Lane Cove Council v Wu

Land and Environment Court (NSW)|2010-10-28|Before: Sheahan J, Mr P, Mr J

Introduction 1His Honour: The defendant, a licensed builder known as Pei Long ('Michael') Wu, has pleaded guilty to a charge under s 125 of the Environmental Planning and Assessment Act 1979 (' EPA Act ') that on or about 25 February 2009 he, as the holder of an owner-builder licence, carried out development otherwise than in accordance with a granted consent, contrary to s 76A (1)(b) of that Act. 2The relevant " development " involved building parts of a replacement residence on land comprising Lot A in Deposited Plan 33031, 3 McMahons Road, Longueville and previously known as 17 Northwood Road, Northwood ('the property'). Both the prosecutor and the defendant tendered photographs of the property during the course of the sentencing hearing ( Exhibits C3 and W1 ). 3That property is registered in Mr Wu's name, and falls within the Council's Residential 2(a2) zone under Lane Cove Local Environmental Plan 1987. A dwelling house is permitted only with development consent, and the relevant consent ( Exhibit C2 , tab A) allowed " demolition of existing dwelling and erection of a new two storey dwelling, with associated garage, and an in-ground swimming pool ". 4The maximum penalty is a fine of $1.1 million, pursuant to ss 76A(1)(a) and 125(1) of the EPA Act . 5The summons in these class 5 proceedings was issued on 4 June 2010, and the defendant's plea of guilty was entered at the first directions hearing, on 16 July 2010. The penalty hearing date (28 October 2010) was fixed on 6 August 2010. 6Between 21 and 24 September 2010, Commissioner Morris heard two relevant class 1 appeals ( Vigor Master Pty Ltd v Lane Cove Council; Jiang v Lane Cove Council [2010] NSWLEC 1267 - 'the 2010 class 1 proceedings'), one commenced on 13 May 2010, and the other on 7 June 2010, arising out of attempts by the defendant and others to regularise what has been done to the property.

Agreed and Other Facts 7The parties agreed upon a comprehensive statement of agreed facts ('SAF' - Exhibit C1 , with exhibits in Exhibit C2 ), which will remain in the court file, but the defendant gave and led other evidence which bears upon the court's consideration of appropriate penalty to impose. 8Following the grant of development consent on 8 March 2007 ( Exhibit C2 , tab A), a construction certificate issued on 1 August 2007 ( Exhibit C2 , tab B). Several modification proposals were considered by Council (SAF 7), and some class 1 proceedings were commenced in this court in 2007, but discontinued shortly after (SAF 8(a) and (b)). 9Construction on the development commenced around August 2007 and continued until December 2008. 10In February 2009, the appointed private certifier expressed some concerns regarding the development, and departures from the consent. The certifier threatened Mr Wu with an order under s 121 of the EPA Act ( Exhibit C2 , tab D). Mr Wu told Council officers who visited the site that he had departed from the approved plans because "the soil on site was not stable and more excavation was carried out" (T28.10.10, p6, L4). The only objecting neighbour also raised (in about June 2009) some privacy issues concerning the property's new rooftop terrace. Various other concerns emerged during Council's investigation (see generally SAF 10-20, and Exhibit C3 ). 11The prosecutor and defendant have agreed upon, and included in the SAF (at 9), a table listing some 21 contraventions of, or departures from, what the various approvals allowed to be built. Such a list was also before the court in the 2010 class 1 proceedings. 12Both those 2010 class 1 appeals were dismissed by Morris C in her judgment dated 6 October 2010 ([6] above). The learned Commissioner's judgment conveniently summarised the 21 contraventions/departures (at [41]) as follows: "The excavation of the site to provide an additional floor level within the building to be used for habitable purposes. The physical changes made to the building which increase its bulk, scale and appearance, in particular the increased floor space associated with the changes to the entry foyer, dining area and children's playground area on the ground floor level and the areas adjacent to the TV room, void and bedroom 3 on the first floor level and the connection of that level with a stairway to the roof structure. The change of the pool from an outdoor pool with grassed surrounds to an indoor pool. The change of use, rebuilding and enlargement of the garage from a water tank/detention area to car-parking and the attachment of that area to the main building. The expansive, hard-surfaced terrace area above the garage and around the indoor pool, which replace a grassed yard area." 13Council appears to accept that some of the 21 items taken individually and separately may have merit, but has adhered to the view that their cumulative impact is too significant to be accepted or approved. (See Council officers' markings on plans in Exhibit C2 , tab K, and the discussion of floor space ratio, the roof, excavation, and pool issues, in the Commissioner's judgment at [45]-[49]). The deletion of the offending roof structure was required by a clear condition of the original consent. 14The 2010 class 1 proceedings turned to a large extent on an argument about the question of " substantially the same development " (at [24]), which Morris C answered in the negative. However, the evidence before her highlighted some environmental negatives of the project " as built " - excessive FSR meaning excessive bulk and scale, inadequate setbacks, impact on a neighbouring building of heritage significance, inappropriate features clearly visible, and excessive excavation and hardstand. 15Morris C concluded that the development " as built " (including unlawful work) is not environmentally acceptable and appropriate for the site, and refused consent. She also refused a building certificate, as she found it " likely that the council could decide to order the building to be demolished, altered, added to or rebuilt " (see [54]). She considered that the dwelling could be made to comply ([59]), but some demolition will be required (T28.10.10, p6, L45). 16No appeal having been lodged against the Commissioner's decision, negotiations commenced on appropriate remediation works (see Exhibit W2 ).

