160 Leicester Pty Ltd v Melbourne City Council
[2021] VSCA 250
•9 September 2021
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCR 2020 0269
| 160 LEICESTER PTY LTD (ACN 606 306 852) | Applicant |
| v | |
| MELBOURNE CITY COUNCIL | First Respondent |
| MINISTER FOR PLANNING | Second Respondent |
S EAPCR 2020 0270
| STEFCE KUTLESOVSKI | Applicant |
| v | |
| MELBOURNE CITY COUNCIL | First Respondent |
| MINISTER FOR PLANNING | Second Respondent |
S EAPCR 2020 0271
| RAMAN SHAQIRI | Applicant |
| v | |
| MELBOURNE CITY COUNCIL | First Respondent |
| MINISTER FOR PLANNING | Second Respondent |
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| JUDGES: | PRIEST, BEACH and KAYE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 1 September 2021 |
| DATE OF JUDGMENT: | 9 September 2021 |
| MEDIUM NEUTRAL CITATION: | [2021] VSCA 250 |
| JUDGMENT APPEALED FROM: | [2020] VCAT 1435 (Quigley J) |
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CRIMINAL LAW – Sentence – Applications for leave to appeal against sentence – Company and its directors found guilty of contempt of VCAT – Contempts constituted by wilful and deliberately defiant breach of VCAT orders – Company fined $150,000 – Directors ordered to be imprisoned for 1 month – Contemnors ordered to pay costs fixed at $250,000 – Whether Tribunal erred in assessing gravity of contemnors’ conduct – Manifest excess – Whether punishment manifestly excessive – New evidence – Evidence of compliance with orders after sentencing – New evidence not throwing light on matters which underpinned Tribunal’s orders – Proposed grounds of appeal not reasonably arguable – Applications for leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants in all matters | Mr D Grace QC and Mr M Clarke QC with Ms S Armstrong | Francke Lawyers |
| For the Respondents in all matters | Mr O P Holdenson QC with Mr A Woods | Maddocks Lawyers |
PRIEST JA
BEACH JA
KAYE JA:
On 15 October 2016, the building at 154–160 Leicester Street, Carlton, known as the Corkman Hotel, was demolished. As no planning permit had been obtained for its demolition, the demolition was unlawful. At the time of the demolition, the property was owned by 160 Leicester Pty Ltd (‘the Company’). The Company’s two directors (‘the Directors’) were Stefce Kutlesovski and Raman Shaqiri.
On 27 October 2016, pursuant to s 114 of the Planning and Environment Act 1987, the Melbourne City Council (‘the Council’) and the Minister for Planning (‘the Minister’) commenced proceedings at VCAT (‘the Tribunal’) for an enforcement order against the Company for breaches of the provisions of the Melbourne Planning Scheme. The enforcement order application sought the reconstruction of the hotel.
Shortly prior to the scheduled hearing of the VCAT proceeding, the parties entered into an agreement which provided for the making of orders to enforce compliance with the Melbourne Planning Scheme. The agreement between the parties provided for the Company to seek planning permission for the redevelopment of the land and, in the interim, the clearing of the site and its use as informal open space. On 28 May 2019, pursuant to the agreement, the Tribunal made consent orders (‘the enforcement orders’). Paragraph 1 of the enforcement orders provided:
1. By no later than 30 November 2019, [the Company] must:
(a)Clear the site at 154–160 Leicester Street, Carlton (Site) of all demolition material and existing building fabric.
(b)Provide to Melbourne City Council evidence that the environmental condition of the Site is suitable for the purpose of ‘informal outdoor recreation’ as defined by the Melbourne Planning Scheme.
(c)Provide to the Melbourne City Council for approval a plan of the interim works required to the Site to provide for its interim use for the purpose of informal outdoor recreation. The plan must be to the satisfaction of the Melbourne City Council.
Paragraph 1 of the enforcement orders was not complied with. As a result, on 16 July 2020, pursuant to s 137(1) of the Victorian Civil and Administrative Tribunal Act 1997 (‘the VCAT Act’), the Council and the Minister commenced contempt proceedings against the Company and the Directors. The contempt proceedings were heard over three days in October 2020 by the President of the Tribunal, Quigley J.
On 10 November 2020 the Tribunal found the Company and each of the Directors guilty of contempt of the Tribunal ‘by reason [of] their wilful and deliberately defiant non-compliance with Order 1(a) and 1(b)’ of the enforcement orders.[1]
[1]Melbourne CC v 160 Leicester Pty Ltd [2020] VCAT 1255, [156] (‘Liability Reasons’).
On 16 December 2020, following a hearing on penalty and costs, the Tribunal made orders fining the Company $150,000, and imposing terms of imprisonment on the Directors of one month.[2] Additionally, the Tribunal made an order that the Company and the Directors, jointly and severally, pay the costs of the Council and the Minister, fixed in an amount of $250,000.[3]
[2]While the orders of the Tribunal refer to terms of imprisonment of ‘not less than one month’, there was no issue in this Court that, properly construed, the Tribunal ordered terms of imprisonment of one month for each Director.
