Holroyd City Council v Khoury

The Statutory Framework under the EPA Act

1. The Land and Environment Court ("the Court") has the power to make utility orders pursuant to s 121ZS(3) of the EPA Act. The section is directed to a failure to comply with an order to cease the use of premises for specified classes of residential premises, as provided for in s 121ZS(1)(b). The subject premises are currently zoned R2, pursuant to the Holroyd Local Environment Plan 2013 ("the LEP").
2. Section 121ZS(10) provides that a utility order must not be made for a premises used for residential purposes unless the regulations authorise such an order. Clause 285(2 of the Environmental Planning and Assessment Regulation 2000 prescribes "boarding house" as an authorised use for the purposes of s 121ZS(10) of the EPA Act.
3. "Boarding house" is defined in the LEP as: boarding house means a building that: (a) is wholly or partly let in lodgings, and (b) provides lodgers with a principal place of residence for 3 months or more, and (c) may have shared facilities, such as a communal living room, bathroom, kitchen or laundry, and (d) has rooms, some or all of which may have private kitchen and bathroom facilities, that accommodate one or more lodgers, but does not include backpackers' accommodation, a group home, hotel or motel accommodation, seniors housing or a serviced apartment.
4. Under s 121ZS(4) the Court must not make a utility order unless satisfied that the failure has caused or is likely to cause a significant adverse impact on health, safety or public amenity. The Council is seeking to establish that there is a significant fire risk at the premises resulting from their use as a boarding house.
5. Section 121ZS(7) provides that the utilities order must not be made unless at least seven days has been given to a provider of water, electricity or gas, and any owner or occupier of the premises.

Chronology

1. On 13 April 2003 a development application was received for a duplex development. Development Consent was granted on 22 October 2003 for "the erection of a part single and part two-storey attached dual occupancy" development.
2. On 5 April 2013 the Council received a complaint that the use of the premises posed a fire and safety risk.
3. On 7 May 2013 the Council issued a Notice of Intention to give an order in respect to the unauthorised use of the premises.
4. On 23 May 2013 the Council issued an order pursuant to s 121B of the EPA Act ("the s 121B Order").
5. The Respondent appealed against the Order to the Court (10472 of 2013) ("the Appeal proceedings").
6. The Appeal proceedings were decided on 11 December 2013 (Khoury v Holroyd City Council [2013] NSWLEC 1236) with the appeal dismissed and an order made restraining the use of the premises as a boarding house.
7. The Council served a copy of the sealed orders on the Respondent.
8. Between February 2014 and October 2014 the Council attempted to gain entry into the building.
9. On 18 November 2014 the Council commenced class 4 proceedings (40945 of 2014) against the Respondent ("the Class 4 proceedings").
10. On 12 February 2015 the Court made a decision in the class 4 proceedings (Holroyd City Council v Khoury [2015] NSWLEC 17) that the premises continued to be used unlawfully for a boarding house.

The Use continues and poses a risk

1. On 23 October 2015 Mr Ferguson posted a notice of entry to the Respondent.
2. On 11 November 2015 the Council obtained a search warrant of the premises from the Local Court.
3. On 12 November 2015 the Council officers and Mr Nathan Halstead in the company of Police Officers inspected the premises. The inspection was recorded by a Council officer operating a digital video camera.
4. The premises have been divided into 13 separate units, spread over three levels.
5. Mr Ferguson observed in Unit 1 that there was a separate fridge, cupboard, kitchen sink, bathroom and living area with a television. Mr Ferguson also observed that that room contained clothing and food stuffs.
6. Mr Ferguson observed that this unit contained two bedrooms, a lounge/dining, bathroom and kitchen. Mr Ferguson had a conversation with two unrelated occupants of Unit 2. One person stated that: 1. she had lived there for two weeks and that she was homeless; 2. she knew of another person living upstairs and another one next door; 3. they paid "Rob" each Tuesday; and 4. they had found out about the premises on "Gumtree".
7. Mr Ferguson then proceeded upstairs and observed that there was a separate room containing two bedrooms, a lounge/dining area, bathroom and kitchen, as well as food stuffs and a fridge. At that time, Mr Ferguson had a conversation with another occupant, who stated: 1. he had lived there for about 3 months with his brother; 2. he had seen about 4 people living in the premises; and 3. that he paid the owner "Robert something".
8. Mr Ferguson made the further observation that there was a separate lounge/dining, bathroom and kitchenette in Unit 9, and that there was food stuffs, a fridge, and it appeared that somebody was sleeping in that room. Mr Ferguson made the same observation about another area, Unit 8, and similarly Unit 7.
9. Mr Ferguson then proceeded to another area, Unit 6, where he had a conversation with an occupier known to him. The occupant stated that he had lived there for about six months, and found out about the premises on the internet through "Gumtree". He also said that there was a common washing machine.
10. Mr Ferguson has conducted a search of the Council records and there is no approval to use the premises as a boarding house.
11. In the opinion of Mr Ferguson, based on his inspection, there are 10 separate units within the premises, nine of which were being occupied at the time of his inspection.
12. Mr Ferguson also formed the view that at the time of his inspection, the premises had an identical configuration to that which was observed on 30 May 2014, and that in his opinion the s 121B order has not been complied with.
13. Mr Halstead identifies each separate unit as being a "sole occupancy unit". Mr Halstead also observed that since his last inspection the building remains not being used in accordance with the approved use or in accordance with the approved plan.
14. Mr Halstead formed the opinion that the current use "is placing people at serious risk of illness or injury" and such use of the premises "should be immediately stopped as the potential fire and life safety risks are very high".

