Randwick City Council v Athens and Anor

APPLICANT Mr A. Thompson (Barrister)

SOLICITORS Bowen & Gerathy LEGAL REPRESENTATIVES: RESPONDENTS Mr D. Buchanan SC

SOLICITORS Levitt Robinson Solicitors and Associates

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 40097 of 2000

4 June 2004 Randwick City Council Applicant v Peta Athens First Respondent Athens Holding Pty Limited (ACN 001 166 552) Second Respondent Judgment No. 10 - Penalty

1 On 29 April 2004 the Court found each of the respondents to be in contempt of the Court's orders made on 8 December 2000 and on 1 June 2001 relating to the premises at 40 Coogee Bay Road, Coogee ("the premises"): see Randwick City Council v Athens and Anor (No. 7) [2004] NSWLEC 213. The Court has received and heard submissions on behalf of the applicant and the respondents relating to penalty.

Order of 8 December 2000 2 Order 3 made on 8 December 2000 ("the consent order") provided as follows:- 3. The First and Second Respondents, their servants, agents or assigns remove the sliding glass doors to Garages 9 and 10 and restore them for the purpose of carparking pursuant to Order7 of the Application herein.

Order 7 in the Application referred to in the above order sought the following prayer for relief:- 7. An order that the Respondents be ordered to remove sliding glass doors to Garages 9 and 10 and to restore them for the purposes of carparking. 3 In an apparent attempt to comply with the Court's order the respondents installed roller shutter doors at the front of each garage, removed the sliding glass doors from their tracks and placed them upside down in virtually the same position as they would have been were they replaced in their tracks. The frames within which the sliding glass doors were fitted remained in place. Neither garage 9 nor garage 10 was restored for the purpose of carparking as required by the order. The breach of such order was continuing as at 29 April 2004.

Order of 1 June 2001 4 On 1 June 2001 the Court made the following relevant order:

1. The first and second respondents are hereby restrained from using the premises at 40 Coogee Bay Road, Coogee, for the purpose of Backpackers Accommodation; 5 The Court found that this order had been breached between 11 May 2002 and 9 April 2004.

