Melbourne CC v 160 Leicester Pty Ltd (No 2) [2020] VCAT 1435

1. The Tribunal orders pursuant to s 137(5) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic):

1. Having found the first respondent guilty of contempt of the Tribunal the Tribunal imposes a fine in the amount of $150,000 against the first respondent. 2. Having found the second respondent guilty of contempt of the Tribunal, the Tribunal commits the second respondent to prison for a term of not less than one month.

1. Having found the third respondent guilty of contempt of the Tribunal, the Tribunal commits the third respondent to prison for a term of not less than one month.
2. The respondents joint and severally pay the costs of the applicants fixed in the amount of $250,000.

Mr A J Finanzio SC, of counsel, with Mr A Woods, of counsel

Mr N Papas QC, of counsel, with Mr A D Trood, and Ms S Armstrong (on 8 and 16 December 2020) of counsel

1. On 10 November 2020 the Victorian Civil and Administrative Tribunal (the Tribunal) published its reasons for finding each of the respondents, the corporate respondent 160 Leicester Pty Ltd, and each of the directors, the second respondent, Stefce Kutlesovski and third respondent Raman Shaqiri, guilty of contempt of the Tribunal pursuant to s 137(1)(ea) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act).
2. The Tribunal found that each of the respondents were guilty of contempt by reason of their wilful and deliberately defiant non-compliance with Order 1(a) and (b) of the Orders made by this Tribunal on 28 May 2019.
3. The Tribunal conducted a hearing which took place over 3 days (19-21 October 2020) in which the respondents were represented by the same solicitor and counsel.
4. In that hearing, the respondents challenged the Tribunal's jurisdiction to make the Order by reason of the proper construction of s 119 of the Planning and Environment Act 1987 (Vic) in that the Order was not clear and unambiguous and was not capable of compliance. Alternatively, the respondents argued if the terms of the Order could technically be complied with the conduct of each of them was not contemptuous of the Tribunal.
5. These arguments were raised on behalf of each of the respondents but in addition the directors argued there was insufficient particularisation of the elements required to prove the contempt was made out specifically against them personally. In particular, it was claimed that the directors did not have the requisite knowledge of the Order.
6. Each of these arguments was rejected.
7. The Tribunal's reasons set out in detail the rationale for concluding that there had been non-compliance with Order 1(a) and (b) of the Tribunal's Orders in contravention of s 137(ea) of the VCAT Act. The Tribunal found each of the respondents guilty of contempt of the Tribunal by reason of their wilful and deliberately defiant non-compliance with these Orders. At the hearing the parties requested a separate hearing in respect of penalty.
8. On 12 November 2020, the Tribunal ordered a further hearing to be fixed for 2 December 2020 and that the parties file short written submissions on the question of penalty by 12pm on 30 November 2020.
9. The applicants filed submissions by the due date.
10. There was no response to the 12 November Order by or on behalf of the respondents. Rather, in response to an enquiry from the Tribunal on 2 December 2020, the Tribunal was informed that no submissions had been filed. However, the Tribunal was advised that the respondents had filed an appeal pursuant to s 148 of the VCAT Act in the Court of Appeal and that a stay of proceeding no. P1128/2020 would be sought.
11. The stay application was made on 2 December 2020 and was opposed by the applicants.
12. The Tribunal refused the stay. In summary, the reasons for refusal of the stay were the Tribunal was of the view that prima facie the appeal lodged was premature[1] and/or misconceived,[2] the administration of justice was better served by proceeding with the penalty hearing rather than splitting the proceeding, there was no injustice to either party which would justify a stay and the balance of convenience did not justify a stay.
13. The further hearing in respect of penalty was not able to proceed on 2 December 2020 as counsel for the respondents did not have instructions and indicated to the Tribunal that there was little more that could be said on behalf of the respondents, there being no remorse shown, no apology and an approach which challenged the underlying Order and the Tribunal's finding of contempt being pursued by way of appeal in the Court of Appeal. The Tribunal expressed its displeasure at the circumstances but adjourned to the further hearing of the proceeding until 10am on 8 December 2020 and, at the request of counsel for the respondents, gave the respondents an opportunity to file an outline of submissions by close of business on 4 December 2020.
14. At close of business on 4 December 2020 no submissions had been received on behalf of any of the respondents nor any communication from their instructing solicitor. However, an email had been received that afternoon directly from the second respondent, Mr Kutlesovski, indicating that he would be appearing on his own behalf at the hearing scheduled for 8 December 2020. No written submissions or indication of his position were forthcoming.
15. Only the day before the penalty hearing scheduled for 8 December 2020 was there a communication with the Tribunal and submissions received outlining the respondents' position. Counsel now appeared again for all respondents.
16. An indication of an apology on behalf of the Company was foreshadowed in the written submissions.
17. At the hearing on 8 December 2020 an expression of 'sincere regret' that circumstances had got to this stage was proffered on behalf of the directors by counsel. Submissions were made on behalf of the directors that there 'will be substantial personal cost and embarrassment' to the directors. Counsel for the respondents referred to the indication that the directors were prepared to offer an apology on behalf of the company as was foreshadowed in the written submissions.
18. Counsel indicated that there had been a commitment to progress compliance with the Tribunal's Orders and the work necessary to construct the public park. In particular, the engagement of a builder, a project manager, a town planning consultant and a heritage consultant. No proof of engagement nor specific time frame to progress this work was provided.
19. The hearing was adjourned to provide an opportunity for the respondents to put before the Tribunal proper material to demonstrate the steps taken and to provide the Tribunal with some confidence that there was a commitment to compliance.
20. On 14 December 2020 an affidavit sworn, not by either of the second or third respondents but by their solicitor,[3] which deposed to the steps taken by the second and third respondents to engage a project manager, external builder and other consultants to construct the interim park and arrange for any further clearing of the site as necessary. Exhibited to the affidavit was a memorandum which documented attendance on 9 December 2020 at a site meeting between the project manager, builder and engineer as to the 'status of works as of Monday 14th December'. An estimate of time of approximately six months was given in the memorandum but a caution that 'due to the nature of the existing site there are also several unknown variables that can affect the Programme of works.'[4] The memorandum also records that the project manager was engaged on 9 December 2020.[5]
21. I have set out this history, as together with the findings made and recorded in the Tribunal's Reasons published on 10 November 2020, the Tribunal has formed the conclusion that the course of conduct of the respondents demonstrates to the Tribunal that they have been required to be dragged every step of the way to compliance and that the requisite contrition is lacking. The Tribunal is not satisfied that the contempt of the Tribunal has been purged.
22. The Tribunal is sceptical given the repeated delays and the course of conduct of the respondents in their lack of compliance, (including their conduct throughout this proceeding) that what is now proposed to be delivered will be done in a timely manner, or at all.
23. Having found the respondents guilty of contempt by reason of their wilful and deliberately defiant non-compliance with Order 1(a) and (b) of the Orders made by this Tribunal on 28 May 2019, together with their lack of contrition, the Tribunal will exercise its discretion pursuant to s 137 of the VCAT Act and as against the first respondent taking into account all of the matters put before it on behalf of the respondents, impose a fine of $150,000.
24. In respect of the second and third respondents the Tribunal is not satisfied that in all of the circumstances which I have set out in detail in these Reasons, and given that I have formed the view that these are exceptional circumstances, that a fine is the appropriate course and that a period of imprisonment in all the circumstances is the just and appropriate penalty.

