Liverpool City Council v Palerma Pty Ltd and Parilo

DEFENDANT: Edmond Michael Parilo

FILE NUMBER(S) : 40790 of 2007; 50049 of 2008; 50050 of 2008

KEY ISSUES: CONTEMPT :- sentencing of corporation and controlling director for failure to comply with Court orders in class 4 proceedings

LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999, s 21A(3) Uniform Civil Procedure Rules 2005, Pt 40 Div 2 R 40.7

Blacktown City Council v Butler [2008] NSWLEC 295 Blue Mountains City Council v Fowler [2007] NSWLEC476 Burwood Council v Ruan [2008] NSWLEC 167 Campbelltown City Council v Toth [2005] NSWLEC 186 Environment Protection Authority v Ableway Waste Management Pty Limited & Anor [2005] NSWLEC 469 Environment Protection Authority v Thaler [2005] NSWLEC 109 CASES CITED: Liverpool City Council v Palerma Pty Ltd and Parilo [2008] NSWLEC 311 Manly Council v Arslan [2005] NSWLEC 646 Parramatta City Council v Roy D R Services Pty Limited [2005] NSWLEC 756 Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 Sutherland Shire Council v Sawyer (2000) 109 LGERA 409 Witham v Holloway (1995) 183 CLR 525 Wood v Staunton (1996) 86 A Crim R 183

PROSECUTOR: Mr M Wright SOLICITORS LEGAL REPRESENTATIVES: Marsdens Law Group

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT 1 HIS HONOUR: The matter before the Court is the sentencing of the defendants Palerma Pty Ltd and Mr Edmond Michael Parilo for contempt of Court. Neither of the defendants appeared at the sentencing hearing today.

2 Each of the defendants was convicted of contempt of court on 17 November 2008 in that they wilfully disobeyed orders 3 and 4A of the Court's orders of 26 February 20081 by failing to remove advertising structures and flagpoles from the land and continuing to use the land for the purposes of the display of advertising: Liverpool City Council v Palerma Pty Ltd and Parilo [2008] NSWLEC 311 (Biscoe J) at [16]. 3 The contempt proceedings were listed for sentence on 5 February 2009 when Mr Parilo again appeared for himself and as agent for Palerma and sought an adjournment to enable him to gain access to documents and other materials he said he wished to tender in evidence on sentence. Mr Parilo said that these materials were located at the property the subject of the proceedings and that Mr Parilo was being denied access to the property by the mortgagee in possession.

4 On 5 February 2009, Mr Parilo again said that he wished to obtain legal representation. He tendered a list of names of solicitors and barristers who he said were representing him and Palerma in relation to other matters including the dispute with the bank. No notice of appearance has since been filed by a solicitor on behalf of either defendant. 5 Having regard to the fact that Mr Parilo had again appeared unrepresented on 5 February 2009, the prosecutor council did not oppose Mr Parilo's application for an adjournment provided its costs were reserved. The Court fixed a further timetable and the proceedings were adjourned to 8 April 2009 for a one day sentencing hearing with the council's costs being reserved. Mr Parilo was granted leave to issue subpoenas requiring production of the documents and materials referred to at [3] above. SENTENCING PRINCIPLES

6 All breaches of court orders are serious: Witham v Holloway (1995) 183 CLR 525 at 533-534. In Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 at 314, Kirby J said:

"A conviction of contempt of court is a conviction of an offence, criminal in nature.

Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the courts according to law. Thus, in determining the punishment which is opt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way…" 7 In Burwood Council v Ruan [2008] NSWLEC 167 at [18] I quoted from Wood v Staunton (1996) 86 A Crim R 183 at 185, where Dunford J set out ten matters to be taken into account in assessing the proper punishment for contempt: (i) the seriousness of the contempt proved;

(ii) whether the contemnor was aware of the consequences to himself of what he did;

(iii) the actual consequences of the contempt on the relevant trial or inquiry;

(iv) whether the contempt was committed in the context of serious crime;

(vi) whether the contemnor has received any benefit by indicating an intention to give evidence;

(vii) whether there has been any apology or public expression of contrition;

(viii) the character and antecedents of the contemnor;

(x) denunciation of the contempt. 8 Those factors relevant to the present case are dealt with below. THE RELEVANT FACTS

9 In addition to the matters outlined above in the introduction the following factual matters are relevant to sentence. 10 Mr Parilo is the secretary and sole shareholder and director of Palerma. As Palerma's agent, Mr Parilo's conduct binds Palerma. He appeared as agent for Palerma at the substantive hearing on 26 February 2008 when the Court's orders were made. 11 Sealed copies of the orders were served on Palerma on 12 March 2008 and Mr Parilo on 2 April 2008 bearing the endorsement required under Part 40 Division 2 Rule 40.7 of the Uniform Civil Procedure Rules 2005 (UCPR).

12 Mr Parilo appeared in person and again as agent for Palerma at the hearing of the contempt charges on 17 November 2008. Liability was contested. Palerma and Mr Parilo were each convicted of contempt of Court on 17 November 2008.

13 The offending advertising structures and flagpoles remained in place and use of the subject land for the purpose of the display of advertising continued from the date of the making of the orders on 26 February 2008 to the date of the sentencing hearing on 5 February 2009.

14 Paragraph 4A of the Court's orders was suspended for a period of 60 days to give the defendants an opportunity to lodge a development application for the continued use of the land for the display of advertising. That 60 day period expired on 26 April 2008 but no development application was lodged with the council in that period or at any time since. Letters were sent to each defendant on 9 May 2008 warning that if the Court's orders were not complied with, contempt proceedings would be commenced.

15 Mr Parilo is an experienced developer and at all material times between 26 February 2008 and 2 February 2009 understood the development application process and his right of appeal to the Land and Environment Court if any such development application had been refused by the council or remained undetermined 40 days after lodgement.

16 Neither defendant made an application to the Court to restore the proceedings pursuant to the liberty granted in paragraph 6 of the Court's orders of 26 February 2008.

17 The contempt proceedings were commenced on 13 August 2008.

EVENTS SINCE THE ADJOURNED SENTENCING HEARING ON 5 FEBRUARY 2009

18 No subpoenas were issued at the request of Mr Parilo or Palerma to the bank or its solicitors. 19 No legal practitioner has filed an appearance in the proceedings on behalf of Mr Parilo or Palerma.

20 The council's solicitors have received no correspondence from Mr Parilo or from any legal practitioner representing Mr Parilo or Palerma in the contempt proceedings since the date of the adjourned sentencing hearing on 5 February 2008.

21 The defendants have not filed any evidence for the sentencing hearing. Consequently, the Court is not assisted with any evidence from Mr Parilo on his own behalf or on behalf of Palerma in addition to that given by Mr Parilo orally on 17 November 2008 during the hearing on liability. In particular, the Court is not assisted by evidence from the defendants concerning the reason for the contempt, their character or antecedents, the failure to comply with the Court's directions made on 5 February 2009 in relation to the issuing of subpoenas or their capacity to pay a fine if imposed.

22 On 10 February 2009, the council's solicitors wrote to Gray Perkins, the solicitors acting for the mortgagee, providing a copy of the Court's orders in the proceedings and asking whether the bank would give the defendants' access to the subject land for the purpose of complying with the orders.

23 Shortly before 26 March 2009, a council officer inspected the land and observed that the advertising structures and flagpoles had been removed. Enquiries have since revealed that the mortgagee took steps to remove them. 24 There was a continued failure to comply with paragraphs 3 and 4A of the Court's orders from 26 April 2008 until approximately two days before the sentencing hearing on 5 February 2009 when the mortgagee took possession of the subject land.

25 Mr Parilo was present when the Court's orders were made, had the benefit of legal advice concerning those orders and fully understood what the Court's orders required.

