalty for contempt: Waverley Council v Tovir Investments Pty Ltd (No 4) [2013] NSWLEC 88 at [32] (Biscoe J) ('Tovir (No 4)'); Brown Brothers at [117] (Pepper J); Mosman Municipal Council v Kelly (No 6) [2010] NSWLEC 20 at [16] (Biscoe J) ('Kelly (No 6)'). There is a particular need for general deterrence in relation to failure to comply with orders of this Court.
2. Council submitted that there is also a need for specific deterrence in relation to the respondent. Whilst I consider it appropriate to take into account the improved compliance on the part of the respondent in the period since it received more considered legal advice earlier this year, I find that there is at least some need for specific deterrence.
3. Given that the Court Orders related to fire safety concerns in an older building, especially one that was used for accommodation and had only a single egress for occupants of the upper floors, and the fact that works were not undertaken in earnest until recently, any penalty imposed by the Court should properly operate to provide specific as well as general deterrence for non-compliance with the orders of the Court.

Other considerations

1. I find that the requirements in the Court Orders to provide certainty in relation to fire safety matters is an important requirement and should not be considered to be of a minor nature.

Consistency in sentencing

1. The existence of a general pattern of sentencing by the courts for offences of contempt akin to these proceedings is a relevant consideration. However, each case is different and a sentence in one case does not demonstrate the limits of a sentencing judge's discretion (Kelly (No 6) at [17] (Biscoe J).
2. In Tovir (No 4), Biscoe J referred at [34] to the caution to be exercised in comparing sentences passed in different factual contexts. His Honour made similar comments in Queanbeyan at [38]-[41], where his Honour noted that the range of penalties imposed by this Court in cases of wilful contempt have generally been in the range of $7,500 to $50,000 with higher penalties (which were defined as being over $20,000) being imposed in cases involving environmental harm or the risk of environmental harm. These figures were sourced from Ruan at [26]-[28], and so related to matters before the Court prior to 2008.
3. Other authorities raised by the parties included Fairfield City Council v Adams (No 2) [2010] NSWLEC 45; and South Sydney City Council v Hexiva Pty Ltd [2002] NSWLEC 174; Sydney City Council v Li (No 2) [2012] NSWLEC 123; and Council of the City of Sydney v Owners Corporation - Strata Plan 18945 [2011] NSWLEC 79. I have considered these cases, in particular the last three cases where the Court, although finding contempt, did not impose a fine.
4. In the circumstances I consider that the range of penalties summarised by Biscoe J in the Queanbeyan and Ruan case to be appropriate.

Capacity to pay

1. Although there are no submissions on this point, I note that "fine" is defined in s 4(1)(a) of the Fines Act 1996 (NSW)('Fines Act') as being any monetary penalty imposed by a court for contempt of court. As such I find that the Fines Act applies. Section 6 requires the Court to consider information regarding the means of the accused to pay, and provides: 6 Consideration of accused's means to pay In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount.
2. There is no evidence in relation to capacity to pay and as such I find that there is no information before the Court which allows me to make any finding that the respondent lacks the means to pay a substantial fine pursuant to s 6 of the Fines Act.
3. Taking all relevant matters into account, I consider it appropriate to fine the respondent $15,000.
4. Council seeks its costs for these proceedings, and the amount of costs is agreed at $8,650.

Orders

1. The Orders of the Court are as follows: 1. The respondent, The Owners Strata Plan No 18820, is fined $15,000. 2. The respondent is to pay the applicant's costs of the contempt proceedings agreed at $8,650.

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: 11 September 2017