[3]Melbourne CC v 160 Leicester Pty Ltd [No 2] [2020] VCAT 1435 (‘Penalty Reasons’).
Pursuant to s 138(1) of the VCAT Act and s 278 of the Criminal Procedure Act 2009, the Company and the Directors now seek leave to appeal against the sentences imposed, including the order that they jointly and severally pay the costs of the Council and Minister fixed in the amount of $250,000.[4] In accordance with the terms of s 138(2) of the VCAT Act, upon the filing of their applications for leave to appeal, the orders made by the Tribunal ‘imposing punishment’ on the Directors and the Company were stayed ‘until the appeal is determined’.
[4]While the Company and the Directors initially filed applications for leave to appeal against conviction as well as sentence, the applications for leave to appeal against conviction were abandoned at the commencement of the hearing in this Court.
In their notices of application for leave to appeal against sentence, the Directors’ proposed grounds of appeal are set out as follows:
1.The Tribunal erred in assessing the gravity of the conduct and circumstances that forms the basis for the contempt of the Tribunal’s Order.
2.The orders (sentence) are manifestly excessive, both individually and in combination to one another.
In its notice of application for leave to appeal against sentence, the Company’s sole proposed ground of appeal is manifest excess. The Company’s proposed ground of appeal is expressed in identical terms to the Directors’ proposed ground 2.
At the commencement of the hearing of their applications, the Company and the Directors applied to adduce new evidence showing that, following the imposition of their sentences, order 1 of the enforcement orders has been complied with, the park that was contemplated to be built on the site had been completed and, on 19 August 2021, the park was opened to the public. The Company and the Directors also applied to add a further ground of appeal in the following terms:
By reason of fresh evidence arising since the date of sentence, which demonstrates the true significance of facts in existence at the time of sentence, a different sentence should be substituted to avoid a miscarriage of justice.
Senior counsel for the Council and the Minister did not oppose the receipt by us of the new evidence sought to be relied upon by the Company and the Directors. Nor did he oppose leave being granted to the Company and Directors to add the proposed further ground of appeal. He contended, however, that the new evidence was immaterial for reasons he would develop in argument. In the circumstances, we permitted the Company and the Directors to tender the evidence, and we granted them leave to add the new proposed ground of appeal.
Background facts
The Corkman Hotel was built in the mid-nineteenth century. It was one of the oldest buildings in Carlton, and had both historical and aesthetic significance. The hotel was owned by the Company, and the Company was controlled by the Directors. The Directors are experienced property developers. The illegal demolition of the hotel occurred over one day on 15 October 2016. Work commenced at about 7:15 am, and by about 7:00 pm that evening the majority of the hotel had been demolished.
While neither the Company nor the Directors fall to be punished again in respect of the demolition of the hotel, there can be little doubt that, in deciding to demolish the hotel, the Directors made a commercial calculation — weighing up the potential penalties that they would face as a result of illegally demolishing the hotel, with the potential profit that would result from the development of the site, potentially into a 12-storey building.
On 18 October 2016, an EPA officer attended the demolition site. The site was observed to contain piles of rubble consisting of bricks, mortar, metal and other general waste. Additionally, the presence of ‘possible asbestos containing material’ was observed. Samples were taken which later confirmed the presence of chrysotile asbestos.
On 7 November 2016, an EPA officer issued a notice requiring the industrial waste at the site (including any chrysotile asbestos) to be covered by 6:00 pm that day. A number of subsequent inspections of the site revealed that this notice was not always fully complied with.
As we have already observed, prior to the issuing of the notice on 7 November 2016, the Council and the Minister commenced proceedings at the Tribunal for an enforcement order against the Company for breaches of the provisions of the Melbourne Planning Scheme.
After mediating, on three separate occasions, the parties reached an agreement which led to the making of the enforcement orders on 28 May 2019. What occurred thereafter, was summarised by the President of the Tribunal in her reasons for finding the Company and the Directors guilty of contempt (the Liability Reasons). It is necessary to summarise the Liability Reasons before turning to the reasons underlying the orders from which the Company and the Directors now seek leave to appeal (the Penalty Reasons).