Was harm done? 17In his written submissions on sentence (par 22), Mr Clay, counsel for the prosecutor, says that, apart from the harm done to the regulatory system in terms of erosion of the statutory planning controls, this project has caused " real environmental harm " by: "(a) in general carrying out works which are not environmentally acceptable; (b) exposing the neighbours to construction work, its effect and outcome which are not environmentally acceptable; (c) exposing neighbours to risk of damage to their homes by virtue of the excavation without proper assessment prior thereto; (d) the waste of human and natural resources by the 'doing and undoing' of the work." 18In his opening submissions, Mr Clay elaborated, stating that the development is " unacceptable in its present form and that of itself has an impact and I would call that environmental harm ..." (T28.10.10, p10, L42).

Who is really at fault? 19As is clear from the names on the class 1 judgment, one appeal before Morris C was brought by Vigor Master Pty Ltd ('Vigor Master'), and the other by Hogarth Jiang. 20Mr Wu's life partner for 16 years, Xue Qin ('Cissy') Wang, from whom he is now estranged, but with whom he has two children, aged 11 and 13, has been a director of Vigor Master since it commenced operation in July 2001 ( Exhibit W3 ). Hogarth Jiang is a "project manager " with that company ( Exhibit W2 ). 21Mr Wu uses a business card ( Exhibit C4 ) on which he is described as the 'Managing Director' of Vigor Master. However, in his affidavit of 27 October 2010, he explains (in par 2) that he was the " nominated licensed builder for the company's license ", but was never a shareholder in the company, nor a director or office bearer. When cross-examined on this issue, Mr Wu explained that he was not aware of the legal effect of portraying himself as a managing director until he sought legal advice in relation to this prosecution (T28.10.10, pp18-20). 22He works from time to time for the company as a general, site or project manager. Vigor Master has not been busy since 2005 and, as Mr Wu is paid on commission, he has gained no income from it in that time. Between April 2007 and July 2008 he worked in Shanghai, Melbourne and Western Australia for a company trading in wool, such that he was out of Sydney more than 50% of the time. He says (par 6 of his affidavit) that he has had no income since July 2008. He says he is living on his loan facility (T28.10.10, pp29-30), but the court has before it no evidence, beyond this assertion, regarding his means to pay an appropriate penalty. 23In early 2007, Mr Wu's relationship with Ms Wang deteriorated, and he decided to sell the property for whatever he could get for it. She opposed the sale, and wanted to build a (new) house on the property, and live there with their children. No sale eventuated and they separated, with Mr Wu agreeing to transfer the title to Ms Wang, and to let her use their loan facility to fund the construction of the house. Mr Wu, under cross-examination, stated that this agreement to transfer the title was detailed in a document, which at the time of the hearing was at his residence. 24He offered to assist her with the project, but deposes (par 8) that he " did not get involved much ... from the stage of Construction Certificate " (1 August 2007). Ms Wang employed a " site manager " (apparently Hogarth Jiang) from July 2007, when construction commenced. Mr Wu was not on site " at any time that excavation was taking place " (par 9). He did, however, become involved by telephone when so requested by Ms Wang, mainly regarding the excavation. An important fax addressed to him at Vigor Master on 23 August 2007 did not reach him, as he was not working there at the time. 25When construction was taking place between July 2007 and November 2008, Mr Wu says he visited the site " about 4 times " (par 11), the first visit occurring on the afternoon of 31 December 2007, in company with Ms Wang. The excavation had been completed by that point, and he says that he suggested to Ms Wang that she explore obtaining a modification approval to use the underground area as habitable space (par 12). 26On a visit in December 2008 (see par 14), he noticed other departures from the approved plan, and learned that no s 96 modification application had been submitted in relation to any of the departures, and that no inspections had been arranged with the certifier. He deposes (in par 14) that: " This would have not happened if I had been managing the construction of the house ". He established personal contact with Council in January 2009, and, at Council's suggestion, also contacted the certifier. After the certifier inspected the site the Council inspectors commenced their investigations and inspections (see pars 15ff). 27In his affidavit, Mr Wu takes some issue with some of the matters in the SAF reporting his conversations with Council officer Sam Mitry during the Council's inspections (see also T28.10.10, p27-28). 28In pars 23ff of his affidavit, Mr Wu says: " 23. I was both the owner and the owner builder of the property. It was my responsibility to supervise the construction and I did not. I left supervision to Cissy because I had known and worked with her for over 12 years and she was very experienced in development, but with hindsight her experience was not first-hand experience as the builder. I should have ceased to be the owner-builder for the project. 24. I have not benefited financially from the unlawful work. My agreement with Cissy remains to transfer title to the property to her, but after the process of dealing with the Council has been concluded. 25. Cissy had intended to move into the house. While the house has remained incomplete, she has had to find alternative accommodation in Belrose, which is a long distance from the school of the children and that has caused much inconvenience to both Cissy and the children. 26. In the meantime the loan for the property is in my name and I continue to make payments on the mortgage. I have received no income since July 2008, but I make loan repayments using part of the loan itself. 27. My reputation accumulated from my previous work has been seriously damaged by this prosecution. This matter has been an embarrassment to me. Affected by this matter, it would be unlikely that I could get more work coming in the future. I have never been convicted of an offence and can assure the Court that I will not come before the Court again. I apologise to the Court and to the Council for what I have done." 29In cross-examination, Mr Wu admitted that he knew that the work undertaken beyond the consent was unlawful unless the consent had been modified pursuant to s 96 of the EPA Act (T28.10.10, p25, LL19-21). He also admits that he was aware, as early as December 2007, of the works being beyond the terms of the granted consent, but did not inform Council of the irregularities until at least 12 months later (T28.10.10, pp25-26).