1. Section 137(1)(ea) of the VCAT Act is in the following terms:[6]

(1) A person is guilty of contempt of the Tribunal if they -

(ea) fail to comply with an order of the Tribunal in circumstances where, if the order were an order of the Supreme Court, the failure would constitute a contempt of that Court;

1. Section 137 also provides the following in respect of penalty:

(5) If the Tribunal finds that the person is guilty of contempt of the Tribunal, it may -

(a) in the case of a natural person, commit the person to prison for a term of not more than 5 years or impose a fine of not more than an amount that is 1000 times the value of a penalty unit fixed by the Treasurer under section 5(3) of the Monetary Units Act 2004 or do both;

(b) in the case of a corporation, impose a fine of not more than an amount that is 5000 times the value of a penalty unit fixed by the Treasurer under section 5(3) of the Monetary Units Act 2004.

(5A) In considering whether, and the term for which, to commit a person to prison for a contempt, the Tribunal may have regard to the provisions of Part 2 of the Sentencing Act 1991 as if it were a court considering imposing a sentence of imprisonment in respect of an offence.

(6) If a person is committed to prison for a term, the Tribunal may order his or her discharge before the end of the term.

(7) The Tribunal may accept an apology for a contempt and may remit any punishment for it either wholly or in part.

(8) A warrant for the committal of a person found guilty of contempt of the Tribunal must be in the form prescribed by the rules.

(9) A fine imposed on a person under this section may be enforced as if it were a fine imposed on that person by the Supreme Court on finding them guilty of an offence.

(10) A power conferred on the Tribunal by this section is exercisable only by a presidential member.