Liability Reasons
As we have already observed, the President of the Tribunal found the Company and the Directors guilty of contempt of the Tribunal ‘by reason of their wilful and deliberately defiant non-compliance with’ paragraphs 1(a) and (b) of the enforcement orders. In her reasons, after identifying the background facts, her Honour described in some detail the steps taken to comply with, and to enforce compliance with, paragraph 1 of the enforcement orders.[5] In the course of this description, her Honour referred to:
·the issuing, on 2 July 2019, of an emergency order made pursuant to the Building Act 1993, in respect of the safety of the site, requiring the removal of asbestos and a retaining wall on the eastern boundary of the site;[6]
·the removal, between 17 and 22 July 2019, of approximately 1000 cubic metres of demolition material from the site, by contractors engaged on behalf of the Company;[7]
·the preparation, on 24 July 2019, of an asbestos clearing report by Prensa Pty Ltd, as part of the requirements to satisfy the Council in respect of the emergency order issued on 2 July;[8] and
·the preparation, some time in November 2019, of a concept plan for the redevelopment of the site, ‘including a concept for a park (‘the Park Plan’) for the site’.[9]
[5]Liability Reasons [8]–[34].
[6]Ibid [12].
[7]Ibid [13].
[8]Ibid [14].
[9]Ibid [16].
Her Honour then referred to correspondence passing between the solicitors for the Company and the Directors, and the solicitors for the Council and the Minister, with respect to allegations made by the solicitors for the Council and the Minister that there was a continuing breach of paragraphs 1(a) to (c) of the enforcement orders. Her Honour said that the following correspondence and communications were of note:
(a)On 2 December 2019, the [solicitors for the Council and the Minister] telephoned and emailed the [solicitors for the Company and the Directors] setting out the allegation that paragraphs (b) and (c) of the enforcement orders remained outstanding. That is, that [the Company] failed to provide the Council evidence that the environmental condition of the Site was suitable for the purpose of informal outdoor recreation and that there was a failure to submit a plan of interim works for the Council’s approval.
(b)On 13 January 2020, the [solicitors for the Council and the Minister] wrote to [the solicitors for the Company and the Directors] again alleging contravention of the Order and asserting that there was no reason or evidence explaining why the Orders had not been complied with.
(c)On 20 January 2020, [solicitors for the Company and the Directors] forwarded the proposed Park Plan prepared by Peddle Thorpe dated November 2019 to the Council.
(d)A copy of the Park Plan was sent to [the solicitors for the Council and the Minister] on 30 January 2020. In this correspondence [the solicitors for the Company and the Directors] referred to a condition report previously provided to the Melbourne City Council and alleged that the Council was not being cooperative in the process and had delayed and obfuscated [the Company].
(e)On 25 February 2020, [the solicitors for the Council and the Minister] informed [the solicitors for the Company and the Directors] that the Prensa Report dated 24 July 2019 was not a report or evidence that complied with the requirements of the Order.[10]
[10]Ibid [18] (footnotes removed).
Next, her Honour referred to a letter sent by the solicitors for the Council and the Minister to the Company. Relevantly, the letter provided:
We have previously written to your previous lawyers about breaches of the enforcement order made against you on 28 May 2019.
…
As at today:
·demolition material and building fabric remain on the site
·a compliant environmental suitability report evidencing the suitability of the site for ‘informal outdoor recreation’ has not been provided
·the interim works plan that was submitted through your previous lawyer is incapable of being assessed unless and until the environmental suitability report is provided.
…
We are instructed that, unless
·all demolition material and building fabric is removed from the site; and
·a compliant environmental suitability report is provided to Council; and
·arrangements are made for appropriate indemnity to be given to Council for use of the site by the public
by close of business Monday 23 March 2020, we are to issue contempt proceedings without further recourse to you.
Her Honour then noted that a response, dated 20 March 2020, provided by the solicitors for the Company (who, by this time had been re-engaged), denied that any contempt had been committed, and noted that ‘a person is not guilty of contempt if they failed to comply with an order that they are unable to comply with’. The 20 March 2020 letter finished by suggesting that an application to the Tribunal to vary the enforcement order might need to be made if the Council and the Minister persisted in the argument that the Company was in contempt. Her Honour noted this letter was sent some ten months after the enforcement order was made, and some four months after the date for compliance had passed, and was the first time that any complaint as to the ability to comply with the enforcement orders was raised on behalf of the Company or the Directors.[11]
[11]Ibid [22].
Her Honour then summarised further correspondence passing between the parties; the sending, by the Council, of a Notice of Intention to Enter the Land;
a conversation between a relevant Council officer and one of the Directors
(Mr Shaqiri), in which the Director said that it was not safe to send a member of his staff to the site ‘due to the rain’ but that the Council officer could inspect the site himself; the inspection of the site by Council officers; and the engagement, by the Council, of an environmental consultancy company, Landserv Pty Ltd, for the purpose of enforcing paragraph 1(b) of the enforcement orders.[12]
[12]Ibid [23]–[28].