26 Mr Parilo admitted that he and hence Palerma had failed to comply with the orders and that as a consequence he was "technically" in contempt of Court.

27 Mr Parilo blamed the defendants' failure to lodge a development application with the council on an alleged conversation with Mr Adam Coburn, the council's Director of Planning in or about March 2008. I do not take Mr Parilo's allegations concerning this conversation into account in mitigation of penalty for the following reasons: (a) Mr Coburn has denied on oath that any such conversation with Mr Parilo ever took place and has not been challenged in cross-examination. I prefer Mr Coburn's evidence and am not satisfied that any such conversation took place.

(b) Even if the conversation occurred as alleged by Mr Parilo, it does not excuse the defendants' failure to comply with the orders. It is plain form Mr Parilo's own evidence that he knew what was required of him under the orders, namely to lodge a development application in relation to the advertising structures within 60 days of the date of the Court's orders. Mr Parilo understood the development application process and was fully aware of his rights of appeal.

(c) It is clear from Mr Parilo's own evidence that he made a deliberate and conscious decision to breach the Court's orders. 28 Mr Parilo has provided no other explanation for failing to remove the advertising structures and flagpoles in the period from 26 April 2008 to 17 November 2008. The evidence he gave prior to the sentencing hearing appears to reflect a long standing and bitter sense of personal grievance with certain council officers arising from matters unrelated to the subject matter of the Court's orders. Nothing in his evidence provides any adequate explanation for the failure to comply with the orders. 29 During his evidence on 26 February 2008, Mr Parilo indicated that a development application would be lodged within five weeks if he was given an extension of time. That has not been done.

30 The defendants continued in breach of the Court's orders even after being convicted of contempt of Court on 17 November 2008. There is no explanation for their failure to remove the advertising structures or flagpoles in the period from 17 November 2008 to the date the mortgagee took possession of the land on or about 2 February 2009.

APPLICATION OF RELEVANT SENTENCING PRINCIPLES TO THE FACTS

The Seriousness of the Contempt Proved 31 In the period from 26 February 2008 to about 2 February 2009, Mr Parilo, and through him Palerma, made no effort to comply with the Court's orders. 32 Whilst contemnors should not be punished for exercising their right to put the prosecutor to proof of the contempt charges (Burwood Council v Ruan [2008] NSWLEC 167 at [15]), Mr Parilo acknowledged in evidence at the hearing on 17 November 2008 that he was "technically" guilty of contempt. Having given that acknowledgement and having been convicted, there is no evidence thereafter of any attempt to purge the contempt by complying with the Court's orders.

33 The defendants were given a long adjournment after the hearing on liability on 17 November 2008 to seek legal representation and to put on evidence on penalty. They have not explained the failure to assemble the documents and materials Mr Parilo says were located on the subject land before the mortgagee went into possession on or about 2 February 2009. They have given no explanation for their failure to take steps to comply with the Court's orders after 17 November 2008 or otherwise to prepare for the sentencing hearing on 5 February 2009 before the mortgagee went into possession of the subject land on or about 2 February 2009.

34 The conduct of both defendants constitutes a wilful and serious breach of the Court's orders. Whilst the breach was deliberate and serious, it could be described as an act of defiance directed more at the council than the Court. Accordingly, the council does not submit that the evidence shows beyond reasonable doubt that either defendant acted with a specific intent to defy the authority of the Court.

WHETHER THE CONTEMNOR WAS AWARE OF THE CONSEQUENCES TO HIMSELF OF WHAT HE DID

35 Each defendant was served with a copy of the orders bearing the prescribed endorsement under UCPR Part 40 Division 2 Rule 40.7 stating consequences which may follow from a breach of the orders and each was specifically warned of the risk of contempt proceedings. Mr Parilo knew and was advised that his failure to comply had potentially serious consequences for him and Palerma. That knowledge must be imputed to Palerma. THE REASON FOR THE CONTEMPT

36 No adequate explanation has been advanced for the defendants' failure to comply with the Court's orders. The breach was deliberate. 37 There is no evidence to suggest that the defendants lacked the ability or means to lodge a development application to regularise the use of the land for the purpose of the display of advertising in the period from26 February 2008 to 26 April 2008 (or since). There is no evidence to suggest that they lacked the ability or means to comply with the Court's orders in the period from 26 April 2008 to about 2 February 2009 when the mortgagee went into possession of the subject land.