Findings 6 At para 22 of the respondents' submissions it is submitted that the Court erred in its understanding of the evidence. The submissions state that the word "backpackers" has been removed from the mini-bus contrary to the Court's apparent understanding. In fact the Court well understood that the word "backpackers" was removed from the mini-bus. However the Court found that the advertising material published for the respondents continued to display a photograph of the mini-bus bearing the word "backpackers" prominently displayed upon it. This is referred to at para 34 of the Court's judgment: see Randwick v Athens (No. 7). 7 At para 24 of the respondents' submissions it is again asserted that the Court has misunderstood the evidence concerning the registration of the subject premises as a boarding house pursuant to the provisions of the Local Government Act 1993. However again there is no error. The evidence establishes that following the restraining order made on 1 June 2001 the business name as recorded in the "Application for Registration of a Boarding House or Place of Shared Accommodation" was only changed from "Coogee Bay Road Backpackers" to "The Aegean Lodge" on 3 September 2003 when the first respondent renewed the registration, namely 17 months after the order came into effect. 8 The respondents also submit (at para 26 of their submissions) that the respondents have done nothing to render the garages permanently unusable for carparking. That fact is irrelevant. The consent order required inter alia the restoration of the garages for the purpose of carparking, not for the purpose of furniture storage as established by the evidence. 9 The submissions of the respondents include references to the Crimes (Sentencing Procedure Act) 1999 insofar as such Act may be relevant. As the Court does not consider that imprisonment is an appropriate penalty, its provisions do not have application: Principal Registrar of the Supreme Court of New South Wales v Jando (2001) 53 NSWLR 527. 10 Upon the hearing regarding penalty commencing on 31 May 2004 the applicant sought to tender evidence to establish that the respondents are continuing to operate the premises in contravention of the restraint contained in order 1 made on 1 June 2001. However the applicant did not request the Court to make any finding that the respondents were continuing to engage in conduct in breach of such order. The evidence was led solely for the purpose of demonstrating that, in the assessment of penalty, the attention of the Court should be drawn to the existing circumstances. 11 The evidence relied upon is contained in an affidavit of Allan Donald Graham sworn 26 May 2004. The respondents did not object to those portions of the affidavit dealing with Mr Graham's observations made on an inspection on 24 May 2004. Against the objection of the respondents the Court permitted evidence contained in such affidavit which related to the unsuccessful attempts by Mr Graham to conduct an inspection of the premises on 19 May 2004 and on 21 May 2004. 12 The respondents adduced evidence of Mr Steven Kaouna contained in an affidavit sworn 26 May 2004 which related to the inspection of 24 May 2004; in an affidavit of Mr Rick Naylor sworn on 28 May 2004. The respondents also tendered several character references relating to the first respondent. 13 The hearing on penalty was adjourned until 4 June 2004. On this occasion the respondents relied upon evidence contained in the affidavit of Mr Naylor sworn 2 June 2004 relating to the cost of removing references to previous versions of the website from caches of search engines; and the affidavit of Mr Joe Vigorito relating to the proposed auction sale of the premises which is scheduled for 3 July 2004. The applicant also relied upon an additional affidavit of Mr Graham sworn on 3 June 2004. 14 The evidence of Mr Graham was led for the purpose of demonstrating that the respondents, after delivery of judgment on 29 April 2004 were not co-operating with the applicant when the applicant sought to carry out further inspections of the premises pursuant to notices issued under s 118C of the Environmental Planning and Assessment Act 1979. The applicant did not seek to press the inspections on the day specified in the notices. Additionally the purpose for which the evidence was adduced, namely current non-co-operation, is not relevant to these proceedings. Accordingly the Court gives no weight to such evidence. Similarly the Court does not consider that the evidence of Mr Naylor is relevant to the question of penalty since the applicant does not submit that the respondents are engaging in a continuing breach of order 1 made by the Court on 1 June 2001. The evidence of Mr Vigorito is also not relevant as the possible sale of the premises is not a factor relevant to the assessment of penalty for past conduct. 15 Orders of the Court are to be observed strictly. Tamberlin J in Australian Competition and Consumer Commission v Hughes [2001] FCA 38 (at para 17) said:- The general rule is that it is the duty of those who are subject to an order of a court to strictly observe the terms of the order: see Borrie and Lowe The Law of Contempt 3rd ed 1996, at 559-560; Arlidge, Eady & Smith On Contempt , 2nd ed 1999 at 189. It is not necessary for a court to prescribe the manner in which the required result is to be achieved; it is sufficient if the court clearly specifies that a respondent is to carry out a particular course of conduct: see Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees Union (No 2) (1987) 15 FCR 64 at 72-73 per Wilcox J. The order must specify with certainty the result to be achieved but it is not for the applicant to suggest, or for the court to prescribe, a particular method of compliance. 16 The Court is satisfied that the circumstances of the breaches do not warrant a custodial sentence. However the penalty must be such as to reflect the seriousness of the breach of the Court's orders. The penalty must be such as to ensure that the conduct of the respondents will not be used as an example by others who may be tempted to breach the planning laws: see Hawkesbury City Council and Anor v Mushroom Composters Pty Limited, Pearlman J, Land and Environment Court of New South Wales, 4 August 1995, unreported and see also Australasian Meat Industry Employees' Union and Ors v Mudginberri Station Proprietary Limited (1986) 161 CLR 98 at 114. 17 The respondents submit that there are mitigating factors namely that there is no suggestion of injury, loss or damage caused by the breaches of the orders; that the breaches were not part of a planned or organised criminal activity; that the respondents have no previous convictions; that the first respondent is a man of good character; that neither respondent is likely to re-offend. It is also submitted that the interference with the administration of justice has not been serious and that there are circumstances substantially diminishing their culpability, being the attempts to comply with the orders. Additionally it is submitted that the second respondent has traded at a loss in the last financial year. 18 The respondents submitted that because the consent order made on 8 December 2000 required compliance by 31 December 2000, there is now no obligation to comply with the orders. In support the respondents rely upon the decision of the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd (2003) 196 ALR 350: see also Environment Protection Authority v Alkem Drums Pty Ltd (2000-2001) 113 LGERA 130. In the former decision an order was made requiring the respondent to immediately cease strike action. No purpose would have been served in those circumstances by seeking to enforce the order after the conduct sought to be restrained had ceased. The latter case turned upon the terms of a clean up notice which is not relevant in the present circumstances. 19 The consent order required the respondents to undertake the restoration of the garages and such obligation did not end merely because the date specified for compliance expired without the obligation being fulfilled. The illegal conduct was found to have continued until the date of judgment, and such conduct can if necessary be restrained by the imposition of penalties. Accordingly the above authorities are relevant to different circumstances and have no application to these proceedings. 20 With respect to the breach of the consent order made on 8 December 2000, the Court has found that the failure to comply constitutes a continuing offence. Accordingly the Court will impose a continuing daily penalty of $500 against each respondent in the event that the breach continues. 21 The respondents were well aware of the lawful purpose for which the premises could be used, namely that of a boarding house which does not include backpackers accommodation. The distinction between such uses was clearly explained by Sheahan J in Randwick City Council v Athens & Anor [2001] NSWLEC 110. 22 The nature of the short-term accommodation provided, the setting of rates for such accommodation, the knowledge that the residents were travellers from other countries, advertising in backpacker magazines and the advertisement of the provision of mini-bus for transport between the premises and Sydney Airport show that the respondents were operating the business for backpacker accommodation. Such activity was in direct defiance of the Court's order. 23 The respondents have pretended to comply with the Court's order by displaying signs at the reception to the premises stating that the premises were not for backpackers, and by removing the word "backpacker" from the name of the premises and from the advertising material. The name "Aegean Lodge" on the premises and on the website was substituted. However the nature of the use of the premises, namely the provision of temporary accommodation did not change. The respondents continued their operations as demonstrated by the conversation held between the first respondent with Mr Wereszczynski on 16 January 2003 when the first respondent said:- We provide budget accommodation. I have a sign at the front reception. It is not up to me to work out if the person is a backpacker or what they are. 24 The Court is satisfied that the respondents have endeavoured to circumvent the orders of the Court. These attempts have not addressed the essential issue, namely the use of the premises. 25 The first respondent is the sole director and shareholder of the second respondent. Each respondent has been held to be in contempt of two separate charges. In accordance with the totality principle referred to in Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 and more recently in Mill v The Queen (1988-1989) 166 CLR 59 and in Pearce v The Queen (1998) 194 CLR 610 the Court will reduce the penalty incurred by the second respondent in respect of each charge. 26 In assessing the penalty for each charge against each respondent the Court has taken into consideration all of the respondents' submissions including the fact that there is no evidence before the Court of any environmental harm. Had evidence of this nature been tendered the Court would have been minded to impose a more serious penalty. Nevertheless defiance of the Court's orders justifies appropriate penalties: see Mudginberri at p 115 and Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 per Kirby P at 314. Even if the second respondent has been trading unprofitably, it currently has substantial assets. No evidence was led concerning the means of the first respondent. 27 During the hearing as to penalty the respondents conveyed an apology to the Court based upon the findings of the Court that contempt had been proven. However no concession was made that but for such findings, the orders had been breached. In these circumstances the Court cannot accept that there has been any genuine expression of contrition. 28 Accordingly the Court determines that the appropriate penalty relating to the breach of the consent order made on 8 December 2000 is $20,000 in respect of the first respondent and $10,000 in respect of the second respondent. The Court determines that the appropriate penalty relating to the breach of order 1 made on 1 June 2001 is $30,000 in respect of the first respondent and $15,000 in respect of the second respondent.

