Great Lakes Council v Spalding

Land and Environment Court (NSW)|2011-12-20|Before: Preston CJ

Judgment 1Mr Michael Spalding owns a quarter acre block of land at 38 Cove Avenue, Bundabah, on the northern shore of Port Stephens. It is formally described as Lot 19, Section 4, Deposited Plan 10915. Mr Spalding has used a shed previously erected for the purpose of a wholesale nursery as a dwelling house without obtaining development consent contrary to s 76A(1)(a) of the Environmental Planning and Assessment Act 1979 ( "the EPA Act" ), and has thereby committed an offence against s 125(1) of the EPA Act . Mr Spalding has pleaded guilty to the offence. A sentence hearing has been held. 2The facts relevant to the sentence to be imposed are to be found from a statement of agreed facts, together with attached documents (Exhibit A); parts of the affidavit of Mr Nicholas Green, a Council building inspector (at paragraphs 1, 28 and 29 except for sub-para (o)); a report of Mr William Barlin, a regional electrical inspector with Essential Energy, which was attached to the statement of agreed facts; an exclusive management agency agreement (residential) between Mr Spalding and a real estate agent, Century 21 Coastal Properties (Exhibit B); an extract from the zoning map under the Great Lakes Council Local Environmental Plan 1996 showing the zoning of Mr Spalding's various properties at Bundabah (Exhibit C); recent for sale advertisements of Lot 19 and an adjoining Lot, Lot 18, which Mr Spalding owns (Exhibit D); and an exchange of emails in March 2010 between Mr Spalding and Mr Green (Exhibit E). Mr Spalding also gave evidence. He tendered a statement responding to the Council's evidence and explaining his financial position (Exhibit 1) and he gave oral evidence. He tendered a sales inspection report for another property he has put on the market, Lot 14 (Exhibit 2). 3The Court's task is now to determine and to impose the appropriate sentence for the offence.

Sentencing considerations 34The sentence I impose should reflect both the objective gravity of the offence and the personal or subjective circumstances of Mr Spalding. I am required to consider, and have considered, the factors of relevance in s 21A of the Crimes (Sentencing Procedure) Act 1999 as well as general principles of sentencing. The purposes for which I may impose a sentence are those set out in s 3A of the Crimes (Sentencing Procedure) Act . Paragraphs (a), (b), (e), (f) and (g) are relevant and are purposes of sentencing for which I impose the sentence in this case.

Nature of offence and maximum penalty 35The system of planning and development control established by the EPA Act depends on persons taking steps to obey the law by ascertaining when development consent is required and then obtaining the development consent before carrying out the development. Mr Spalding's actions in carrying out development without first applying for and obtaining consent undermines the system of planning and development control. The actions circumvented the integrity of the system and the process of careful, expert consideration that occurs on the lodgment of a development application, including consideration of the issues of the permissibility of the development having regard to the minimum lot size development standard, the compliance with the relevant standards under the Building Code of Australia, and the health and safety of the occupants and other entrants. 36The maximum penalty for the commission of the offence is $1.1 million. The maximum penalty is the public expression of the New South Wales Parliament of the seriousness of the offence. There is, however, a broad spectrum of conduct that can give rise to an offence under s 125(1) of the EPA Act .

Objective harmfulness of the offence 37The commission of the offence has not caused actual harm to the environment or to human health and safety. However, during the six months period whilst the shed was being used as a dwelling house, it posed some potential risk to human health and safety by reason of the non-compliances with the Building Code of Australia, including inadequate protection from bushfire, and the risk of electric shock and electrocution by reason of the deficiencies in the electrical work. 38I accept the evidence of Mr Green, the Council's building inspector, in his affidavit and oral evidence and Mr Barlin, Essential Energy's regional electrical inspector, in his report, as to the deficiencies and potential risks posed by the deficiencies in the building and electrical work of the shed. 39If Mr Spalding had complied with the law and sought development consent, these potential risks could have been considered and addressed, including by refusing consent or by granting consent but subject to conditions which prevented or mitigated to an acceptable level any potential risks and adverse impacts. 40Those potential risks existed whilst the shed was occupied as a dwelling house. After that residential occupation ceased, so did the potential risks for residential occupants. The shed has been approved as fit for the purpose of a shelter and facilities for workers for the approved wholesale nursery. 41In the circumstances, I do not find that the potential risk of harm was substantial and hence an aggravating factor for the purposes of s 21A(2)(g) of the Crimes (Sentencing Procedure) Act .

