City of Salisbury v Ahrens Group Pty Ltd - [2010] SASC 254

SUPREME COURT OF SOUTH AUSTRALIA
(Land and Valuation Division: Civil)
CITY OF SALISBURY v AHRENS GROUP PTY LTD
[2010] SASC 254
Judgment of The Honourable Justice Bleby
18 August 2010
ENVIRONMENT AND PLANNING - ENVIRONMENTAL PLANNING - PLANNING OFFENCES - GENERALLY
CRIMINAL LAW - SENTENCE - SENTENCING ORDERS - DISCRETION TO RECORD CONVICTION - RELEVANT CONSIDERATIONS
Respondent pleaded guilty to undertaking development without approval contrary to s 44 of the Development Act 1993 - respondent contracted to provide various building services in relation to the construction of a warehouse and office building - sentencing judge imposed a fine without recording a conviction - application of s 16 Criminal Law (Sentencing) Act 1988 - whether conditions precedent to the exercise of a discretion not to record conviction met - whether extenuating circumstances existed in the present case - whether discretion not to record conviction properly exercised.
Held: sentencing judge erred in holding extenuating circumstances existed - respondent undertook no steps to avoid commission of the offence - no good reason to not record a conviction - appeal allowed - conviction recorded.
Development Act 1993 (SA) s 32, s 44, s 59; Building Work Contractors Act 1995 (SA) s 21, s 25; Criminal Law (Sentencing) Act 1988 (SA) s 16; Development Regulations 1993 (SA) reg 74, referred to.
Leonello v Police [2005] SASC 29; Hemming v Lukin (1996) 67 SASR 248; House v The King (1936) 55 CLR 499, applied.
R v Wilton (1981) 28 SASR 362, distinguished.
Everett v The Queen (1994) 181 CLR 295; Police v Zefi [2003] SASC 218; R v Briese (1996-1997) 92 A Crim R 75, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"extenuating circumstances"

CITY OF SALISBURY v AHRENS GROUP PTY LTD
[2010] SASC 254
Miscellaneous Appeal
BLEBY J
Introduction

The respondent pleaded guilty in the Environment Resources and Development Court (“the Environment Court”) to a breach of s 44(1) of the Development Act 1993 (SA). Without recording a conviction the Court imposed a fine of $9,000. The sole question on this appeal is whether the Environment Court erred in failing to record a conviction.
Section 44(1) of the Development Act makes it an offence for a person to undertake development contrary to Part 4 Division 1 of the Development Act. The maximum penalty is a fine of $120,000. Particulars of the charge were that between 17 March 2008 and 13 November 2008 the respondent undertook development, namely building work, by constructing or causing the construction of a warehouse and office buildings on certain land at Pooraka. The development was not an approved development. It was therefore undertaken contrary to s 32 of the Development Act, which section is in Part 4 Division 1 of the Act.
The facts
The respondent was one of three defendants charged with breaches of s 44(1) of the Development Act in respect of the same development. The first defendant, Giuseppe Rocca, was the developer’s agent and was described in the contract mentioned below as the superintendent of works. He entered into a contract with the respondent (the second defendant) which required the respondent to undertake certain contract services in respect of the construction of the warehouse. Those services included the supply, fabrication, erection, supervision and cladding of the warehouse and office building, including the provision of concrete footings and the preparation of structural drawings and engineering calculations relating to the contract services. It was a substantial structure, the warehouse occupying approximately 3000m² and the office structure comprising two storeys with a total floor area of 390m². The structure was to accommodate a five tonne gantry travelling crane. The contract price, including GST, was over $1,000,000.
The first defendant also retained the services of an architect to design the whole of the building works and to obtain development approval for the works.
Upon their completion, the respondent provided the engineering drawings to the first defendant’s architect for completion of the plans for the whole building and for submission for development approval. The footing design and associated engineering requirements, electrical, plumbing and sewerage detail and fire compliance did not form part of the respondent’s scope of work. The respondent was not instructed to obtain Building Rules consent or Development Approval.
The agreement for the contract services between the first defendant and the respondent was entered into in late November 2007. On 17 March 2008 Development Plan consent was granted by the appellant for the development. The first defendant then instructed the respondent to commence the contract services. Commencement of the erection of the steel work for the walls of the buildings was undertaken on or about 25 July 2008. By 30 September 2008 the wall and roof cladding of the building had been completed.
When instructed to commence the contract services, the earthworks for the footings of the building had already been undertaken. However, the respondent commenced the contract services without sighting a Building Rules consent or Development Approval or any plans stamped with such approval. The respondent did not satisfy itself that Building Rules consent or Development Approval had been obtained, nor did it seek to make itself aware of the terms of the consent or of any conditions attaching to it.