The Defendant's Expert Evidence 30The court admitted, subject to relevance, fresh affidavits sworn in these class 5 proceedings by Mr Wu's consultant planner, Tony Moody, and his consultant geotechnical engineer, Linton Speechley. Their credentials were not disputed. Both had been retained by the interests associated with Mr Wu and this project for the 2010 class 1 proceedings before Commissioner Morris. Both maintain the professional opinions they expressed in those proceedings. 31Mr Speechley did not see the site prior to the demolition of the original dwelling. He recounts in detail his findings on site inspection. He expressed the following opinions in his 18 August 2010 report: "8.1 ...Excavation to form the basement has changed the natural landform and topography of the site. However in my opinion the changes ... will have no adverse effect on any adjoining sites. 8.2 ...In my opinion there would not be a groundwater level within the depth of the basement excavation and the basement excavation would have no adverse effect on soil stability or subsoil water movements within the area. 8.3 ... excavation of the basement will have no adverse impact on the structural condition of the adjoining properties. 8.4 .... a geotechnical report (often termed a dilapidation report) would have been advisable prior to commencement and then after completion of the works. However I understand that no such report was undertaken. As the excavation and building works are now complete, the preparation of any reports would be of no real assistance in assessing if the excavation has caused any damage to adjoining structures. I understand ... that the adjoining property owners have not reported any damage to their dwellings as a result of the excavation works. Based on the nature of the material excavated and the distance of the adjoining buildings from the excavation, in my experience, I would not expect any damage to the adjoining buildings as a result of the excavation works ." 32Mr Moody inspected the site twice and recommended a number of changes, to which the applicant in the s 96 proceedings agreed. He participated in a joint conference with the Senior Town Planner of the Council, Ms Li, and they submitted a joint report to the court in the class 1 proceedings. They noted that only one adjoining property owner objected and three supported, and they agreed that proposed planter beds and privacy screens on the southern edge of the rear balcony at ground floor level represented an improvement in privacy to the adjoining southern neighbour. Morris C did not agree with Mr Moody's submission that it was " substantially the same development " (at [24]), but he read her judgment before making his affidavit for these class 5 proceedings. 33Mr Moody further agreed with Ms Li that the previously proposed roof terrace was unsympathetic to the adjoining development and should be removed, that the additional floor space was acceptable subject to a condition that it not be used for dual or multiple occupancy or for commercial purposes, and that the additional areas were minor in nature and would not have an adverse impact on adjoining properties or the public domain. 34The court accepts the expert evidence as relevant, mainly on the question of environmental harm, and has found it useful.