WHETHER THE CONTEMNOR HAS RECEIVED ANY BENEFIT BY BREACHING ORDERS

38 On Mr Parilo's evidence, the income said to be derived from the display of advertising on the subject land was applied to support community groups or clubs. There is no other indication on the available evidence that either defendant received a benefit from the breach of the Court's orders.

WHETHER THERE HAS BEEN ANY APOLOGY OR PUBLIC EXPRESSION OF CONTRITION

39 Mr Parilo acknowledged the breach of the Court's orders in his evidence on 17 November 2008, saying that he was "technically" in contempt but thereafter the breach continued without explanation. Beyond that, there has been no clear or adequate apology or expression of contrition from the defendants. THE CHARACTER AND ANTECEDENTS OF THE CONTEMNORS

40 There is no evidence to assist the Court in relation to the character or antecedents of either defendant. There is no evidence of any prior convictions in relation to either defendant.

GENERAL AND PERSONAL DETERRENCE AND DENUNCIATION OF THE CONTEMPT

41 Mr Parilo is an experienced industrial developer and knew the consequences of failure to comply with the Court's orders. There is a need for specific personal deterrence so that Mr Parilo understands that serious consequences will follow from a failure to comply with orders of the Court directed at upholding and enforcing the planning law. 42 Injunctions were granted in these proceedings after a contested hearing in the substantive matter in Class 4 proceedings. There is a need to ensure that those involved in the development industry generally are aware that Class 4 proceedings taken to enforce the planning law in this Court are serious proceedings with serious consequences.

43 The orders were deliberately breached over a lengthy period. There is a clear need in this case for both general deterrence and for personal deterrence in relation to both defendants. AGGRAVATING OR MITIGATING FACTORS

44 There is no evidence of aggravating or mitigating factors. THE FINES ACT 1996

45 I conclude below that a fine is an appropriate penalty. There is no information available to the Court regarding the defendants' means: see s 6 of the Fines Act 1996. COMPARABLE DECISIONS

46 I have had regard to the following decisions determining an appropriate penalty.

47 In Sutherland Shire Council v Sawyer (2000) 109 LGERA 409 at 410 [2] -[17] the defendant continued to keep rabbits at premises in Woronora in breach of the Court's orders. The Court found that the defendant's conduct involved "contumacy" or "perverse and obstinate resistance to authority" at [77] and [78]. The Court imposed a fine of $25,000.00 and a daily penalty of $2,500.00 until the Court's orders had been complied with. The defendant was also ordered to pay the council's costs on an indemnity basis.

48 In Burwood Council v Ruan, the defendants pleaded guilty after the commencement of the contempt proceedings and were convicted of wilful contempt by continuing to use premises as a brothel in breach of the Court's orders. After taking into account the utilitarian value of the (late) plea of guilty, the defendants were each fined $10,000.00 and ordered to pay the council's costs.

49 In Blue Mountains City Council v Fowler [2007] NSWLEC476 at [8], [11], [18]-[19], there was a failure to complete building works within the 45 day period required by the orders. By the time of the hearing the building works had almost been completed. A fine of $2,000.00 was imposed but the Court also ordered that the fine should be suspended for 21 days and if the outstanding works were completed within that time, the order imposing the fine would be vacated. Mr Fowler was ordered to pay the council's costs as agreed or assessed.

