Randwick City Council v Arxidia Pty Ltd - [2021] NSWLEC 105 - NSWLEC 2021 case summary — Zoe

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Randwick City Council v Arxidia Pty Ltd

[2021] NSWLEC 105

Land and Environment Court (NSW)|2021-08-18|Before: Duggan J, Ms J, Mr J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2021-08-18

Before

Duggan J, Ms J, Mr J

Source

Original judgment source is linked above.

Judgment (26 paragraphs)

[1]

Nature of proceedings

By Notice of Motion filed 21 August 2020 the Applicant (the Council) seeks orders that the First Respondent, Arxidia Pty Ltd (Arxidia), be found guilty of contempt by its failure to comply with Order 4 made by this Court in proceedings 2016/00314834 made and entered by the Court on 8 July 2017 (the Court Order) and be punished for that contempt. The nature of the asserted conduct was particularised in Charge 1 of the Statement of Charge (Charge 1) which provides: Charge 1 In breach of order 4 of the orders made by the Land and Environment Court in the proceedings No 2016/00314834 on 8 June 2017 (and entered on 8 June 2017 - "the Orders") the First Respondent Arxidia Pty Ltd did, on 20 June 2020, cause, permit and allow the land in lot 2 DP 939299 known as 23 Harbourne Street Kingsford ("the Land") to be used for a purpose for which development consent was required ("the Uses") when: a. no development consent had been obtained for the Uses on the Land (including any structures on the Land), and b. no occupation certificate had been issued for the occupation of all buildings and structures on the Land in association with the Uses. Particulars (a) Order 4 of the Orders is in the following terms: The respondents (and their servants, agents and contractors) be restrained from using, or causing, permitting or allowing the use of, the Land for any purpose for which development consent is required unless and until: a) that development consent (including a complying development certificate) has been obtained for the Land (including any structures to be erected on the Land), b) all the approved building works have been carried out in accordance with that development consent and in accordance with all necessary construction certificates, and c) all final occupation certificates have been issued for the occupation of all of the buildings and structures on the Land. (b) Complying Development Certificate No. MSA0362AC-CDC1 dated 22 February 2013 was issued by Matt Shuter and Complying Development Certificate No. MSA0362AC-CDC2 dated 22 March 2013 issued by Matt Shuter (collectively referred to as 'the Shuter CDCs'). (c) Final Occupation Certificate No. MSA 0362AC-OC1a dated 26 July 2013 was issued by Matt Shuter for the Shuter CDCs ('the Shuter OC'). (d) On 6 August 2017 Jon Hall certifier issued complying development certificate No CDC 23/2017 for "Internal works and alterations Existing dwellings" for the Land ('the Hall CDC'). (e) On 9 August 2017 Jon Hall certifier issued a final occupation certificate No 23/2017 for the Hall CDC ('the Hall OC'). (f) The Shuter CDCs and the Hall CDC were together a development consent for the purposes of Order 4(a) of the Orders which approved the use of the Land for the purposes of a single dwelling house ('the Approved Single Dwelling House'). (g) The Shuter OC and the Hall OC were together final occupation certificates for the Approved Single Dwelling House for the purposes of Order 4(c) of the orders. (h) The Approved Single Dwelling House was a different dwelling house to the dwelling house approved by the Shuter CDC as referred to in order 3(a) of the Orders. (i) On 20 June 2020 the ground floor of the front main building on the land contained two separate dwelling areas ('D1' and 'D2') and the rear smaller building contained one dwelling area ('D3'). (j) On 20 June 202 [sic] each of the dwelling areas D1, D2, and D3 contained their own separate ground floor entry/exit, kitchen, bathroom, living, bedrooms. The occupants of the dwellings shared the laundry area and facilities between the main building and the rear building. (k) Each of the dwelling areas D1, D2, and D3 were set up as separate and distinct dwellings. (l) On 20 June 2020 thirteen (13) persons were occupying, living in and residing in the buildings on the Land. (m) On 20 June 2020 three (3) persons were occupying, living in and residing in D1. (n) On 20 June 2020 three (3) persons were occupying, living in and residing in D2. (o) On 20 June 2020 seven (7) persons were occupying, living in and residing in D3. (p) The occupation and use of the Land identified in paragraphs (k)-(o) above was not for the purpose of the Approved Single Dwelling House or for the purpose of Shuter CDCs. (q) The occupation and use of the land identified in paragraphs (k)-(o) above was for the purposes of a boarding house, or multi dwelling housing as defined in Randwick Local Environment Plan ("RLEP"). (r) Since 8 June 2017 the Land has been and continues to be zoned R3 Medium Density under RLEP. (s) The Uses are permissible on the Land with development consent under the Environmental Planning and Assessment Act 1979 and RLEP. (t) No development consent has been obtained or granted for the Uses. (u) No final occupation certificate had or has been issued for the occupation of the buildings on the land in association with the Uses. (v) Other than the Shuter CDC's and the Hall CDC, there are no development consents or complying development certificates for the Land.