1. In the relevant period one penalty unit was $165.22 which means that the maximum penalty for the corporate respondent is $826,100 and for Mr Kutlesovski and Mr Shaqiri is five years imprisonment and a fine of $165,220.
2. In determining the penalty which is appropriate in respect of each of the respondents the following factors have been held to be relevant:[7]

1. the contemnor's personal circumstances; 2. the nature and circumstances of the contempt;

1. the effect of the contempt on the administration of justice; 2. the contemnor's culpability; 3. the need to deter the contemnor and others from repeating the contempt; 4. the contemnor's reasons for his or her conduct; 5. the absence or presence of a prior conviction for contempt; 6. the contemnor's financial means; and 7. whether the contemnor has exhibited general contrition and made a full and ample apology.
2. These factors have been cited with approval in other cases including CC Containers Pty Ltd v Lee (No 9),[8] DPP v Johnson and Yahoo!7(No 2),[9] Consumer Affairs Victoria v Talia (Review and Regulation)[10] and Moira Shire Council v Sidebottom Group Pty Ltd (No 3).[11]
3. In Moira Shire Council (No 3) Her Honour said that the imposition of a penalty should serve three purposes:

1. specific deterrence (noting the gravity of the respondent's breach of both the order and undertaking, and subsequent lack of remorse); 2. general deterrence (to reinforce that compliance with a court order is not optional); and

1. compelling obedience to court orders.[12]
2. Imprisonment for contempt should be considered only when no other lessor penalty will suffice. It should be reserved for exceptional circumstances.[13]
3. The power of tribunals to punish for contempt is limited to the words of statute unlike the Supreme Court of Victoria which has unlimited jurisdiction to punish.[14]
4. It was noted by the Court of Appeal in Varnavides v Victorian Civil and Administrative Tribunal[15] that it is not only unusual for a statutory tribunal to be accorded contempt power but where it is conferred, it is to be limited to the terms of the statute. Section 137 of the VCAT Act provides the Tribunal with contempt power and, where the Tribunal finds a party guilty of contempt of the Tribunal, the Tribunal is empowered to impose a penalty by way of a fine or imprisonment by s 137(5).
5. Section 137(5A) of the VCAT Act was introduced by way of s 59(2) of the Justice Legislation (Further Amendment) Act 2006 (Vic) following the Court of Appeal decision in Varnavides v Victorian Civil & Administrative Tribunal & Anor[16] which had found that the provisions of the Sentencing Act 1991 (Vic) (Sentencing Act) were not applicable. Consequently, by reason of s 137(5A) of the VCAT Act the Tribunal may consider the relevant Sentencing Act provisions when considering the imposition of fine or a prison term. The Tribunal considers that these principles are largely reflected in the factors deemed relevant in Gashi set out above.
6. In this regard, the Tribunal must give attention to the maximum penalty. This maximum penalty 'yardstick' invites comparison between the case before the Tribunal and the worst category of the offence which is so grave that it warrants the imposition of the maximum penalty.[17] Considerations of the desired sentencing purposes such as punishment, deterrence and denunciation[18] must be considered and whether these purposes could be achieved by way of a fine.
7. The Tribunal considers that the following factors are relevant to the level of penalty having regard to the Tribunal's findings, noting that that the primary aim of bringing a contempt charge is to ensure compliance with the Tribunal's Orders:

1. any punishment is to be to an extent and in a manner which is just all the circumstances;[19] 2. deterrence and denunciation by the Tribunal of the failure to comply with the orders;[20]

1. the nature and gravity of the conduct;[21]

1. the respective culpability and degree of responsibility for the contempt of each of the respondents;[22] 2. the personal and financial circumstances[23] of the respective respondents; 3. the maximum penalties under s 137 of the VCAT Act; 4. whether there has been an apology or explanation for the contemptuous behaviour and the timing of that communication;[24] 5. the actual consequences of the contempt;[25] and 6. the effect on the administration of justice.[26]
2. The Tribunal notes that instances of contempt before the Tribunal are relatively rare and those where the contemnor has not purged the contempt either by apology or other acts are rarer still. Inevitably, the exercise of the Tribunal's discretion must turn on the circumstances of this case guided by the application of the principles set out above and their application in matters of this type. From the authorities to which the Tribunal has been referred it is difficult to find one where the circumstances are of the gravity and the continuing behaviour of the contemnor is as blatant.[27]
3. Not only have the respondents failed to comply with the terms of the Orders, as the Tribunal has previously found, any steps taken to rectify compliance with the breaches of the planning scheme have been consistent with their own ambition rather than in compliance with the Orders. The respondents' behaviour in this proceeding in taking steps either at the eleventh hour or not at all and without explanation indicates a course of conduct established and continued throughout. The arrogance and lack of respect to the Tribunal and to the proper administration of justice without any or reasonable justification or explanation is unacceptable. I accept that very recent steps preparatory to carrying out works consistent with the Tribunal's Orders have been commenced and this is a positive albeit delayed response, but they came exceptionally late in the day and are but preliminary steps in any event.
4. It is important that the Orders of the Tribunal are complied with and that the respect for the jurisdiction is upheld in the eyes of the community. The community expects no less.
5. It is necessary to address the penalty relevant to each of the respondents accordingly and with the relevant sentencing factors considered.
6. The Tribunal is instructed that it is not the position that any of the respondents lacks capacity to pay a financial penalty.
7. Counsel for the respondents argued that any financial penalty by way of a fine had the potential to be double punishment of the second and third respondents[28] due to the corporate structure and the fact that each of the respondents was a sole director of the corporate entities that were the two shareholders of the first respondent. Additionally, counsel also argued that any fine take into account the likelihood that there would be substantial costs awarded in favour of the applicants.
8. The Tribunal was also counselled against the temptation to look at a continuum of activity which has been subject of other prosecutions by the Victorian Building Authority, the Environment Protection Authority, the Melbourne City Council and Worksafe. It was submitted that these events are not relevant except as background and context. The Tribunal agrees with this submission. The proceeding before this Tribunal is one brought pursuant to s 137 of the VCAT Act for contempt by reason of the respondents' wilful lack of compliance with the Tribunal's Order. It is entirely in this context that a decision on penalty will be made.