The third defendant, Felice Rocca, a licensed builder, supervised the completion of the building by way of electrical and plumbing installations, wet area constructions, painting, fire services installations and civil works. The building was occupied on 1 November 2008.
Although Development Plan consent had been granted on 17 March 2008, that was only the beginning of the development approval process. In accordance with the requirements of Part 4, Division 1 of the Development Act, the developer also needed to obtain Building Rules consent from a private certifier and final Development Approval by the appellant. Building Rules consent was granted on 10 November 2008 and final Development Approval was granted on 3 April 2009. The development had been substantially competed by 13 November 2008. With the exception of certain landscape works, at the time of the hearing in the Environment Court the development had been completed in accordance with the Development Approval.
The respondent is a construction and engineering company and is a licensed builder. It has offices throughout Australia. It employs over 200 people. It is an experienced builder and was aware of the need to obtain Building Rules consent and Development Approval.
At a separate hearing prior to the imposition of the fine on the respondent, the Environment Court had recorded convictions against both the first and third defendants and had imposed fines of $13,500 against the first defendant and $4,500 against the third defendant. The third defendant was the first defendant’s father. He was aged 70, with limited English.
Prior to the hearing involving the respondent, the respondent’s solicitors had written to the Supervisor of Builders Licensing at the Office of Consumer and Business Affairs giving full details of its breach of the Development Act, of the proceedings in the Environment Court and notifying the intention of the respondent to plead guilty to the charge against it. It undertook to notify the Office of the outcome of the proceedings.
By virtue of s 21(1) of the Building Work Contractors Act 1995 (SA) there is proper cause for disciplinary action against a building work contractor if –
…
(c)the contractor… has acted contrary to this Act or otherwise unlawfully… in the course of conducting, or being employed or otherwise engaged in, the business of the contractor; or
…
On the hearing of a complaint by the Commissioner for Consumer Affairs or any other person setting out matters that are alleged to constitute grounds for disciplinary action the District Court, if it is satisfied on the balance of probabilities that there is proper cause for taking disciplinary action, may make any of a number of orders. Those orders include reprimanding the person, imposing a fine not exceeding $20,000, imposing conditions on the licence, suspending the licence for a specified period or until further order, cancelling the licence and disqualifying a contractor from being licensed under the Act.[1]
[1] Building Work Contractors Act 1995, s 25(1).
Section 16, Criminal Law (Sentencing) Act 1988 (SA)
Section 16 of the Criminal Law (Sentencing) Act 1988 (SA) provides:
16— Imposition of penalty without conviction
Where a court finds a person guilty of an offence for which it proposes to impose a
fine, a sentence of community service, or both and the court is of the opinion—
(a)     that the defendant is unlikely to commit such an offence again; and
(b)     that, having regard to—
(i)      the character, antecedents, age or physical or mental condition of the
defendant; or
(ii)     the fact that the offence was trifling; or
(iii)    any other extenuating circumstances,
good reason exists for not recording a conviction,
the court may impose the penalty without recording a conviction.
I adhere to what I said in Leonello v Police[2] concerning the operation of that section:[3]
The forming of the opinion on the two matters referred to in paragraphs (a) and (b) of s 16 is a condition precedent to the exercise of the court's discretion to impose a penalty without recording a conviction. The court must form the opinion both that the defendant is unlikely to commit the offence again and that good reason exists, having regard to the relevant factors, for not recording a conviction. In forming the opinion as to the second limb (paragraph (b)) the court will first need to be satisfied that one or more of the elements of the requisite nature referred to in paragraph (b) provide good reason for not recording a conviction: see Sims v Police [2000] SASC 102 at [5]; Police v Zefi [2003] SASC 218 at [10].
[2] [2005] SASC 29.
[3] Ibid [9].
It was not suggested in these proceedings that that was other than the correct approach. If the conditions precedent of paragraphs (a) and (b) are fulfilled, there remains a discretion in the court as to whether a conviction should be recorded.
The Judge’s consideration of the conditions precedent
When considering the conditions precedent to the application of s 16 in this case the Judge of the Environment Court said:
I am satisfied that the defendant is unlikely to commit an offence of this nature again, having noted that is has upgraded its systems with a view to ensuring that no development is commenced prior to the issue of a development approval. The company has no convictions for offences of this nature. I am also satisfied that there is good reason for not recording a conviction. While nothing can excuse the Ahrens Group for commencing development work in the absence of the development approval, the responsibility to obtain that approval belonged to others, in particular the first defendant in these proceedings, who has already been convicted and fined. In addition, Ahrens Group commenced the building work at the request of others involved in the project. I consider that these are extenuating circumstances which, along with my opinion that the defendant is unlikely to again undertake development without consent, provide good reason for not recording a conviction against Ahrens Group.