State of mind and reasons for offending 42The offence against s 125(1) of the EPA Act is a strict liability offence and hence the state of mind of the offender in committing the offence is not an element of the offence. Nevertheless, the offender's state of mind in committing the offence, and the reasons for committing the offence, can increase the seriousness of the offence. A strict liability offence that is committed intentionally, negligently or recklessly will be objectively more serious than one not so committed. A failure to heed advice or warnings, including from regulatory authorities, will be an aggravating feature. Similarly, an offence committed to make a profit, or to save incurring an expense, or to avoid the cost of obtaining a statutory permission such as a development consent, increases the seriousness of an offence. Offenders should not profit from crime. 43I find that Mr Spalding knew, at all material times, that development consent was required to use the shed as a dwelling house and that he had not obtained consent for the erection or use of the shed as a dwelling house. Mr Spalding was well aware of these facts from his dealings with the Council since 2002. Mr Spalding knew of the Council's concern that he would fit the shed out and use it as a dwelling house. All of the Council's actions in issuing orders, requiring assurances and imposing conditions on various approvals were intended to prevent the modification and use of the shed as a dwelling house. Mr Spalding repeatedly assured the Council that he knew use of the shed as a dwelling house would not be legal and that he did not intend to do so, but rather would only use it as a shelter and to provide facilities for workers for his proposed horticultural activities. 44In his written statement tendered at the sentence hearing, Mr Spalding said that he assumed that the occupation certificate he obtained in 2010 allowed the shed to be occupied and that the only way for an occupation to be carried out was with a lease. He said that he believed this was allowable and that is why he signed the residential tenancy agreement to let the premises to a tenant. He asserted that he had made an honest and reasonable mistake (as an explanation for his conduct but not as a defence). 45In his oral evidence, however, Mr Spalding modified this statement, upon being shown in cross-examination the letters and emails exchanged over the years. He now accepts that he knew but still he maintains that at the time in early 2011 he made a mistake and thought that what he was doing was allowable. 46I do not accept Mr Spalding's evidence that he made a mistake about the lawfulness of allowing the use of the shed as a residence. 47First, it is inconsistent with the history of Mr Spalding's dealings and communications with the Council. He knew well that he did not have a development consent either to erect or to use the shed as a dwelling house. The two development consents he had been granted, the first in 2003 for the conduct of a wholesale nursery on the land and the use of the shed he had already erected illegally for that purpose and the second in 2005 for the addition of sanitation facilities to the shed, did not authorise the use of the shed for the purpose of a dwelling house. 48Secondly, Mr Spalding had been warned by the Council that occupation of the shed as a dwelling house would be illegal. The Council had repeatedly raised concerns about the shed being lived in as a residence from 2002 onwards. The Council sought and Mr Spalding gave assurances that the shed would not be used as a residence. The Council had issued notices of intention to issue orders under the EPA Act to demolish the shed on the grounds that it had been erected without development consent. Mr Spalding and his solicitor made submissions to allow the shed to remain. Critical to their arguments was that the shed was to be used only as a workers' shed for the purpose of the horticultural activities proposed for the land. Mr Spalding sought and obtained a building certificate for the illegally erected shed. The Council had deferred issuing various consents and certificates until Mr Spalding confirmed he would not use the shed as a dwelling house. The most recently expressed concern and assurance was in March 2010 before the occupation certificate on which Mr Spalding relied was issued. Mr Spalding knew and sought to allay the Council's concern that the shed was being and would be used for habitation as a residence. 49Thirdly, the occupation certificate is clear on its face. The building to which the occupation certificate applies is stated to be only, "addition of sanitation facilities to shed", not the whole shed. The "building use" is also defined in the occupation certificate only as, "addition of sanitation facilities to shed". 50The occupation certificate followed a development consent and a construction certificate for exactly the same use - addition of sanitation facilities to shed. Prior to the development consent for that use being granted, Mr Spalding had been required by the Council to provide information on his reasoning for acquiring the addition of sanitation facilities to the shed. Mr Spalding expressly stated they were for the purpose of providing facilities for workers for his proposed horticultural activities on the land. Hence, the only occupation permitted by the occupation certificate was by the workers using the shed and its facilities whilst working on the land. 51Fourthly, Mr Spalding elsewhere in his written statement tendered at the hearing, in explanation of why the shed did not comply with the Building Code of Australia for a dwelling, said that "the shed was never intended to be used as a dwelling". Mr Spalding knew that the shed had not been approved or built as a dwelling house. 52Fifthly, Mr Spalding did not make a mistake in entering the various agreements to let the land and shed for occupation as a dwelling house. He knew that both the Exclusive Management Agency Agreement (Residential) with the real estate agent and the subsequent residential tenancy agreement with the tenant concerned the letting of his land and shed as a residence. The documents are plain on their face. Clause 29 of the Exclusive Management Agency Agreement (Residential) is a warranty by Mr Spalding that there is no legal impediment to occupation of the premises as a residence. Yet Mr Spalding admitted that there was an impediment in that there was no development consent for occupation as a residence. Mr Spalding's evidence is that he wanted to rent the property to someone to ensure the upkeep of the property and prevent vandalism until it was sold. Mr Spalding received rent from the residential tenant. 53Mr Spalding, therefore, made a deliberate decision to modify the shed to adapt it for use as a dwelling house and to let it to a tenant at commercial rent for use as a residence, without applying for and obtaining development consent, in the knowledge that to do so was illegal and despite warnings from the Council. 54Mr Spalding also intended to and did profit from his illegal conduct by charging and receiving rent of $200 per week for up to six months, a total of up to around $5,000. 55The commission of the offence intentionally and for a profit increases the objective seriousness of the offence.