Her Honour then referred to a report provided by Landserv, following its assessment of the site on 24 July 2020. She summarised the Landserv report as identifying:
·scaffolding was observed along the northern and western boundaries of the site, which was used to fix timber boarding to prevent access to the site from the public;
·the surface of the site appeared to have split levels where the northern portion of the site was slightly more elevated than the southern;
·the site was covered mostly in hard stand concrete with some areas where concrete had been partially removed exposing the underlying soils. Vegetation (weeds) had grown in areas where concrete had been removed;
·miscellaneous items of rubbish and builder’s rubble including brick, concrete, bitumen, tyres, plastic, steel, ceramic, timber, plasterboard, rock, paper, glass, and organic matter was observed across the entire extent of site surface;
·fragments of asbestos-containing material in the form of bonded cement sheeting was observed in multiple areas across the site surface;
·a large palm tree was located on the eastern boundary; and
·a large bluestone lined hole was noted in the north-west corner of the site, likely to be associated with the former cellar. Scaffolding, minor building rubble, general rubbish and surface water was observed in the bottom of the hole.[13]
[13]Ibid [31].
Her Honour noted that, at the hearing of the contempt application, the defence of the Company and the Directors was that no contempt could be made out because:
(a)the Tribunal lacked jurisdiction to make the Order by reason of the proper construction of s 119 of the Planning and Environment Act 1987 in that the Order:
(i)was not clear and unambiguous; and/or
(ii)was not capable of compliance
(b)alternatively, if the terms of the Order could technically be complied with, the conduct was not contemptuous of the Tribunal.[14]
[14]Ibid [45].
Her Honour rejected the submissions of the Company and the Directors that the enforcement order was invalid, describing the claim of invalidity as being ‘without foundation’.[15] Similarly, she rejected the submission that the enforcement order was not clear and unambiguous, saying that there was ‘no merit’ in the submissions raising ambiguity or lack of clarity.[16]
[15]Ibid [74].
[16]Ibid [98].
As to the submission that the enforcement order was not capable of compliance, her Honour observed that this submission was not based on any inability in a ‘technical sense’ to comply with the order, ‘but rather the trouble and expense required to comply with the terms of the Order’.[17] After referring to the evidence, her Honour said that she was ‘totally unpersuaded of the merit of this point’.[18]
[17]Ibid [99].
[18]Ibid [108].
In rejecting the submission that the enforcement orders were not capable of being complied with, her Honour said:
No evidence was provided to the Tribunal on behalf of [the Company] of its lack of financial capacity to undertake the work; rather the evidence was that the work was estimated to cost approximately $1.5 million and that such work would be more efficiently done as part of a redevelopment of the site. In the context of a significant redevelopment site such a cost whilst a large figure in absolute terms needs to be considered in its relative context.[19]
[19]Ibid [102].
Her Honour then turned to, and rejected, the submission that the conduct of the Company and the Directors was not contemptuous. As to the reliance by the Company and the Directors upon the Company’s partial compliance with the enforcement order, by at least the removal of approximately 1000 cubic metres of demolition material in July 2019, her Honour said:
The suggestion that there has been partial compliance with the Order, in particular that the Site has been partially cleared and that there was a Park Plan prepared (albeit not submitted until January 2020 without explanation but which has been approved in principle) does no more than demonstrate non-compliance with the Order. The Order does not say partially clear the Site. It plainly states ‘clear’ the Site.
That some attempt seems to have been made to comply with the orders demonstrates to the Tribunal that there is knowledge and understanding of the Orders but a preparedness only to go as far as it suits the respondents notwithstanding the significant breaches of the planning scheme which have led to this situation brought about by its own actions and contravention of the law.
I can draw no other conclusion that the Company and its Directors through whom it acts has chosen to take the steps it wishes to take and no more.
I note that no notice was given that there was any challenge to the terms of the Order until 20 March 2020 and no actual step to challenge the terms of the Order until an application was filed on behalf of the respondent on 30 July 2020 to vary the Order. This application was made on the cusp of the first return date of this proceeding.
In respect of the Company, I have no hesitation in finding that each of the elements of contempt have been made out. The inaction and non-compliance with the timetable of requirements which had been negotiated and consented to by all parties cannot be considered accidental. I find that the failure to act to comply with the Order is considered, wilful and deliberate.
There is no need for the applicants to prove intention to disobey, rather that it was a deliberate and voluntary act or omission. I can draw no other conclusion than that the omission was deliberate and voluntary by the Company and consequently contemptuous of the Tribunal.[20]
[20]Ibid [112]–[117]. See also [146]-[147] wherein her Honour rejected a submission that partial compliance with paragraph 1 of the enforcement orders was a mitigating factor.
Her Honour then dealt with the liability of the Directors, noting that it was clear from the evidence before the Tribunal that no person other than the Directors directed the business of the Company.[21] After reviewing all of the evidence, her Honour said:
I find there is more than sufficient evidence to conclude beyond reasonable doubt that the Directors wilfully obfuscated and obstructed compliance with the Order. There is no plausible alternative theory that can be reasonably accepted.[22]
[21]Liability Reasons [130].
[22]Ibid [149].
