Mosman Municipal Council v Waratah Village Partners Pty Ltd

28 March 2003 MOSMAN MUNICIPAL COUNCIL Applicant v WARATAH VILLAGE PARTNERS PTY LIMITED Respondent Judgment

In relation to the nature of the summons which is before me I note that I have set out in my earlier judgment of 21 October 2002 ( Mosman Municipal Council v Waratah Village Partners Pty Ltd [2002] NSWLEC 184) the charge as follows: … that between 19 January 2001 and 30 January 2001 at Mosman in the State of New South Wales the Defendant did cause to be carried out development, to wit, demolition of structures known as Bradleys Head Private Hospital erected on land at 66 Bradleys Head Road, Mosman, otherwise than in accordance with a prior development consent obtained and in force and issued by the Mosman Municipal Council pursuant to Mosman Local Environmental Plan 1998.

The relevant sections of the Environmental Planning Assessment Act 1979 (the EP&A Act) are s 125(1) and s 76A. Section 125(1) provides: Where any matter or thing is by or under this Act, other than by or under the regulations, directed or forbidden to be done, or where the Minister, the Director-General, a council or any other person is authorised by or under this Act, other than by or under the regulations, to direct any matter or thing to be done, or to forbid any matter or thing to be done, and that matter or thing if so directed to be done remains undone, or if so forbidden to be done is done, a person offending against that direction or prohibition shall be guilty of an offence against this Act.

Section 76A(1) provides that: If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless: (a) such a consent has been obtained and is in force, and (b) the development is carried out in accordance with the consent and the instrument

The maximum penalty applicable for offences of this nature is $1.1 million for both individuals and companies.

In relation to the relevant facts I note the Prosecutor relied on the agreed statement of facts that was before me in the hearing on guilt (exhibit A). Further, at the penalty hearing the Defendant's counsel handed up a further statement of facts (exhibit 4). I will incorporate the Defendant's further statement of facts into my judgment also.

The Defendant also relied on an affidavit sworn by Mr Dorney, director of the Defendant, dated 26 March 2003. There was some cross-examination of Mr Dorney by the Prosecutor's counsel.

Prosecutor's submissions 7. The Prosecutor submitted the Defendant's answers in cross-examination were less than satisfactory and that the Prosecutor did not accept Mr Dorney's expression of contrition and regret in his affidavit. Furthermore, in relation to Mr Dorney's suggestion that the Defendant had no building experience, the Prosecutor submitted this submission could not stand as the Defendant in fact hired an experienced company to make the development application in question.

The Prosecutor submitted the application lodged by the Defendant was an application for alterations and additions to an existing building which relied on the existing building envelope to justify height exceedances over that permitted by the Council's building controls and which was the basis for a SEPP 1 objection to enable a height of 13 metres to be utilised in the existing building. Otherwise only an eight metre height would have been allowed.

The Prosecutor pointed to the fact that Mr Dorney stated that the Defendant had suffered financial loss because no activity had taken place on the site since 25 January 2001. This was estimated in Mr Dorney's affidavit to be some $200,000, which consisted of interest on a loan for the purchase and development of the site.

It was put to Mr Dorney in cross-examination that because of the demolition of the whole building the Council's advice to the Defendant was that the Defendant could no longer rely on the existing development consent. A new development application was required. The Defendant had been aware of this fact for some two years since discussions with Mr Perica of the Council in January 2001.

The Prosecutor submitted the Defendant could have made other applications to the Council any time after January 2001, but had not done so. In these circumstances it was inappropriate to rely in mitigation of penalty on the Defendant's holding costs, as the Defendant was seeking to do.

The Prosecutor drew the Court's attention to s 3A of the Crimes (Sentencing Procedure) Act 1999 in relation to the matters it must consider.

It was noted the building which was the subject of the development consent was a heritage item at the time of demolition, although the Prosecutor also accepted that the building was removed as an item of environmental heritage under the Mosman Local Environmental Plan 1998 (the LEP) shortly after the demolition.

The Prosecutor submitted the gravity of the offence was not at the most serious end of the spectrum. However, the Prosecutor submitted that there were elements of wilful blindness in the Defendant's behaviour and referred to my earlier decision on 21 October 2002, particularly par 53, to the effect that the Defendant could have made a phone call before the demolition to the Council to clarify matters but did not do so. The Prosecutor submitted this was effectively the company closing its eyes to the obvious and relied on Caralis v Smyth (1987) 65 LGERA 303 in making that submission.