The Judge then went on to consider the exercise of the discretion and decided not to record a conviction.
It was not argued on the appeal that it was not open to the Judge to find that the defendant was unlikely to commit an offence of that nature again. In other words, it was not suggested that paragraph (a) of s 16 had not been satisfied. However, the appellant attacked the sufficiency of the Judge’s reasons for finding that there were extenuating circumstances which would satisfy paragraph (b) of the section. The appellant submitted further that, even if the condition precedent of paragraph (b) were made out, it was not open to the Judge to exercise the discretion in favour of not recording a conviction.
Whether there were “extenuating circumstances”
In my opinion the Judge erred in holding that there were extenuating circumstances providing good reason for not recording a conviction.
The Judge identified two circumstances on which reliance was placed:
(1) That the responsibility to obtain approval belonged to others, and
(2)That the respondent commenced the building work at the request of others involved in the project.
In my opinion these do not either individually or collectively constitute extenuating circumstances.
The particulars of the offence alleged against the respondent were undertaking the “development, namely building work by constructing or causing the construction of a warehouse and office buildings on the subject land” when the development was not an approved development. The extenuating circumstances identified by the Judge did not relate to any action or failure on the part of the respondent to ensure compliance with the requirements of the Development Act. The Judge relied solely on the action or inaction of others.
The respondent is a substantial construction company. It was aware of its obligations under the Act. Although it was not a requirement of its contract to obtain the necessary Building Rules consent or Development Approval, it was aware that it could not proceed without such approval, and yet it failed to make any enquiry at all as to whether such consent or approval had been obtained. It had control over whether it complied with the Development Act. Although it was not the only principal contractor with the developer, it was, nevertheless, a principal contractor and not a sub-contractor. Its involvement with the development was substantial. The Judge correctly rejected an analogy put in submissions portraying the respondent as “akin to a tiler coming in to do some specialist work on a major building project”. The Judge recognised that the respondent had a significant construction role in the development, although it was not identified as “the builder”.
That responsibility for obtaining the approval belonged to others and that the respondent was requested by the developer’s agent to commence the building work did not excuse the respondent from satisfying itself that Development Approval had been given. It complied with the request to start work not knowing whether the engineering drawings which it had caused to be prepared were approved or whether the development was subject to any conditions or alteration which might be a material to the construction upon which it was about to embark.
Hemming v Lukin[4] was an appeal against a magistrate’s failure to record a conviction upon a plea of guilty of an offence under the Fisheries Act 1982 (SA). The offence was the offence of using three pots to take rock lobster, the pots not being marked with the defendant’s licence number, in breach of the Fisheries Regulations. The respondent was the registered owner of the boat being used at the time and was the holder of the required licence. However, at the time of the offence the boat was in the charge of a registered master who was, in effect, using the respondent’s licence under a lawful arrangement between the two of them. In leasing the licence the respondent in that case had expressly the provided that a breach of the Act was a breach of the lease. The respondent had no previous convictions.
[4] (1996) 67 SASR 248.
The Chief Justice held, on appeal, that the Magistrate, in holding that there were extenuating circumstances for the purpose of s 16 of the Criminal Law (Sentencing) Act, erred in relying upon the provisions of the lease agreement which imposed a number of relevant obligations on the lessee. The Chief Justice said:[5]
[5] Ibid 250-251.
To my mind, the sort of thing which would entitle a person such as the respondent to favourable treatment would be evidence of efforts made by the respondent, in a practical sense, to ensure that the licence user complied with the requirements of the law. In the present case, there is no suggestion at all that the respondent gave the user of the licence regular reminders of his obligations, or made any efforts to check the state of the pots or the state of the vessel when the vessel was in port.
There is no evidence, in fact, that the respondent did anything to ensure compliance with the Act, other than, as I have already said, insert two basic provisions in the lease agreement by which the licensee undertook to comply with the requirements of the law.
I do not mean by this to say that it was incumbent upon the respondent to show that she took steps that would have prevented the offence taking place. In the case of a fishing licence, with a vessel which will be at sea for some time, that is simply not possible. The point I am making is that, to my mind, the relevant inquiry is to inquire: what has the respondent done by way of active steps to attempt to ensure that offences do not occur?
In the present case, she has done nothing other than to provide for two provisions in the lease agreement. That is something, but, in my opinion, much more could be done. It has not been suggested that it was not possible to do more, and, in my opinion, much more should be done if a respondent is to seek leniency.
………………..
In previous cases, it has been said that this power is not often to be invoked in relation to regulatory offences. I refer to Piva v Brinkworth (1992) 59 SASR 92 at 96; Hemming v Neave (1989) 51 SASR 427 at 428-429; and to Ly v Glover (1989) 150 LSJS 449 at 453-454.