Finally, her Honour expressed her conclusions as follows:
The Tribunal finds that there is non-compliance with Order 1(a) and (b) of the Orders made on 28 May 2019 in contravention of s 137(1)(ea) of the VCAT Act.
The Tribunal finds the Company and each of the Directors guilty of contempt of the Tribunal by reason of their wilful and deliberately defiant non-compliance with Order 1(a) and 1(b).[23]
[23]Ibid [155]–[156].
Penalty Reasons
The Penalty Reasons are detailed and comprehensive. In them, her Honour referred to the findings she had made in the Liability Reasons, saying that the course of conduct of the Company and the Directors demonstrated to her that ‘they have been required to be dragged every step of the way to compliance and that the requisite contrition is lacking’.[24] Her Honour then said:
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.[25]
[24]Penalty Reasons [21].
[25]Ibid [22].
Her Honour’s reference to ‘what is now proposed to be delivered’ was a reference to affidavit evidence given by the solicitor for the Company and the Directors, deposing to steps to be taken by the Directors to engage a project manager, external builder and other consultants to, in essence, comply with the terms of the enforcement orders. Her Honour said:
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.[26]
[26]Ibid [38].
Her Honour acknowledged that imprisonment for contempt should only be considered when no lesser penalty would suffice, and referred to authority that imprisonment should be ‘reserved for exceptional circumstances’.[27] She formed the view that the circumstances of the contempts committed by the Company and the Directors were ‘exceptional’, justifying a fine of $150,000 for the Company, and terms of one month’s imprisonment in respect of the Directors.[28]
[27]Ibid [31].
[28]Ibid [23], [24], [31], [37].
With reference to authorities to which her Honour was taken during the course of the penalty hearing, her Honour said:
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.[29]
[29]Ibid [37].
Her Honour then said:
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.[30]
[30]Ibid [38].
In fixing penalty, her Honour noted the submissions made on behalf of the Company and the Directors that ‘financial hardship was not a consideration in respect of the ability to pay a fine’.[31]
[31]Ibid [51]. See also [41].
When dealing with the Directors, and whether a financial penalty would suffice, her Honour said:
I am of the view that a financial penalty alone will not achieve the underlying objectives of the power of contempt of the Tribunal.
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. However, I am of the view that these are exceptional circumstances.
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.
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 either the applicants nor the respondents. Penalty is at the discretion, properly exercised, of the Tribunal.[32]
[32]Ibid [62]–[65] (citations omitted).
Additionally, her Honour said that deterrence and denunciation were important factors in considering the appropriate penalty in this case.[33] Her Honour observed that the non-compliance with the enforcement orders had been raised with the Company and the Directors on numerous occasions, and that the conclusion to be drawn was that they had ‘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’.[34]
[33]Ibid [76], [90].
[34]Ibid [78].
Her Honour further concluded that there was ‘little doubt that the actions of [the Company and the Directors] were directed to significant financial gain at the expense of compliance with the planning law[35] and the Orders made by the Tribunal’.[36] As her Honour put it, ‘Such behaviour is unacceptable and cannot be tolerated’.[37]
[35]For completeness, we note that at Penalty Reasons [99], her Honour correctly observed that the ‘separate and distinct breaches of the law’ associated with the demolition of the Corkman Hotel were ‘part of the backdrop to this saga and not more than that’.
[36]Penalty Reasons [82].
[37]Ibid.
After making detailed observations about the circumstances of the Company, and each of the Directors individually,[38] her Honour concluded:
[38]Ibid [49]–[98].
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.
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.
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.
I do not accept that that there is no harm to the community by reason of the respondents’ contempt.
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.
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.
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.
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.[39]
[39]Ibid [99]–[106].
Finally, her Honour dealt with the issue of costs, concluding that it was appropriate to order the Company and the Directors to pay the costs of the Council and the Minister fixed in the amount of $250,000.[40]
[40]Ibid [108]–[114].
Parties’ contentions
Under proposed ground 1, each Director submitted that the Tribunal erred in assessing the gravity of the conduct and circumstances that formed the basis for the Tribunal’s finding of contempt. Each Director submitted that the Tribunal erred in its assessment, ‘in not taking into account’:
(a)The measure of compliance with the Order 1(a) and 1(b) — i.e. the substantial above ground clearance of the site, the adoption and payment for the Landserv Report into the suitability of the site for use as informal outdoor recreation, the submission of and approval of the Peddle Thorp plans for the use of the site as a park, and the setting in place through the use of external expert contractors, of the means of achieving compliance with the Order,
(b)The expression of regret on behalf of [the relevant Director],
(c)The absence of risk to public safety from the contempt,
(d)The absence of harm to the community from the contempt,
(e)The absence of prior convictions for contempt and/or defiance of Court Orders.
The Directors submitted that the ‘prime aim for the bringing of a contempt application is to ensure compliance with the Order’. They submitted that, ‘albeit late, this was being undertaken’ at the time of sentencing.