Application of the Sentencing Act 1991 in VCAT contempt proceedings

1. Counsel for the respondents submitted that having made a finding pursuant to s 137 there was a necessary step before penalty which was a determination as to conviction.
2. Counsel for the applicants submitted that the issue of whether this step was required or not was not uncomplicated. The power given to the Tribunal in terms of penalty is set out in s 137. However, reference to the Sentencing Act is only in respect of Part 2 and not the Sentencing Act as a whole.
3. A plain reading of the terms of s 137 do not require the interim step of a finding of conviction. Rather, it provides that if the Tribunal finds the person guilty of contempt it may commit a natural person to prison and or impose a fine, or do both. In the case of a corporation it may impose a fine. Section 137(5A) provides that in considering whether and the term for which to commit a person to prison for a contempt the Tribunal may have regard to the provisions of Part 2 of the Sentencing Act as if it were a court considering imposing a sentence of imprisonment in respect of an offence. No other parts of the Sentencing Act are referred to in the relevant provisions of the VCAT Act.
4. Consequently, the options open to the Tribunal in respect of penalty once a person is guilty of contempt are confined to the terms of the statute. In the exercise of its discretion it is also open to fine or imprison a contemnor in accordance with ss 137(5) and (5A).
5. However, if I am in error in this interpretation, I would have no hesitation in making a determination to convict each of the respondents. The circumstances of this matter, the course of conduct and personal circumstances of each of the respondents would support such a determination.