[5]

Letting arrangements of the Property

On 1 March 2018, Arxidia entered into a 12-month Management Agency Agreement with Realty Trading Australia Management Pty Ltd, trading as Laing & Simmons Kingsford in respect of the Property which was described as "23 Harbourne Road, Kingsford (including granny flats)" (the Management Agency Agreement).
The effect of the Management Agency Agreement was that Arxidia authorised Realty Trading Australia Management Pty Ltd to let and manage "all or part" of the Property (clause 1).
Clause 5 of the standard printed form of the Management Agency Agreement records an indemnity from Arxidia to Realty Trading Australia Management Pty Ltd against "all proceedings, claims and expenses for matters properly undertaken by the Agent on behalf of" Arxidia in accordance with the terms of the Agreement.
On 14 September 2018, a residential tenancy agreement was entered into between Arxidia and Dacheng Zhu which granted a right of occupancy of land described as "23 Harbourne Street, Kingsford NSW 2031" (the Main Building Lease). The residential tenancy agreement bears a signature that looks similar to that used by the real estate agent for Arxidia (for example as endorsed upon the managing agents' agreement).
An unnumbered condition on the front page of the Main Building Lease was that "no more than 1 person per room may ordinarily live in the premises at any one time".
Clause 32 of the Main Building Lease states that the whole or part of the premises may be sublet "with the landlord's written permission" (which permission the landlord may refuse, but in the case of a sublease of part of the Property, permission can only be refused on reasonable grounds).
Special condition 1 of the Main Building Lease was crossed out and initialed by the agent for the landlord and the tenant.
The words in special condition 1 of the Main Building Lease which were crossed out read: "Not to sublet the premises or part of the premises without the written consent of the owner or owner's agent".
Special condition 2 of the residential tenancy agreement requires that the tenant may "not change any locks or add any locking or access device to any apartment without the written permission of the owners' agent".
The rent that was payable under the Main Building Lease was $5,217.29 per month and a rental bond of $2,400.

[8]