Additionally, the Directors contended that imprisonment for contempt is ‘the option of last resort’. They submitted that relevant authorities show that the power of imprisonment is used infrequently, ‘and in situations of greater gravity than the facts herein’. The Directors also noted that, in the submissions of the Council and the Minister to the Tribunal, the Council and the Minister ‘did not assess the gravity of the conduct herein to be sufficiently grave as to justify a submission that a term of imprisonment ought to be imposed on either Director’.
With respect to the proposed ground of appeal alleging manifest excess (ground 2 in relation to the Directors, and ground 1 in relation to the Company), the Directors submitted:
(a)The substantial clearance of the site of 1000 cubic metres of demolition material and above ground building fabric by August 2019,
(b)The further subsequent clearance of the site of above ground remnant materials,
(c)The adoption and payment for the Landserv Report into the suitability of the site for use as informal outdoor recreation,
(d)The submission by 30/1/2020, of the Peddle Thorpe Plans for the use of the site as a public park, which were subsequently approved by Council on 14/9/2020,
(e)Albeit late in the proceedings, the setting in place through the use of external expert contractors, of the means of achieving compliance with the Order,
(f)The expression of regret on behalf of the Company,
(g)The absence of risk to public safety from the contempt,
(h)The absence of harm to the community from the contempt,
(i)The absence of prior convictions for contempt and/or defiance of Court Orders,
(j)The Ordering of committal to prison for not less than 1 month, and with the additional liability to pay a further $250,000, exceeds the maximum fine that can be imposed on [the relevant Director].
The Company relied upon the same matters the Directors relied upon, save that its final contention was that:
The ordering of the fine for $150,000 together with the liability to pay a further $250,000 by way of costs, a total of $400,000. This sum equates to almost 50 per cent of the maximum penalty that can be imposed on a corporate contemnor.
As we have already observed, at the hearing of these applications, the Company and the Directors applied to add a fresh evidence ground, relying upon an affidavit from their solicitor which demonstrated that order 1 of the enforcement orders has now been complied with. It was contended that this evidence was fresh evidence which reopened the sentencing discretion. Senior counsel for the Company and the Directors submitted that there were two bases upon which the new evidence was admissible.
First, senior counsel submitted that the new evidence was admissible in accordance with the principles set out in this Court’s decision in R v Nguyen.[41] It was submitted that the new evidence throws light on the Tribunal’s scepticism that what was proposed in terms of compliance, at the time of the plea hearing, would be performed ‘in a timely manner, or at all’.[42]
[41][2006] VSCA 184 (‘Nguyen’).
[42]Penalty Reasons [22]. See Nguyen [2006] VSCA 184, [36]–[37].
Secondly, it was submitted that it was always open to a contemnor to purge his or its contempt by late compliance and/or an apology — potentially leading to any punishment being remitted (either wholly or in part). In support of this submission, senior counsel noted that s 137(6) of the VCAT Act permitted the Tribunal to order the discharge of a person committed to prison for a term, before the end of that term; and s 137(7) of the Act permitted the Tribunal to accept an apology for a contempt, and empowered it to remit any punishment for the contempt, either wholly or in part.
In relation to the original proposed grounds of appeal, the Council and the Minister submitted that the contentions of the Company and the Directors were not reasonably arguable. In making these submissions, the Council and the Minister, in essence, relied upon the reasoning of the Tribunal.
With respect to the fresh evidence ground, the Council and the Minister submitted that the new evidence did not throw any relevant light on matters which were in existence at the time of sentencing. They contended that nothing in the new evidence impeached the sentences imposed by the Tribunal, or justified some different sentence now being passed in respect of the Company or either of the Directors.
Consideration
The proposed grounds of appeal contained in the notices of application for leave to appeal
In their notices of application for leave to appeal against sentence, the Directors asserted that the Tribunal erred in assessing the gravity of the conduct and circumstances that formed the basis for the contempt found against them, and that the penalties imposed upon them were manifestly excessive. In its notice of application for leave to appeal against sentence, the Company joined with the Directors in asserting that the penalties imposed by the Tribunal were manifestly excessive. There is no substance in any of these complaints. The Tribunal was entirely correct in its assessment of the gravity of the conduct of the Company and the Directors, and the circumstances that formed the basis for the Tribunal’s findings of contempt. Moreover, far from being manifestly excessive, the orders made by the Tribunal were realistically the only orders that could be made in the circumstances as they existed at the time of sentencing.
The contempts committed by the Company and the Directors were, as the Tribunal said, wilful and deliberately defiant.[43] Her Honour was well-justified in concluding that it is difficult to find a case where the circumstances of the contempt ‘are of the gravity and the continuing behaviour of the contemnor is as blatant’ as those of the present case.[44] As the Tribunal also correctly observed when dealing with Mr Shaqiri:
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.[45]
[43]Liability Reasons [156].