In relation to the level of penalty the Prosecutor referred the Court to other cases. Firstly, the matter of McDonagh on behalf of Great Lakes Council v Birdon Dredging Pty Ltd (1998) 99 LGERA 198 in which case a penalty of $10,000 was imposed for a breach of s 125(1) of the EP&A Act. That case dealt with sand dredging activity. Another matter referred to by the Prosecutor was Ashfield Council v Fuda (Pearlman J, NSWLEC, 29 June 1998, unreported) in which penalties of $15,000 and $2,000 were imposed for two breaches of s 125(1) of the EP&A Act.

Obviously relevant in this matter is the decision of Cowdroy J in Mosman Municipal Council v Mitchelson [2002] NSWLEC 111 which related to the same circumstances but involved the prosecution of the Defendant's project manager. The Prosecutor submitted that the decision by Cowdroy J in that matter was inadequate in the context of the maximum penalty being $1.1 million. In that case Cowdroy J imposed a penalty of $2,000. It is clear that Cowdroy J did take into account the capacity of the Defendant to pay and the early guilty plea amongst a number of other matters, which are circumstances that do not exist for the Defendant in this case.

The Prosecutor submitted Mr Mitchelson should not be held entirely responsible for the matter. The Defendant company had it's own responsibilities under the EP&A Act and cannot simply pass them on to Mr Mitchelson. Furthermore, the Defendant did not avail itself of an early plea of guilty and does not gain any benefit which applied to Mr Mitchelson who did enter an early plea of guilty.

In relation to the principal of even-handedness and parity the Prosecutor suggested that I must also have regard to the penalty imposed on Menai Excavations Pty Ltd in the decision of Lloyd J, Menai Excavations being the excavation company which actually carried out the illegal demolition. Lloyd J imposed a penalty of $40,000 but reduced this to $30,000 after taking into account numerous matters in mitigation (see Mosman Municipal Council v Menai Excavations Pty Ltd [2002] NSWLEC 132).

The Prosecutor did advise the Court that the Defendant has no prior convictions known to the Prosecutor. The Prosecutor also noted that its costs were likely to be in the amount of $47,000.

Defendant's submissions 20. The Defendant submitted there is no suggestion of environmental harm or harm to heritage value as a result of the Defendant's actions. At the time the development consent was granted the building was identified as a heritage item in the LEP but it was removed some four weeks after demolition. The relevant Council report concludes that none of the fabric of the building was of heritage value (exhibit F).

Further, exhibit D shows the areas marked up on the building demonstrating what parts were to be retained. This showed that approximately 12.5 percent of the original building was to be retained, with the roof and most of the walls to be demolished. The Prosecutor's submissions in relation to the SEPP 1 objection application by the Defendant were not important in the context of this sentencing hearing. The Council officer's report recorded that if a more usual roof height measurement was taken into account the height would have varied from 5.2 metres to 8.2 metres rather than the 13 metres that the Prosecutor was arguing.

The Prosecutor's counsel did not test Mr Dorney's expressions of regret and remorse in his affidavit in his cross-examination of Mr Dorney. The Defendant submitted it is quite possible as a matter of principle for the Defendant to express remorse and contrition despite pleading not guilty. The Defendant argued it was not guilty because the director, Mr Dorney, was inexperienced in development and instead had chosen to hire somebody to undertake the project work on the company's behalf. Ultimately it appears the wrong person was chosen and the Defendant company formed the wrong belief as to the appropriateness of that person. The Defendant certainly accepts the fact that it broke the law and its expressions of regret and remorse in the affidavit of Mr Dorney are genuine.

The Defendant's counsel also noted that Mr Dorney's affidavit provides evidence that the Defendant has taken steps to avoid a recurrence of events in the future and this has included finding a new project manager with relevant experience and appropriate qualifications.

It was submitted there was no need for specific deterrence and also no need for general deterrence given that the Prosecutor has prosecuted all three parties, that is Menai Excavations Pty Ltd, Mr Mitchelson and the Defendant in relation to the matter.

In relation to the penalty range, the Defendant essentially argued the relevant cases were the related matters of Mosman Municipal Council v Menai Excavations Pty Ltd and Mosman Municipal Council v Mitchelson . The Defendant notes there is no difference in maximum penalty between individuals and companies under the EP&A Act.

Finding 26. Firstly dealing with the gravity of the crime, regard must be had to the culpability of the Defendant and the individual circumstances which lead to the commission of the offence. The Defendant has been found guilty on the basis that it is vicariously liable for the actions of its agent Mr Mitchelson. The illegal demolition related to approximately 12.5 percent of a building which was otherwise to be demolished. The heritage value of the building is low. The Defendant is the owner of the site and has overall responsibility for it. It has obligations under the EP&A Act and must ensure its employees discharge their duties appropriately. In employing an inexperienced person, in this case, Mr Mitchelson, it has arguably failed to do so. There was opportunity for the Defendant to intervene before the illegal demolition took place, as I stated at par 53 of my earlier judgment. I do not, however, accept the Prosecutor's submissions there was wilful blindness on the Defendant's part. The Defendant is clearly culpable in my view.