Lack of prior criminality 56Mr Spalding does not have any prior convictions for any environmental offences.

Plea of guilty 57Mr Spalding has pleaded guilty at the first return of the summons before the Court. He has agreed to an early sentence hearing. His early plea of guilty should attract the maximum discount of 25 per cent for the utilitarian value of a plea of guilty.

Assistance to authorities 58Mr Spalding has cooperated with the Council upon being informed by the Council of the illegality and afterwards. Upon the Council investigating the offence, Mr Spalding took action to have the tenant move elsewhere. This took some time due to the unavailability of suitable alternative accommodation for the tenant. However, Mr Spalding did endeavour to rectify the situation promptly. Mr Spalding pleaded guilty at the first opportunity. He cooperated with the prosecutor for an expedited sentence hearing. He has agreed on a statement of facts. He has agreed to pay the Council's legal costs.

Contrition and remorse 59Mr Spalding's actions after the Council investigated the offence and after it brought proceedings, including his plea of guilty and assistance to the Council, are consistent with Mr Spalding being contrite and remorseful. 60Mr Spalding's remorse for his actions, acceptance of responsibility for his actions, and the cessation of use of the shed as a dwelling house, make it less likely that Mr Spalding will re-offend in the future.

Capacity to pay fines 61Mr Spalding said in his written statement tendered at the sentence hearing that his financial circumstances at present are limited. He is unemployed. He was made redundant in October 2002 for recurring physical injury. He said he has survived off the redundancy payment since that time. He has used his redundancy payment and his superannuation to try to establish a wholesale plant nursery at Bundabah. He purchased and prepared lots adjoining and in the vicinity of the land. He built an office and machinery shed on other land and the workers' shelter on the subject land. He prepared a road suitable for the traffic of trucks. He has fenced and installed irrigation systems. He has suffered damage and loss by vandalism and break-ins. 62Mr Spalding said he also has suffered loss by devaluation and has been forced to sell most of his assets by reason of the ongoing global financial crisis. Mr Spalding said he has sold some of the lots and transferred others to his former partner in partial satisfaction of debts he owes the partner (around $400,000). 63Mr Spalding has put the subject land, Lot 19, and the adjoining Lot, Lot 18, on the market for sale. He is asking $180,000 for both but he is not hopeful of attracting that price. He has also placed a nearby Lot, Lot 14, on the market in the hope that it will be sold and allow him to pay the fine and associated legal costs ordered by the Court. The real estate agent in a Sales Inspection Report and Exclusive Sales Agreement (Residential) offered an opinion that the current reasonable selling price of that property is $30,000 to $35,000. 64Mr Spalding says he anticipates being eligible for a disability pension in 2014 by reason of severe arthritis in his ankles and limited use of his right shoulder. 65Apart from these general statements, Mr Spalding has not tendered any financial accounts or statements, proving his assets and liabilities, income or expenditure, or bank balance. 66Mr Spalding submits his limited financial capacity to pay, together with the fact that he will be ordered to pay the Council's costs of the proceedings, should be taken into account in fixing the amount of any fine under s 6 of the Fines Act 1996. 