The Respondent is aware of the s 121B order and these proceedings

1. The Respondent Mr Khoury can be assumed to be aware of the s 121B order issued by the Council because: 1. Mr Khoury lodged an appeal against such an order and appeared in the Appeal proceedings; and 2. the orders made by the Court in the appeal proceedings were served upon Mr Khoury.
2. Mr Khoury is aware of the Council's intention to proceed to a hearing of these orders. The Council on 21 January 2016 made an application for substituted service (in doing so the Council relied upon the following affidavit evidence: affidavit of Peter Prineas of 29 December 2015; affidavit of Peter Mercouris 5 January 2016; affidavit of Brad Ferguson 12 January 2016). On 21 January 2016 the Court made substituted service orders under r 10.14 of the Uniform Civil Procedure Rules 2005 (NSW).
3. The Applicant attended to orders 1(a) and 1(d) made on 21 January 2016. The affidavit of Malcom Colin Grace sworn 27 January 2016 attests to the actions. Mr Grace placed a sealed envelope at the doorstep in compliance with order 1(a) of 21 January 2016, and affixed a notice to the front door in compliance in order 1(d) of 21 January 2016. Mr Grace forwarded a text message to Mr Khoury and he received the reply, "Your lying".
4. The Applicant did not fully satisfy orders 1(b) and 1(c). Further orders for substituted service were made on 29 January 2016. The affidavit of Mr Angelo Bilias 5 February 2016 attests to the actions in respect to these later orders.
5. On 23 February 2016 the matter was before the Court and the Court made further orders for bringing the proceedings to the notice of Mr Khoury. The affidavit of Mr Peter Mercouris 9 March 2016 attests to the actions in respect to these later orders.

Council has established basis for utility order to be made

1. There is more than sufficient evidence in the affidavit of Mr Ferguson and the report of Mr Halstead summarised above to establish that the existing use of the premises is as a boarding house. There are rooms being rented which are separate let-in lodgings with private kitchen and bathroom. There was evidence of three-month up to six-month stay periods from at least two occupants and there is at least one identifiable communal area. This evidence satisfies the statutory definition in the LEP that the premises are being used as a boarding house in contravention of the s 121B order confirmed by the Court on 13 May 2013.
2. The extent of the ongoing unlawful use since at least the Court order made in May 2013 in the Class 1 appeal proceedings was confirmed in the Class 4 proceedings in February 2015.
3. The significant fire safety risk identified by Mr Halstead justifies the granting of a utility order in the terms sought by the Council. Subsection (4) of s 121ZS is satisfied. Subsection 7 provides that at least seven days' notice needs to be given to a utility provider. The affidavit of Angelo Bilias sworn 9 March 2016 and his oral evidence attests to the actions taken in compliance with this provision. Sufficient notice has also been given to the owner and Respondent Mr Khoury and the occupants as identified in the affidavits of Mr Grace sworn 22 February 2016 (Exhibit L) and Mr Mercouris sworn 9 March 2016 (Exhibit J).
4. I also agree with the submission of the Council that without the coercive nature of a utility order, the Court could not be confident that the Respondent will comply with the s 121B order and cease the unlawful boarding-house use. There is no evidence to support such a conclusion. Mr Khoury has not attended at any stage of these proceedings to put matters in his favour to the Court.

Costs

1. The applicant Council seeks its costs of this application and for the reasons it has given I consider such an order ought be made.
2. In Class 1 proceedings, the costs discretion must be exercised in accordance with r 3.7 of the Land and Environment Court Rules 2007. Rule 3.7(2) provides that "[t]he Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances".
3. The Respondent has failed to comply with the s 121B order over a lengthy period despite having full knowledge of such orders. The Respondent's conduct prior to the commencement of proceedings left the Applicant with little choice but to take legal action. His actions or lack thereof invited the proceedings.
4. Secondly, the Respondent has not taken any active part in these proceedings. Indeed in answer to at least one text message the Respondent replied "Your Lying". Such conduct during the proceedings is unreasonable.
5. It is fair and reasonable that the Respondent pay the Applicants costs as agreed or assessed.

Orders

1. The Court orders: 1. Pursuant to s 121ZS of the Environmental Planning and Assessment Act 1979 Sydney Water and Endeavour Energy must cease to provide water and electricity services to 36 Francis Street, Wentworthville for a period of three months from 14 days from the date of this order. 2. Service of this order on Sydney Water and Endeavour Energy shall be effected by sending a copy of this order by email and registered post. 3. The Respondent must pay the Applicants costs as agreed or assessed. 4. Exhibits may be returned. 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: 18 March 2016