Sentencing principles 35The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 (' CSP Act '). The purposes for which a sentence may be imposed are: "(a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community ." 36A basic principle of sentencing is that the sentence imposed by the court for an offence must reflect and be proportionate to the objective circumstances of the offence and the personal circumstances of the defendant. See Veen v R (1979) 143 CLR 458 at 490. 37The process of arriving at an adequate penalty, by combining the objective circumstances of the offence and the personal circumstances of the defendant, has been termed " instinctive synthesis ". See Markarian v R [2005] HCA 25; (2005) 228 CLR 357 at [37], [39], [66] and [73]. 38The court is to have regard to the maximum penalty prescribed for the offence. The maximum penalty is the Parliament's expression and the community's perception of the gravity of the offence, and the appropriate penalty should be determined with reference to it. See Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. 39The court may take into account the objects of the legislation that have been breached. My Clay, in his written submissions, points to the relevant objects of the EPA Act as being to encourage the promotion and co-ordination of the orderly and economic use and development of land, as well as the increased opportunity for public involvement and participation in planning and assessment. 40In Mosman Municipal Council v Menai Excavations Pty Ltd [2002] NSWLEC 132; (2002) 122 LGERA 89 (at [35]), it was noted that offences against the EPA Act tend to undermine the integrity of the planning system. In Keir v Sutherland Shire Council [2004] NSWLEC 754, it was said by the former Chief Judge of this court, McClellan ChJ (at [13]) that: " The resources of the community are not sufficient, and never could be, to allow for councils to constantly supervise the work which licensed builders carry out on a daily basis. By enacting the Environmental Planning and Assessment Act and similar legislation, the legislature has provided a frame work of regulation which is in the interests of the whole community, although its effectiveness depends upon individuals observing its provisions. Builders and others who have been granted licences by the relevant bodies to carry out building work carry a particular responsibility to ensure the work that they do is carried out in accordance with the law. Accordingly, when such a person breaches the law the penalty imposed must be sufficient, not only to provide adequately to punish the breach, but to ensure that others with licences to carry out similar work are reminded of their responsibilities under the law." 41Similarly, in Bankstown City Council v Taouk Constructions Pty Ltd [2004] NSWLEC 402, it was also noted by McClellan ChJ (at [20]) that: " It is a very serious matter particularly when an experienced developer decides, for its own financial gain, to proceed to construct part or all of a development knowing that consent is required and also knowing that that consent has not been obtained. If many people were to take that course, the system of development control which has existed in this State now for more than fifty years would be seriously undermined to the disadvantage of the whole community ." 42These authorities indicate that both specific and general deterrence are key considerations in sentencing for offences such as the present. 43I turn, therefore, to the " instinctive synthesis " of the objective and subjective factors involved.

Harm Done 44As noted in the evidence, the individual departures from the granted consent may be viewed as minor. However, cumulatively, they result in a development that is unacceptable, as well as different from that which was envisaged. In both of those respects some environmental harm results. 45As well as the harm caused by the undermining of the planning system, some minor environmental harm has been done to the immediate locality. In addition, appropriate remediation of the project may be expected to cause some environmental harm in the short term.

Defendant's State of Mind 46There is some evidence that the defendant has had some professional involvement in past Vigor Master projects where works done have required ex post facto approval by s 96 modifications. 47In the present case he knew from December 2007 that there were departures from the development consent for the subject works, not approved by any modifications, and that he, as the licensed owner-builder, bore the responsibility to ensure compliance with the consent, or seek appropriate modifications to it. 48However, it was not until December 2008, following an inspection with a certifier, that positive steps were taken to inform Council officers and attempt to regularise those departures. 49His offence may be characterised as more than merely reckless, but less than an intentional subversion of the planning and development control system. The uncontested evidence shows that he was not on site to supervise most of the works and did not personally authorise the offending works. He accepts ultimate responsibility as owner-builder, but was not " carrying out the works " in the sense envisaged by the legislation. 50In Holroyd City Council v El-Khouri [2008] NSWLEC 83, a case relevantly similar to the present (see [8]), Jagot J noted (at [20]): " The defendant quite properly accepted that breaches of development consents are inherently serious, as they tend to undermine the planning system. However ... objective criminality must be assessed by looking at the defendant's individual circumstances... it is important not to confuse the criminality of another person with that of a defendant ." 51Jagot J found that the conduct of the defendant in that case was " of a very low order of criminality indeed " (at [21]), and that her extenuating circumstances were " extraordinarily unusual and difficult " (at [28]). Her Honour gave the defendant the benefit of s 10(1)(a) of the CSP Act . 52Mr Johnson, counsel for Mr Wu, submitted (T28.10.10, p48, LL24-30) that: "... it was reasonable for Mr Wu to enter a plea of guilty to the whole on the basis of his being a owner/builder but in assessing the objective criminality of what he did one must have regard to what he did and his particular circumstances and involvement and not the intention of his wife, not the state of mind of his wife which was clearly different. He can't be vicariously responsible for what his partner did." 53While Mr Wu bore ultimate responsibility for the development in his role as owner-builder, his direct involvement with the offending works was of a low level, and he was proactive in addressing the problems once he realised the extent of the breaches. His personal failure was in paying inadequate attention to his duty to ensure compliance.