1. Given the primary aim of bringing a contempt charge is to enforce compliance with the Tribunal's Orders, the human agency through which the corporate entity operates is primarily responsible for delivering that compliance. However, as the entity which owns the site the subject of the breach of the planning scheme and the entity against which the Tribunal's Orders were made, it is appropriate to penalise the first respondent for its contempt.
2. In respect of the corporate entity, the key considerations which are of influence in the penalty to be imposed are deterrence and denunciation, the nature and gravity of the breach, the effect on the administration of justice and the consequences of the contempt. That there has been no explanation or apology on behalf of the corporate entity until this penalty hearing is also a factor I have considered.
3. There is no detailed evidence before me of the financial circumstances or position of the company save that the land is the sole asset of the company and that funds for the purchase of the land were borrowed. I am uncertain if those funds were in the corporate name or one of the associated entities. However, it can be reasonably assumed that the value of the land as a development site in the City of Melbourne is considerable. Further, it is clear (and has been since March 2019, well prior to the consent orders being made)[29] that the proposal for the site was a substantial commercial redevelopment for which the corporate entity had expectation of significant financial gain. I note that the financial gain was likely to flow to the associated corporate entities controlled by the two directors, the second and third respondents.[30] It was submitted on behalf of all of the respondents that financial hardship was not a consideration in respect of the ability to pay a fine.
4. The factors which would tend to leniency, such as the lack of evidence of contemptuous behaviour in the past are, in the context of all of the relevant factors, insignificant.
5. The maximum fine which can be imposed is $826,100.
6. The confidence of the community in the planning system and its enforcement are vitally important for the administration of justice and the rule of law. The financial rewards which may be won by blatant and wilful refusal to comply with the planning system in Victoria must be deterred and denounced.
7. The enforcement order application brought by the applicants sought to ameliorate the impact of the illegal action of the respondent in the demolition of the historic building. The agreement was to take steps within a timeframe to bring the site into planning scheme compliance and in the meantime clean up the site and make it available as a public space whilst generous time was given to pursue an alternative development proposal. In default of achieving this outcome the obligation was to rebuild the hotel structure.
8. Effective abandonment of the site, leaving it behind hoardings, an unsafe and ugly eyesore when the respondents had agreed to orders and a timetable by which the illegality of the previous actions were ameliorated for the community benefit has exaggerated the community cost of the illegal demolition of the historic building.
9. The community has a right to expect that all laws, including planning laws - which are intrinsically for community benefit - are complied with and that where there is a community impact that the entity which is responsible and benefits from the failure to comply with the Tribunal's Orders enforcing the planning laws will be punished appropriately.
10. I acknowledge that the first respondent does not have prior findings of guilt for contempt nor does it have any relevant prior convictions other than those associated with the unlawful demolition of the Corkman Hotel. What is submitted is that the respondents have been amply punished already in respect of those contraventions. However, breach of the Tribunal's Orders is a separate and distinct breach with consequences provided for in the VCAT Act_._ The convictions alluded to may have had the same genesis but the implications flowing from breaches of building regulations, environmental legislation and workplace safety arise from the respective relevant legislation. The breach of the Planning and Environment Act gave rise to a separate and distinct breach and the consequences provided for in that legislation. The enforcement order application brought by the applicants sought to remedy and ameliorate the impact of the breach. The enforcement order was consented to, and the course of conduct since the making of the Order, in particular feigning ignorance, being slow to take the steps required, and then only partially, notwithstanding being legally advised throughout the period must equally be taken into account.
11. The Tribunal has taken into account in the setting of the fine the Tribunal's intention to make a substantial award of costs in favour of the applicants. The Tribunal was informed that the applicants' costs on a full indemnity basis amount to $285,000.
12. The Tribunal will impose a fine in the amount of $150,000 against the first respondent, 160 Leicester Pty Ltd, pursuant to s 137(5) of the VCAT Act_._

1. I propose to make some remarks which are of application to both the second and third respondents in addition to those made already in respect of the first respondent. However, I will deal with each of the second and third respondents separately in respect of penalty and specific observations relative to the penalty to be imposed.
2. I am of the view that a financial penalty alone will not achieve the underlying objectives of the power of contempt of the Tribunal.
3. I am mindful that the power to imprison for contempt is necessary in order to ensure the status and integrity of the judicial and administrative structures upon which our society depends is upheld. I also recognise that it is an extreme power which must be exercised as infrequently as possible and always with restraint.[31] However, I am of the view that these are exceptional circumstances.
4. The purpose of punishing contempt is to secure obedience to Orders of the Tribunal and that it is a matter of public importance the planning orders are not taken lightly by the community.[32]
5. I am not satisfied that a penalty other than a period of imprisonment is appropriate. I recognise that the applicants and the respondents have submitted that a term of imprisonment would be unjustified in the circumstances. I am not bound to adopt the submissions of the either the applicants nor the respondents. Penalty is at the discretion, properly exercised, of the Tribunal.
6. For the reasons set out in the Tribunal's decision handed down on 10 November 2020 and the matters already raised, I am not persuaded that this is a circumstance in which a fine is an appropriate outcome for the individuals.
7. The corporate entity cannot act without human agency. The human agents who facilitated the steps taken or more importantly the steps not taken in compliance with the Tribunal's Orders are the two directors. Whilst they played different roles in the administration of the company, as set out in the Reasons, they both had knowledge of the Orders and were responsible for the actions of the company.
8. The Orders were made by consent. As noted in the Reasons the Tribunal concluded that the directors had knowledge of the terms of the Orders and that it was not feasible to conclude that they were not aware of the terms.
9. The matters referred to in paragraphs [54]-[57] are of significance to the community in that the effect of the failure to comply with the Orders, the state of the Site - leaving it in an unsafe and ugly state - and the expectation of the community that when Orders are made they will be complied with. This is particularly so when they are made by consent, and are made in response to an enforcement order which seeks to ameliorate the impact of illegal activity. These considerations are equally relevant to the individual directors.