I note that I must apply the principle of even-handedness to ensure that there is appropriate sentencing of like offences. I have been provided with cases by the Prosecutor which have referred to a range of approximately ten to fifteen thousand in relation to potentially similar matters. I also have the decision before me of Lloyd J in Mosman Municipal Council v Menai Excavations Pty Ltd where there was a penalty of $30,000 and also the decision of Cowdroy J in Mosman Municipal Council v Mitchelson resulting in a penalty of $2,000. It is important to observe that each case must be decided on its own circumstances.

The principle of parity set down in Lowe v The Queen (1984) 154 CLR 606 is clearly relevant. The question of parity is important in this case given the sentences of Menai Excavations Pty Ltd and Mitchelson in relation to essentially the same event. A key matter in assessing parity of co-offenders is the extent of culpability. I rely on the High Court decision of Postiglione v The Queen (1997) 189 CLR 295 in this regard. In my view the Defendant's culpability is of a similar, if not greater, level of culpability to that of Menai Excavations. Menai Excavations pleaded guilty before Lloyd J. He held that as an experienced demolition company it should have known better and refused a s 10 Crimes (Sentencing Procedure) Act 1999 application. Clearly, Lloyd J formed the view the culpability of Menai was substantial in awarding a penalty of some $30,000, reduced from $40,000 due to mitigating circumstances.

Mr Mitchelson, as I have noted, was fined $2,000. It is clear that Cowdroy J took into account a number of mitigating circumstances such as the Defendant's inexperience, that the illegal act was not deliberate, the substantial impact on the health and family life of Mr Mitchelson, his early plea of guilty, the payment of the Prosecutor's costs of a large sum for an individual and also Mr Mitchelson's means to pay. Many of these factors are not relevant to a plea in mitigation by this Defendant. I think the Defendant's culpability is greater than Mr Mitchelson's in the circumstances set out above.

The principle of proportionality requires that the sentence be proportional to the gravity of the crime and in that respect I have to have regard to the maximum penalty imposed by parliament, in this case $1.1 million. I think that it is necessary in matters of this nature to consider the issue of general deterrence, but I certainly consider there is no need to have regard to any specific deterrence in setting the penalty for this Defendant.

Another matter that it is necessary to consider is whether there is harm to the environment. I note that the Prosecutor did not rely on harm to the environment, in particular, harm to any heritage item as part of its sentencing submissions.

In relation to any mitigating factors, as there was no guilty plea the Defendant is not entitled to a utilitarian discount on the basis of a plea of guilty. I note however, the Defendant has expressed contrition and remorse and I accept the statements of the Defendant's director Mr Dorney in that regard.

While the Defendant pleaded not guilty and there was a hearing on the question of guilt, I accept the Defendant cooperated with the Prosecutor in its investigations of the matter in general. The Defendant accepts that it must pay the Prosecutor's costs which are likely to be substantial, in the vicinity of $40,000. I also note the Defendant has taken steps to employ an appropriately qualified person as its project manager as a measure to avoid such occurrences in the future.

I do not take into account, as I do not consider it relevant, the fact the Defendant has incurred holding costs because development on the site has not proceeded to date. The fact there is a prosecution on foot does not itself prevent further activity on the site being undertaken.

I accept the Defendant has not incurred any financial benefit to date as a result of the offence and I note the Defendant has no prior record.

These mitigating factors suggest a small reduction in penalty is warranted. In relation to the actual penalty I am of the view that the penalty should be in the low range.

I note the parties' submissions in relation to parity and sentencing, namely, that I must have regard to the sentences imposed on Mr Mitchelson and Menai Excavations although, not surprisingly, the parties did put varying submissions as to how those sentences should be approached. As I have already noted, I believe the culpability of the Defendant is higher than that of Mr Mitchelson and is similar to that of Menai.

In all these circumstances I consider it is appropriate to impose a penalty of $28,000. The penalty that I may have been inclined to impose in this case would have been higher. The Prosecutor's costs are a substantial figure and I have taken that into account in imposing this level of penalty as well as a small reduction for the other mitigating factors I have mentioned.

Orders 39. The Court orders that: 1. The Defendant is convicted of the offence with which it is charged. 2. The Defendant is fined the sum of $28,000 to be paid to the Registrar of the Court within one month of today's date. 3. The Defendant must pay the Prosecutor's costs of the proceedings against it, as agreed or assessed. 4. The exhibits may be returned.

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