Costs 29 The notice of motion sought an order for costs. Since the applicant has been successful in its prosecutions, it is entitled to be compensated for its costs: see Latoudis v Casey (1990) 170 CLR 534. Whilst the respondents sought the costs of the first reopening hearing, the Court is satisfied that such costs should be treated as being costs in the proceedings. In the exercise of the Court's discretion, the Court will order that the first respondent pay two-thirds of the applicant's costs and the second respondent pay one-third of the applicant's costs.

Orders 30 The Court makes the following findings and orders:-

Each of the first and second respondents is adjudged guilty of a wilful breach of order 3 made by this Court on 8 December 2000 by failing to remove the glass doors to garages 9 and 10 of the premises at 40 Coogee Bay Road Coogee and by failing to restore such garages for the purpose of carparking and that such breach has continued from 11 May 2002 to 29 April 2004;

Each of the first and second respondents is adjudged guilty of a wilful breach of order 1 made by this Court on 1 June 2001 by using the premises at 40 Coogee Bay Road Coogee for the purpose of backpacker accommodation and that such breach occurred for the period from 11 May 2002 to 9 April 2004;

ORDER that the first respondent be fined the sum of $20,000 and the second respondent be fined the sum of $10,000 in respect of the breach of order 3 made by the Court on 8 December 2000;

ORDER that the respondents each be fined a continuing daily penalty of $500 per day in respect of any continued breach of order 3 made by the Court on 8 December 2000;

ORDER that the first respondent be fined the sum of $30,000 and the second respondent be fined the sum of $15,000 in respect of the breach of order 1 made by the Court on 1 June 2001;

ORDER that the respondents pay the applicant's costs of the proceedings in proportion two-thirds by the first respondent and one-third by the second respondent;

ORDER that the exhibits are to remain with the Court file pending further order.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.