1. The main aim of a contempt proceeding is to enforce compliance with the Tribunal's Orders. As noted the corporate entity can only act through human agency and Mr Kutlesovski is and was a director of the company and its company secretary. As recorded in the Reasons, correspondence was directed to him as company secretary. The Tribunal made findings in respect of his knowledge and his obligation as a director.
2. As a director he was empowered and had responsibility to act to ensure the company's compliance with the law.
3. It is necessary that the punishment is just in all the circumstances. There is no doubt that the actions which facilitated the demolition of the historic building on the site, the intention to redevelop the site and the inaction to ameliorate the impact of the illegal demolition in accordance with the Tribunal's Orders has had a negative impact on the community and demonstrates an arrogance and disobedience in respect of not only the Tribunal's Orders but in the conduct of proceedings subsequent.
4. There was no compliance with the Tribunal's Orders as to submissions and rather than take any steps to rectify the non-compliance with the Orders, the actions taken have been to challenge the Orders and ultimately to seek to review the decision of the Tribunal.
5. This behaviour cannot be in any way considered to demonstrate contrition, remorse or an apology to the Tribunal. A muted expression of regret is unsatisfactory.
6. As noted, it is a characteristic of the history of this matter that the respondents have been dragged to compliance every step of the way. There has been no apology on behalf of the second respondent. The expression of regret at the eleventh hour is yet another example of this approach. The very recent action to commence work on the site does not convince the Tribunal that the contempt is purged, although it is a step in the right direction.
7. It is clear that deterrence and denunciation are factors for which weight must be given in the circumstances of this respondent. I do not accept that the second respondent, or any of the respondents, have already been dealt with in respect of deterrence and denunciation previously as this penalty deals only with the respondent's behaviour in respect of compliance with the Tribunal's Order.
8. I have already identified the consequences of the contempt and its impact on the community and the effect on the administration of justice.
9. The non-compliance with the Orders has been raised with the respondents on numerous occasions. The conclusion drawn was that the respondents wilfully disregarded the Orders and took only such actions as they chose, rather than what was required to comply with the terms of the Orders. In this respect the communication directly to the second respondent as company secretary is highlighted.
10. The seriousness of the respondent's flouting the integrity and status of the Tribunal's jurisdiction is an important factor.
11. The financial and personal circumstances must also be taken into account. All of the respondents were afforded a generous opportunity to provide written submissions outlining to the court on two occasions and this opportunity was not taken up until the eleventh hour.
12. The Tribunal is advised that the second respondent is 45 years old and he and his ex-wife have three children aged 13, nine and seven. He worked as a property developer and has done so in conjunction with his family since 1997.
13. There is little doubt that the actions of the respondents were directed to significant financial gain at the expense of compliance with the planning law and the Orders made by the Tribunal. Such behaviour is unacceptable and cannot be tolerated.
14. The maximum penalty pursuant to s 137 of the VCAT Act for an individual contemnor is $165,220 and or 5 years imprisonment.
15. I note the lack of remorse and late challenge to the jurisdiction of the Orders, the continued refusal to comply with the Orders and the continuance of challenge and delay which has become a feature of the proceedings between the respondents and the planning authorities.
16. Taking into account all of these factors I am not satisfied that compliance with the Tribunal's Orders will be facilitated by the imposition of a fine alone and that a period of imprisonment in all of the circumstances is the just and appropriate penalty. I will impose a term of imprisonment of 1 month.

1. In respect of the third respondent much of what has been said above equally applies to the determination of the penalty appropriate to his role in the failure to comply with the Tribunal's Orders.
2. Specifically, as a primary aim of contempt is to enforce compliance with the Tribunal's Orders the Tribunal must consider a punishment which is just in all the circumstances.
3. Compliance with the Orders by the corporate entity requires human agency and the human agency in the circumstances was provided by the second and third respondent. It is also clear from the Reasons provided that the Tribunal was satisfied that the third respondent was particularly engaged with the management and supervision of the site and engagement with Council Officers.
4. In this regard, together with his involvement in the instruction to the expert witnesses, demonstrates direct involvement with the operation and management of the site and the subsequent litigation and this could be seen as greater culpability on the third defendant in respect of the non-compliance with Tribunal's Orders.
5. The considerations of deterrence and denunciation are important factors in consideration of an appropriate penalty in this case.
6. The loss to the community occasioned by the failure to comply with the Orders which were put in place after the illegal demolition of the historic building and the flouting of compliance with planning laws and the Tribunal's Orders demonstrate the nature and gravity of the contempt.
7. The Tribunal was advised that the defendant is 39 years old, married with two children aged two years and 11 months respectively and he and his wife are expecting their third child in May 2021. He has worked as a builder in the building industry for approximately 14 years and in property development with the second respondent since 2011. I have not been provided with evidence in respect of the personal or financial circumstances of the third respondent.
8. However, I observed that the second and third respondents not only controlled the corporate entity but no doubt also would financially benefit from the redevelopment of the site and the intervening increase in value of the land in the meantime. As against this the failure to ameliorate the impact on the amenity of the site and the compliance with the planning scheme by failing to comply with the Orders is a serious consequence of the contempt.
9. The lack of compliance with timelines, the late action in taking steps in the litigation including the eleventh hour application to amend the consent order, the failure to comply with directions as to submissions and communicate with the Tribunal in respect of the conduct of this part of the proceeding is unimpressive.
10. I accept that there have been very recent steps taken to comply with the Tribunal's Orders and this is a positive albeit delayed step.
11. The arrogance and lack of respect for the law including in particular the Orders of the Tribunal have a negative impact on the administration of justice and diminish the standing of the Tribunal in the eyes of the community. The lack of respect for the law and for the Tribunal, the lack of apology, remorse or contrition until the eleventh hour is unacceptable.
12. As noted above, the maximum penalty for an individual pursuant to s 137 of the VCAT Act is $165,200 and/or five years imprisonment.
13. Taking into account all of the relevant factors and being of the view that the severity of the contempt and the lack of compliance to date will not be remedied by a fine alone, I will impose a term of imprisonment of 1 month.