The second inspection and use of the Property

On 9 August 2018, the Council received information suggesting that the Property was occupied for residential purposes.
On 1 December 2018, Fulmay Pty Ltd entered into a sublease for the rear part of the Main Building being D2 with 3 individuals nominating a tenancy for the period 25 July 2018 to 5 February 2019.
Feng Zhu is the director and sole shareholder of Fulmay Pty Ltd.
Feng is the son of Dacheng Zhu, the tenant of the Property.
Neither Feng Zhu or Dacheng Zhu are associated with the Respondents within the meaning of the Corporations Act 2001 (Cth) (other than Dacheng Zhu being the nominated tenant in the Main Building Lease and the Rear Building Lease).
Between 11 April 2019 and 20 May 2020, the Council carried out surveillance at the Property and observed lights on at the Property and food deliveries to the Property consistent with residential occupation.
On 23 April 2020, Fulmay Pty Ltd entered into a sublease for the front part of the Main Building being D1 with 3 individuals for the period 27 April 2020 to 26 October 2020.
On 25 May 2020, Fulmay Pty Ltd (signed by Feng Zhu and acting through N G Farrah as agent) entered into a sublease for the Rear Building on the Property being D3 with 4 individuals and a maximum of 7 occupants, for the period 11 June 2020 to 17 June 2020. The Respondents were not a party to that agreement.
The lease and sublease were marked as signed by Feng Zhu for Fulmay Pty Ltd.
On 18 June 2020, the Council obtained a search warrant to enter and inspect the Property.
On 20 June 2020, the Council officers inspected the Property.
At the time of the inspection on 20 June 2020, the Main Building and the Rear Building had been configured so that it was capable of being occupied as three separate dwellings: 1. A dwelling at the front of the Main Building with a kitchen, lounge room, 4 bathrooms and 8 rooms capable of being used as bedrooms (D1) accessed by a door fronting Harbourne Road; 2. A dwelling at the rear of the Main Building with a kitchen, lounge room, 5 bathrooms and 7 rooms capable of being used as bedrooms (D2) accessed from a door on the southern elevation of the Main Building; and 3. A dwelling in the Rear Building with a kitchen, 2 lounge rooms, 4 bathrooms and 6 rooms capable of being used as bedrooms (D3) accessed from Meeks Lane.
The configuration of the Property into three separate dwellings was not in accordance with any development consent.
At the time of the inspection on 20 June 2020 only the ground floor levels of D1 and D2 were occupied. The upstairs levels of the Main Building (both D1 and D2) were unoccupied.
As at 20 June 2020, the Property was used for the purpose of three separate residential uses.

[13]

The purpose of sentencing for contempt

The authorities on the principles relating to the nature and purpose of punishment where a finding has been made of contempt have been summarised in Environment Protection Authority v Pannowitz (No 2) (2006) 153 LGERA 126, 131-132 at [20]-[24] as: 20 The underlying purpose of the exercise of the power of the court to punish for contempt is to protect the effective administration of justice by demonstrating that the court's order will be enforced: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106-107. In Mudginberri (at 107) the High Court referred to Borrie and Lowe's Law of Contempt (2nd ed, 1983), p 3: If a court lacks the means to enforce its orders, if its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute. 21 The function of punishment for contempt serves two purposes: the enforcement of the process and order of the court and punishment as vindication of the authority of the court: Mudginberri at 108. Thus, in addition to its coercive purpose punishment also serves the purpose of deterring both the contemnor and others who might be so minded from flouting the authority of the court. 22 Non-compliance with an order or a judgment of the court necessarily constitutes an interference with the administration of justice: Witham v Holloway (1995) 183 CLR 525 at 533-534. Any punishment must therefore show that obedience to a court's order is important and should reflect its gravity. 23 Finally on the question of the nature and purpose of a penalty for contempt it is worth noting the judgment of Kirby J in Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at [149]: Unless courts are seen to respond firmly to deliberate defiance of their orders, their effectiveness in the authoritative determination of disputes of law would be undermined. And if they were not effective, "serious and lasting damage to the fabric of the law may result". [Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 115]. Obviously, the culpability of the contemnor is relevant to the order which must be made [Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741] The contemnor must then be punished in an emphatic way. He or she must be deterred effectively from any temptation to re-offend. However, the focus of attention is not solely on the contemnor. It is also addressed to the community at large and to any others who might consider acting in a similar manner. 24 In Court of Appeal, Registrar of v Maniam (No 2) (1992) 26 NSWLR 309, Kirby P, Hope AJA concurring, in an important passage said (at 314): 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 apt 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: see Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741. In this jurisdiction, contempt is a common law offence for which there is therefore no maximum penalty in this Court: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434 at 442. Any limits which are imposed upon the Court's powers derive from the purposes stated above and the limitations expressed in the Tenth Article of the Bill of Rights 1688 which restrains the imposition of cruel or unusual punishments or "excessive fines": see Smith v The Queen (1991) 25 NSWLR 1, noted (1991) 65 ALJ 695.