[44]Penalty Reasons [37].
[45]Ibid [96].
To the extent that it was submitted on behalf of the Directors that the Tribunal was wrong to impose terms of imprisonment on the Directors because such a penalty is one of last resort and was not necessary in the present case, that submission must be rejected.
First, as is disclosed in the Penalty Reasons, the Tribunal was well alive to the proposition that imprisonment is only to be imposed as a last resort and in exceptional circumstances.[46]
[46]Ibid [24], [31] and [104].
Secondly, the Penalty Reasons eloquently explain why terms of imprisonment were necessary in relation to the contempts committed by the Directors.[47] Monetary penalties would not have vindicated the authority of the Tribunal. Any monetary penalty would almost certainly have been regarded as a ‘mere cost of doing business’ — thus countenancing the notion that well-resourced contemnors are free to disregard, or even flout, orders of the Tribunal. As was said by this Court in Varnavides v Victorian Civil and Administrative Tribunal:
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.[48]
[47]Ibid [24], [38], [52], [62]-[64], [75]-[78], [80], [82], [90], [96] and [101]–[106].
[48](2005) 12 VR 1, 12 [42] (Vincent and Nettle JJA and Harper AJA).
The defence mounted by the Company and the Directors to the contempt charges revealed that their attitude to the enforcement orders was that they were free to ignore the orders, if complying with them was not in their commercial interests. In that regard, the Tribunal’s conclusion that any steps taken by the Company and the Directors ‘to rectify compliance with the breaches of the planning scheme have been consistent with their own ambition rather than in compliance with the Orders’, is unimpeachable.[49] Secondly, the fact that none of the contemnors put on evidence before the Tribunal as to their means or their capacities to pay financial penalties led to only one conclusion: namely, that they were well-resourced and well-positioned to pay whatever financial penalty was imposed. These two circumstances in combination effectively mandated terms of imprisonment being imposed on the Directors.
[49]Penalty Reasons [38].
Section 137(5) of the VCAT Act permitted the Tribunal to impose a fine of not more than 1000 times the value of a penalty unit fixed by the Treasurer under s 5(3) of the Monetary Units Act 2004 on each of the Directors. At the relevant time a penalty unit was $165.22. Thus the maximum fine which could be imposed on each Director was $165,220. In the case of a corporation, the maximum fine was 5000 times the value of a penalty unit. Thus the maximum fine applicable in respect of the Company was $826,100.
On the penalty hearing, the Company expressly stated to the Tribunal that it was not submitted that it did not have the capacity to pay a financial penalty. As we have already observed, neither the Company nor the Directors put on evidence before the Tribunal as to their means or their capacities to pay financial penalties. The complaints by the Company and the Directors that the fine and costs were manifestly excessive (either on their own or in combination with the terms of imprisonment) must be examined in that light. In the absence of any evidence about the contemnors’ financial means, it cannot be said that any financial penalty was manifestly excessive because it failed to take into account any lack of means any contemnor might have possessed to pay the penalty.
In oral argument, senior counsel for the Company and the Directors referred to the fact that his clients had been dealt with in the County Court in relation to offences under the Environment Protection Act 1970, the Building Act 1993 and the Planning and Environment Act 1987, in respect of the demolition of the hotel and its aftermath. In the County Court, following pleas of guilty to the offences with which they were charged, the Company and the Directors were fined a total amount of $900,000 and ordered to pay costs in the sum of $176,883.[50] To the extent that it was submitted that these amounts should somehow be taken into account in the present applications, we reject that submission. The fines imposed, and costs ordered, in the County Court related to the illegal demolition of the hotel and the various breaches of the law associated with that demolition. The Tribunal did not sentence, or impose any penalty on, the Company and the Directors in respect of the offending for which they were dealt with in the County Court. There is no basis for taking these matters into account in this Court in relation to the penalties that were imposed by the Tribunal for the contempts committed of the enforcement orders.
[50]160 Leicester Pty Ltd v City of Melbourne [2019] VCC 1430, [117], [118].
Contrary to the submissions made by senior counsel for the Company and the Directors, there is no basis for contending that the fine of $150,000 imposed on the Company was manifestly excessive. Nor is there any basis for contending that this fine, coupled with the order for costs made by the Tribunal and/or the terms of imprisonment imposed upon the Directors gave rise to any penalty which was manifestly excessive. As has been said many times before, manifest excess is a stringent ground which is difficult to make out. It will only succeed if it can be shown that the sentence was ‘wholly outside the range of sentencing options available’.[51] Far from being manifestly excessive, the punishment ordered by the Tribunal was, notwithstanding the matters in mitigation which the Company and the Directors relied upon, entirely appropriate.
[51]Clarkson v The Queen (2011) 32 VR 361, 384 [89] (Maxwell ACJ and Nettle, Neave, Redlich and Harper JJA).