1. The saga of the Corkman Hotel commenced on 15 October 2016. The consequences of the respondents' actions in the illegal demolition of the historic building has sounded in various breaches of the law. These separate and distinct breaches of the law are part of the backdrop to this saga and not more than that.
2. In an attempt to ameliorate the impact of the breach of the Planning and Environment Act, the applicants sought an enforcement order and by consent and at the request of the parties the Order the subject of these contempt proceedings was made on 28 May 2019.
3. The course of conduct of the respondents in complying with that Order and the proceedings before the Tribunal which have ensued have been characterised by a course of conduct in which the respondents have, in effect, been dragged to compliance every step of the way. Partial compliance is not compliance especially when it prevents the delivery of the interim outcome generously provided during the period of grace afforded the respondent to seek planning permission. The apology from the first respondent at the eleventh hour and the muted 'expression of regret' proffered by the second and third respondents is yet another example of this dilatory and resistant behaviour.
4. I do not accept that that there is no harm to the community by reason of the respondents' contempt.
5. Whilst no doubt there was anguish and anger of the community about the illegal demolition of the historic building, this matter before me deals only with the respondents' lack of compliance with the Tribunal's Order. This is a separate and distinct issue though set against the backdrop of the circumstances of the Orders being made.
6. I recognise that a decision to impose a term of imprisonment on the second and third respondents for their contempt of the Tribunal is a very significant and unusual step. However, I am not persuaded by the conduct of the respondents over the course of this proceeding that compliance with the Tribunal's Order will be ensured other than by the penalty I have imposed.
7. I am not satisfied that the contempt has been purged. It is welcome that some action has commenced but if the pattern of behaviour which has been established across the history of this matter repeats, I have little to no confidence that the work promised will eventuate and will be done in a timely manner.
8. The respondents are yet to demonstrate to the Tribunal that their actions are such that the contempt is purged. I consider it significant that the material produced to the Tribunal to prove the recent action undertaken was via the instructing solicitor and not by the second or third respondents. That the Tribunal is expected to rely on the solicitor's belief as to the commitment of the respondents to fulfill their obligations is inadequate.
9. I note the operation of s 138(2) of the VCAT Act will apply to any order made under s 137 and as a consequence my orders will be automatically stayed for a period of 14 days.

1. The power to award costs is set out in s 109 of the VCAT Act. Whilst the starting point is each party bear their own costs in a proceeding the Tribunal may make an order that a party pay all or a specified part of costs of another party in a proceeding only to be satisfied that is fair to do so having regard to the factors set out in s 109(3).
2. I am satisfied that it is fair to do so in this matter for the following reasons:

1. the nature of the matter being a contempt proceeding brought by the applicants who have responsibility for the enforcement of the planning scheme: ss 109(3)(d) and (e) 2. the manner in which the proceeding has progressed, with numerous indulgences being granted to the respondents. This includes the multiple hearings across the penalty hearing and stay hearing and the tardiness of compliance with directions made by the Tribunal:[33] ss 109(3)(a)(ii) and (iv)

1. the relative strength of the claims. The extent of the matters raised was wide and unsuccessfully argued including some issues which were untenable. Detailed and complex submissions were required both orally and in writing: s 109(3)(c)

1. the nature and complexity of the proceeding. This was rightly conceded by the respondents counsel to be relevant trigger to award costs: s 109(3)(d).