67Section 6 of the Fines Act requires the Court, in fixing the amount of any fine, to consider the financial means of the offender. The procedure is for the Court, once it determines that a fine should be imposed, to determine the appropriate amount by reference to the gravity of the offence for which it is imposed. If the Court is satisfied that the offender would be unable to pay the amount determined, the Court may reduce the amount of the fine to take account of the offender's means and impecuniosity.

Appropriate penalty 68The sentence of the Court needs to publicly denounce Mr Spalding's conduct and to ensure he is held accountable for his actions and is adequately punished. The sentence must deter Mr Spalding from being tempted to use the shed again as a dwelling house either by renting it to others or using it himself, without first applying for and obtaining development consent for that purpose. Most importantly, the sentence needs to operate as a deterrent to others who might be tempted to similarly carry out development without development consent, including building then using sheds as a dwelling house without consent. 69Having regard to the purposes of sentencing, I find it is appropriate in the circumstances of this case to convict Mr Spalding of the offence as charged and to impose a fine, being the prescribed penalty for the offence. 70The amount of the fine should be determined by an instinctive synthesis of all of the relevant objective and subjective circumstances of the offence and the offender. 71Accordingly, I take into account the objective circumstances of the offence I have discussed earlier, as mitigated by the subjective circumstances of Mr Spalding that I have also discussed. I consider the appropriate amount of the fine should be $20,000. This amount should be discounted by 25 per cent to take account of the utilitarian value of Mr Spalding's early plea of guilty. This results in a fine of $15,000. 72Having assessed the appropriate amount of the fine, it is necessary to assess whether Mr Spalding has the financial means to pay a fine in that amount. Having regard to the information available concerning Mr Spalding's assets and income, I consider Mr Spalding would be unable to pay a fine in the amount of $15,000 as well as an order for costs which the Council estimated might be in the range of $35,000 to $40,000. In these circumstances, I consider I ought to reduce the amount of the fine to $7,500. 73The fine is required to be paid within 28 days of the sentence being imposed (s 7 of the Fines Act ). However, the Registrar of the Court may allow further time for the payment of the fine (s 10 of the Fines Act ). 74I consider it is appropriate for there to be an order under s 257B of the Criminal Procedure Act 1986 that Mr Spalding pay the prosecutor's costs. The prosecutor ought to be compensated for the costs of bringing the prosecution which is in the public interest. The amount of the costs will need to be agreed or assessed.

Orders 75The Court orders: 1.Mr Spalding is convicted of the offence against s 125(1) of the Environmental Planning and Assessment Act 1979 as charged. 2.Mr Spalding is fined the sum of $7,500. 3.Pursuant to s 257B of the Criminal Procedure Act 1986 , Mr Spalding is to pay the prosecutor's costs of the proceedings as agreed or assessed. 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: 09 January 2012

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