50 In Manly Council v Arslan [2005] NSWLEC 646, the defendant operated a take away food and refreshment room outside the hours of operation contained in an undertaking to the Court. Within four days of the undertaking being given to the Court, the council detected breaches of the undertaking and these continued over a period of several months. The· Court did not accept that the breach had resulted in any environmental harm. The defendant pleaded guilty soon after the contempt proceedings were commenced and otherwise showed remorse. The defendant was fined $10,000.00 and was ordered to pay the council's costs.

51 In Campbelltown City Council v Toth [2005] NSWLEC 186, the defendant had been convicted of contempt of court at an earlier hearing for continuing to use premises in breach of the Court's orders as "restricted premises" (a sex shop) in the period from 14 October 2004 to 20 January 2005. The Court noted at [10] that the period from 24 December 2004 to 20 January 2005 was insignificant in determining penalty. The Court also observed at [7] that the penalty to be imposed must be adequate to deter others who may be tempted to breach the planning law. The Court took into account the relatively short period of the breach, that the defendant had no prior convictions except for traffic matters, was not likely to re-offend and that no environmental harm had resulted from the breach. The defendant was fined $7,500.00 and ordered to pay the council's costs.

52 In Parramatta City Council v Roy D R Services Pty Limited [2005] NSWLEC 756 the fifth defendant was convicted after a contested hearing of continuing to use premises as a brothel in breach of the Court's orders. The Court found the contempt to be wilful, imposed a fine of $7,500.00 and ordered the defendant to pay the council's costs.

53 In Blacktown City Council v Butler [2008] NSWLEC 295, the defendants pleaded guilty to four elements of a charge of contempt at the hearing. The hearing was adjourned to allow them time to purge the contempt. They were each fined $8,000.00 (after a discount of $2,000.00 for the plea of guilty) and were ordered to pay the council's costs.

54 In the present case: (a) there has been no plausible or adequate explanation for the defendants' failure to comply with the Court's orders;

(b) there is (thus far at least) an absence of genuine contrition or apology;

(c) the operation of paragraph 4A of the Court's order was suspended to enable the defendants to regularise the use of the subject land for the purposes of the display of advertising but the defendants did not avail themselves of that opportunity;

(d) on 9 May 2008, the defendants were specifically warned of the risk of contempt proceedings if the breach was not cured within a further 7 days;

(e) the defendants failed to bring the matter back to the Court in exercise of the liberty granted in paragraph 6 of the Court's orders;

(f) the defendants pleaded not guilty but Mr Parilo acknowledged in evidence that he was technically in contempt of Court. There is therefore no discount to be given for a plea of guilty in this case;

(g) the breach has continued over a prolonged period including a period of three months after the defendants were convicted of contempt;

(h) the breach has been cured by actions of a third party and as such there has been no effort by the defendants to purge the contempt. 55 In these circumstances, the defendants' continued failure to comply with the orders renders the contempt in this case wilful and serious. However, there is no evidence of environmental harm and it is not in the worst category of case.

CONCLUSION 56 The contempt proceedings against Palerma Pty Ltd were brought by notice of motion in the original class 4 proceedings No 40790 of 2007 with two separate charges of breach of, respectively, order 3 and order 4. The contempt proceedings against Mr Parilo were brought in two separate proceedings, 50049 of 2008 and 50050 of 2008, relating to breach of, respectively, order 3 and order 4. Separate contempt proceedings were necessary against Mr Parilo because he was not a party to the original class 4 proceedings. The principle of totality should be applied in the case of Mr Parilo such that the total fine that I propose to impose on him should be apportioned as between the two contempt proceedings against him.

57 In proceedings No 40790 of 2007 1. The defendant is fined the sum of $20,000. 2. The defendant is to pay the council's costs on an indemnity basis. 3. The exhibits may be returned.

1. The defendant is fined the sum of $10,000. 2. The defendant is to pay the council's costs on an indemnity basis. 3. The exhibits may be returned. 59 In proceedings No 50050 of 2008 1. The defendant is fined the sum of $10,000. 2. The defendant is to pay the council's costs on an indemnity basis. 3. The exhibits may be returned.

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