1. I have taken into account the written submission of the applicant dated 14 December and the oral submission and cases to which I was referred at the hearing on 16 December 2020.
2. Each case must be determined on its own facts and the relativity of costs awarded and the basis of the award turns very much on the individual circumstances of those cases.[3] There is little authority in the Tribunal of a matter of the significance and consequences as this matter.
3. The 'ball park' figure of the applicants costs had been identified in open court in an earlier hearing in answer to a direct question from the Tribunal. The figure of $285,000 was indicated. The request for written submissions in advance of the hearing on 16 December 2020 sought the basis of the quantum. Those submissions were provided as directed by the Tribunal.
4. Whilst the applicants' primary application is for indemnity costs, I have determined in all the circumstances that a figure ought to be fixed in the amount of $250,000, which represents less than full indemnity costs. This is fair in the circumstances, as it properly compensates the applicants for the expenditure incurred without being excessive given the complexity and the expertise required to bring this matter fully to its conclusion.
5. I will order that the respondents joint and severally pay the costs of the applicants fixed in the amount of $250,000. I have taken into account this figure in determining the fine which might otherwise be imposed on the respondents and in particular the corporate structure in which the second and third respondents hold their interest in the first respondent.

1. Having found the first respondent guilty of contempt of the Tribunal the Tribunal imposes a fine in the amount of $150,000 against the first respondent. 2. Having found the second respondent guilty of contempt of the Tribunal, the Tribunal commits the second respondent to prison for a term of not less than one month.

1. Having found the third respondent guilty of contempt of the Tribunal, the Tribunal commits the third respondent to prison for a term of not less than one month.

1. The respondents joint and severally pay the costs of the applicants fixed in the amount of $250,000.

[1] At the hearing the Tribunal was advised that the appeal had been lodged with the Registry of the Court of Appeal but had not been accepted as compliant and had not been served.

[2] The procedure for appealing a contempt charge was governed by s 138 of the VCAT Act and followed the process set out in the Criminal Procedure Act 2009 (Vic).

[3] Matthew Francke, 'Affidavit of Matthew Francke' filed in Melbourne City Council v 160 Leicester Pty Ltd, P1128/2020, 14 December 2020.

[6] The application dated 16 July 2020 originally cited s 137(1)(f) as the relevant provision. However, leave was granted at the hearing to amend the application to refer to s 137(1)(ea).

[7] Deputy Commissioner of Taxation v Gashi & Anor (No 3) [2011] VSC 448; (2011) 85 ATR 262, 265 [5] (Dixon J) ('Gashi').

[8] [2015] VSC 595 [5].

[9] [2017] VSC 45 [10].

[10] [2017] VCAT 146 [88].

[11] [2018] VSC 556 [34].

[13] Consumer Affairs Victoria v Talia (Review and Regulation) [2017] VCAT 146 [124].

[15] [2005] VSCA 231 [16].

[17] Shau v The Queen [2020] VSCA 252 [41].

[18] Sentencing Act 1991 (Vic) s 5(1)(a)-(b), (d).

[19] Ibid s 5(1)(a).

[20] Ibid s 5(1)(b), (c).

[21] Ibid s 5(2)(c).

[27] See Thompson v VCAT [2001] VCAT 4; Cua v Versaci Homewares (Vic) Pty Ltd (Civil Claims) [2006] VCAT 808; Port Phillip CC v Ironcroft Pty Ltd (No 2) [2003] VCAT 1582; Dental Practice Board of Victoria v Varnavides [2004] VCAT 1881; (2004) 21 VAR 505; Varnavides v Victorian Civil and Administrative Tribunal [2005] VSCA 231; (2005) 12 VR 1; Moira Shire Council v Sidebottom Group Pty Ltd (No 3) [2018] VSC 556.

[28] 160 Leicester Pty Ltd, Stefce Kutlesovski, Raman Shaqiri, 'Submissions on Penalty on behalf of the First, Second and Third Respondents', Submission in Melbourne City Council v 160 Leicester Pty Ltd, P1128/2020, 7 December 2020, [62].

[29] Melbourne CC v 160 Leicester Pty Ltd [2020] VCAT 1255 [5].

[30] MK Properties Portfolio Pty Ltd and SQ Properties Portfolio Pty Ltd are the equal shareholders the second respondent being the sole shareholder of MK Properties Portfolio and the third respondent being the sole shareholder of Q Property Portfolio.

[31] Varnivides v VCAT [2005] VSCA 231 [42].

[32] Mornington Peninsula SC v Russo & Ors [2008] VCAT 2339 [35]-[36].

[33] Such as in relation to submissions required to be filed on 30 November 2020 on penalty and the need to adjourn the 2 December 2020 hearing until 8 December 2020.

See Stubbs v Martyniuk (Civil Claims) [2015] VCAT 1[3]15; Melton SC v Shabani (Contempt) [2007] VCAT 382; Falconbridge Pty Ltd v Yarra CC [2005] VCAT 1042; East Gippsland SC v Whadcoat [2007] VCAT 2312; Lindon v State of Victoria [2000] VCAT 1857; and Cooper v Boroondara CC [2001] VCAT 2429.