[14]

Determination of appropriate penalty

There are no specifically identified matters that must be taken into account in the sentencing for contempt, however, in Wood v Staunton (No 5) (1996) 86 A Crim R 183 Dunford J identified a number of relevant considerations, which have been adopted with approval by many courts in sentencing for contempt, including this Court, and have been adopted by both the Council and Arxidia as the relevant considerations in this matter. The factors identified at 185 were: 1. the seriousness of the contempt proved; 2. whether the contemnor was aware of the consequences to himself of what he did; 3. the actual consequences of the contempt on the relevant trial or inquiry; 4. whether the contempt was committed in the context of serious crime; 5. the reason for the contempt; 6. whether the contemnor has received any benefit by indicating an intention to give evidence; 7. whether there has been any apology or public expression of contrition; 8. the character and antecedents of the contemnor; 9. general and personal deterrence; and 10. denunciation of the contempt.
Of those identified factors, those numbered 1, 2, 3, 5, 6, 7, 8, 9 and 10 were identified by the Council as relevant considerations with respect to the conduct in this matter. With the exception of factor numbered 3, I accept that those are the relevant matters for consideration. As to factor 3, the Council approached this matter as one relating to the consequences of the contempt, such as risks to the environment and fire safety, however, the factor is not framed in that manner. Factor 3 relates to the consequence of the contempt on the trial or inquiry. In this case, there is no evidence of such impact and, accordingly, that factor is not relevant. That is not to say that if there were an impact of the type identified by the Council it could not be considered in relation to factor 1, being the seriousness of the contempt proved: Burwood Council v Ruan [2008] NSWLEC 167 at [20]. However, if such consequences was contended by the Council to be considered an aggravating feature of the contempt (to adopt the language of sentencing consideration), it would be necessary that the Council prove beyond reasonable doubt such consequences, and it has not done so.
I will consider each of the remaining identified relevant factors.

[15]

The seriousness of the contempt proved

The Council submits that the nature of the contempt is such that it would be considered wilful in the sense that term is used in Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435, 484-485 at [147] that: 147 In approaching this submission, it is essential to remember a number of general propositions which govern punishment for contempts of the kind in question here where the punishment is not limited by statute but is at large. In determining the order which is appropriate to the contempt found, the Court must take into account those general principles which govern the sentencing of persons convicted of criminal offences which are apt to the peculiar character of contempt. The underlying purpose of the law on this form of contempt is to vindicate the due administration of justice. Contempts of the kind illustrated in this case may be technical, wilful but without a specific intent to defy the authority of the Court and contumacious. In the last category a serious act of deliberate defiance of judicial authority is evidenced.
The contempt in this case, whilst not at the most serious end of the scale, is still serious. The contempt was wilful in that it was not technical or contumacious.
Arxidia submits that there is no element of wilful disregard or contempt for the Court's authority. Rather, the conduct comprised a lack of commitment to ensuring that the real estate leased the property to a tenant sufficiently bound to ensure the orders were complied with, and that the terms of the lease would be complied with.
Further, there being no evidence of the conduct being part of a pattern of offending and no evidence of harm the conduct should be considered at the low end of the scale.
I accept the characterisation of the seriousness of the contempt as submitted by the Council. Arxidia, whilst not taking any positive actions to breach the terms of the Court Order, took no positive steps to ensure that the terms of the Court Order were complied with. This inaction discloses a lack of attention to the need to comply with the orders made.
The submissions of Arxidia at [68] above appear to suggest that it was merely a matter of the lease not being complied with by the lessee, this is not the cause of the breach. The evidence is clear, that whilst Arxidia was prepared to leave the leasing to an agent, it took no steps to bring the terms of the Court Order to the agent's attention or to limit the agent's authority to deal with the Property only in accordance with the terms of the Court Order. By failing to do so, and by failing to take any positive steps itself by enquiry of the agent or inspection of the Property, its conduct demonstrated a disregard for the requirements of the Court Order and its obligations to ensure that any dealings with the Property were not in breach of the Court Order. Its conduct, through its inactivity and inattention, was wilful without a specific intent to defy the Court Order. It was not inadvertent or a technical breach.
However, the conduct that has been proved only relates to the single day. Accordingly, having regard to the full range of conduct that could amount to wilful contempt the limited period renders the conduct at the low end of wilful conduct amounting to contempt.

Randwick City Council v Arxidia Pty Ltd

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