To the extent that senior counsel for the Company and the Directors submitted that, in making the Directors jointly and severally liable in respect of the $250,000 costs order, the Tribunal imposed a fine that exceeded the maximum amount allowed under s 137(5) of the VCAT Act, that submission must be rejected. The costs ordered by the Tribunal were not part of the fine imposed under s 137(5). The mere fact that the word ‘fine’ is defined in s 3(1) of the Sentencing Act 1991 to include ‘costs’ does not mean that an amount ordered in respect of a party’s costs falls within a fine calculated by reference to the value of penalty units under the Monetary Units Act. As ss 49 and 50 of the Sentencing Act make clear, the maximum fine specified in any statutory provision relating to an offence is the amount specified in the provision, and that amount does not include costs. While s 137(5A) of the VCAT Act permits the Tribunal to have regard to the provisions of Part 2 of the Sentencing Act ‘as if it were a court considering imposing a sentence of imprisonment’, nothing in that section or Part 2 of the Sentencing Act derogates from the Tribunal’s power to impose a fine of up to 1000 penalty units on an individual, and also to order that individual to pay the costs of the prosecuting party (even if the fine imposed, and costs ordered, total more than the maximum fine permitted by the relevant statutory provision).
The proposed new evidence ground of appeal
The new evidence upon which the Company and the Directors sought to rely was contained in an affidavit sworn on 19 August 2021, by their solicitor, Matthew Francke. The affidavit exhibited various documents, including documents relating to variations of the enforcement orders, the performance of the work necessary to be undertaken to comply with the enforcement orders, and photographs (including photographs taken of the completed works showing the park that is now present on the site). The documents exhibited to the affidavit described the steps required to be undertaken to complete the works, and included a cost summary showing that the costs incurred by the company in complying with the enforcement orders totalled in excess of $1.6 million (inclusive of GST).
In oral argument, senior counsel for the Council and the Minister accepted that the new evidence relied upon by the Company and the Directors could be admitted into evidence. This concession was made on the basis that, in contempt cases, ‘the question of penalty and its imposition has been consistently described as sui generis, which enables a contemnor to seek to purge the contempt’. Senior counsel for the Council and the Minister did not, however, concede that the new evidence threw light on the Tribunal’s scepticism that what was proposed in terms of compliance, at the time of the plea hearing, would be performed ‘in a timely manner, or at all’.[52] Nor, so it was submitted, did the new evidence require some different penalty to be imposed on the Company or the Directors.
[52]Penalty Reasons [22].
In our view, the new evidence, viewed in context, is of no moment. The Tribunal was well-justified in concluding, on the evidence before it, that the Company and the Directors had to be ‘dragged to compliance every step of the way’.[53] The fact that the Company and the Directors may have moved with greater alacrity after the Tribunal ordered the punishment it imposed on them does not shed any light upon any relevant matter which underpinned those orders.
[53]Ibid [101].
Moreover, nothing that occurred after the sentencing of the Company and the Directors was relevantly unexpected or unanticipated. To the extent that the Company and the Directors asserted that the incurring of in excess of $1.6 million in costs to comply with the enforcement orders was of particular note, that submission must be rejected. It is to be remembered that at the time the contempt charges were heard in October 2020, the evidence was that the work necessary to comply with the enforcement orders was ‘estimated to cost approximately $1.5 million’.[54] This was one of the matters relied upon, before the Tribunal, by the Company and the Directors, as showing why the enforcement orders were not capable of being complied with.[55]
[54]Liability Reasons [102].
[55]Ibid [99]–[108].
As we have already said, the orders made by the Tribunal were realistically the only orders that could be made in the circumstances as they existed at the time of sentencing. The contempts committed by the Company and the Directors were deliberate, wilful, flagrant and blatant. In the exceptional circumstances of this case, terms of imprisonment were called for for the Directors, and a substantial monetary penalty was called for for the Company. The new evidence tendered by the Company and the Directors does not change any of this. At best, it might form part of the evidence that might be called before the Tribunal if the Company and the Directors choose to avail themselves of s 137(7) of the VCAT Act by apologising to the Tribunal and seeking to have their punishment remitted.
To that end, we should record for completeness that, during the course of his submissions in this Court, senior counsel for the Company and the Directors read out an apology in the following terms:
We sincerely apologise for our contempts. We have now completely rectified the situation and the orders are now complied with and the park is open to the public and for the great benefit to the community. We are repentant and we recognise what we have done wrong. We have learned a salutary lesson and this behaviour will not be repeated. Yours sincerely Raman Shaqiri, Stefce Kutlesovski and 160 Leicester Pty Ltd.
Senior counsel for the Company and the Directors accepted that the apology he read in this Court would only have relevance if we were to resentence the Company and the Directors. For the reasons given above, however, there will be no resentencing in this Court.
Conclusion
The applications for leave to appeal against sentence by the Company and the Directors will be refused.
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