Defendant's reasons for committing offence 54The court may infer, as submitted by the prosecutor, that the defendant sought to provide for himself and/or his family his preferred form of dwelling, rather than that which had been approved by the Council. However, the defendant's evidence is, and the court accepts, that, strictly speaking, he personally will not benefit from this offence, as he will not in the future reside at the property.

Practical Measures and Control 55The defendant, as the owner-builder, bears ultimate responsibility for the carrying out of the development. The defendant accepts this, and he also accepts that he should not have left so much of the task to his wife, who is relatively inexperienced in such matters (T28.10.10, p27, LL23-39). Earlier intervention on his part was a practical measure which could well have avoided the offence, or minimised its impact.

Conclusion on Objective Seriousness 56The breach of the planning regime/law in this case is of low to medium objective seriousness, and I now turn to the " subjective " considerations.

Subjective Circumstances of the Offender 57The defendant has no prior criminal record, and believes that his professional standing has been damaged by this prosecution (par 27 of his affidavit, quoted in [28] above). 58The court accepts that he is unlikely to reoffend so the need for specific deterrence is not high in all the circumstances of this case. 59He cooperated with Council, and made frank and full disclosures of the material facts in his affidavit and in cross examination. As noted by Mr Johnson, the defendant's evidence during the hearing was at times unfavourable to his cause. 60The court accepts his contrition and remorse (as noted above in [28]), and is conscious that he is taking responsibility for the failure of others, in addition to his own. 61He entered an early guilty plea, and there are no factors affecting the utilitarian value of the discount available to him under s 22 of the CSP Act and R v Thomson [2000] NSWCCA 309; (2000) 49 NSWLR 383. 62He accepts his responsibility to pay the Council's costs, which are estimated at $70,000 (T28.10.10, p52, L2), an amount which on its face seems very high for such a prosecution. He can choose to agree to the amount payable or have Council's costs assessed. 63In addition it would appear that he will be ultimately responsible for the cost of bringing the building into compliance. 64The court accepts he was at the date of the hearing under some financial stress, the details of which he has not proven, and that his principal asset was " frozen " by its failure to reflect the consent.

Sentencing Parity 65Mr Clay referred the court to several decisions which involve a contravention of the EPA Act . Most of these are helpfully summarised by Pain J in Council of the Municipality of Kiama v Furlong [2009] NSWLEC 139 at [35]-[40], and by Pepper J in Council of the Municipality of Kiama v Pacific Real Estate (Warilla) Pty Ltd [2009] NSWLEC 191 at [112]. It is not necessary to repeat those analyses here. 66In Pacific Real Estate , however, I note that Her Honour held that the defendant acted in part deliberately, partly motivated by reasons of financial expediency, and that the objective circumstances were of moderate gravity (at [85]). She imposed a fine of $32,500, reduced from $50,000 having regard to subjective circumstances, and discounts. 67Mr Johnson referred the court to Fairfield City Council v Hanna [2007] NSWLEC 343, where Jagot J imposed a total fine of $28,000 reduced from $30,000, which had already been reduced by 25% on account of the utilitarian value of the guilty plea. In that case, the defendant had excavated beyond the granted consent, leading to the creation of a whole floor beneath the building, with more than 200m 2 of floor space added, and the ground floor becoming, unlike here, 1.3m higher than shown on approved plans.

Conclusion 68Having regard to the objective seriousness of the offence and the subjective circumstances of the offender, I consider that a fine of $30,000 is appropriate, subject to discount by 25 per cent for the utilitarian value of his plea of guilty to $22,500. 69The orders of the court will therefore, be: (1)The defendant is convicted of the offence with which he was charged. (2)The defendant is fined $22,500. (3)The defendant is ordered to pay the reasonable costs of the prosecutor, applicable solely to this prosecution and to no other proceedings between the parties, as agreed or assessed according to law. (4)The exhibits are returned, except for Exhibit C1 .

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: 12 April 2011

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