I am cautious about applying such statements literally, but I think, in the present case, the thrust of them is that in the case of an offence under s 69 where the offence is committed regardless of any question of fault and intent, one would look, in the case of such an offence, as a basis for leniency, for positive efforts directed to preventing or avoiding the commission of the offence. [Emphasis added]
By the words I have emphasized the Chief Justice was referring to efforts to prevent or avoid the commission of the offence in question, not to steps taken afterwards to avoid the commission of future offences. The Environment Court in this case was not informed what steps had been taken by the respondent to ensure future compliance with the requirements of the Development Act. However, it was accepted that adequate steps had been taken in that regard. That was relevant to the consideration of paragraph (a) of s 16 of the Criminal Law (Sentencing) Act, but whatever steps were taken after the offence was committed were not relevant to extenuating circumstances attending the commission of the offence.
In the circumstances of this case it was insufficient for the respondent merely to assume that someone else had applied for and had obtained the necessary consent and approval. There was no evidence of any effort made by the respondent to ensure that it was complying with the requirements of the Development Act in respect of what was, on its part, a substantial development. As the Judge acknowledged, nothing could excuse the respondent for commencing the work in the absence of Development Approval. The situation required something more to be done. A simple enquiry of the first defendant as to whether Development Approval had been obtained and, if so, whether any conditions had been imposed, would probably have been sufficient. The fact of the matter is that no steps were taken by the respondent at all. In my opinion those steps should have been taken if the respondent was to seek leniency under s 16 of the Criminal Law (Sentencing) Act. Merely to rely on the omission and actions of others was insufficient to provide extenuating circumstances.
The conduct of the case below

The respondent argued that because counsel for the appellant in the court below did not specifically mount an argument that it was beyond the scope of the Judge’s discretion not to record a conviction, the appellant was precluded from relying on such a submission on appeal. In particular, counsel relied on the following dictum of King CJ in The Queen v Wilton:[6]
[W]here a submission is made by counsel for a convicted person that a sentence should be suspended or a possible suspension is mentioned by the judge, and this course is regarded by the prosecution as beyond the proper scope of the judge’s discretion, a submission to that effect should be made. Generally speaking, if the submission is not made to the sentencing judge the prosecution should not be able to advance that contention successfully on an appeal by the Attorney-General.
[6] (1981) 28 SASR 362, 368.
However, that passage must be read in the context of the passage which immediately precedes it:[7]
It is necessary to consider whether the prosecution should be allowed to raise on the appeal the contention that the sentence ought not to have been suspended when contention was not put in the Court below. The consequences of allowing the prosecution to do so are serious. The respondent has faced the prospect of deprivation of his liberty by way of imprisonment and has been spared, subject to observance of the conditions of the bond. If the prosecution is allowed to raise the contention he must again face the prospect of imprisonment. That is what the Federal Court meant in R v Tait and Bartley[8] by “double jeopardy”. In my opinion, this Court should allow the prosecution to put to it, on an appeal against sentence, contentions which were not put to the sentencing Judge, only in exceptional circumstances which appear to justify that course. I endorse with respect what was said in Tait and Bartley[9] as to the duty of prosecuting counsel before the sentencing judge. In particular where a submission is made……..
[7] Ibid 367-368.
[8] Ibid (1979) 24 ALR 473.
[9] Ibid.
The reason for not allowing the submission to be put on appeal in that case was because of the principle of double jeopardy. That fact was clearly recognised by the High Court in the joint judgment of Brennan, Deane, Dawson and Gaudron JJ in Everett v The Queen.[10] Counsel was unable to site any case applying that principle beyond circumstances of double jeopardy which were the foundation of the dictum relied on. No question of double jeopardy in the sense relied on in those cases arises here.
[10] (1994) 181 CLR 295, 302-303.
At the hearing below, counsel for the respondent made a submission based on s 16 of the Criminal Law (Sentencing) Act that a conviction should not be imposed. He addressed the requirements of s 16(a). In support of a submission that good reason existed for not recording a conviction, counsel referred to what the Judge had previously said in sentencing the first and third defendants. On that occasion the third defendant had put a submission that no conviction should be recorded because the third defendant was afraid of losing his builder’s licence should a conviction be recorded. In sentencing the third defendant the Judge considered that he undertook building work without ensuring that the law had been complied with and declined to accede to the third defendant’s submission. Counsel for the respondent in this case, in submissions before the Judge, then relied heavily on the letter of the respondent’s solicitors to the Office of Consumer and Business Affairs as a reason, along with others, as to why a conviction should not be recorded in this case. It is not clear whether that was put as an extenuating circumstance or in support of the exercise of the Court’s discretion. If the former, it was inadequate for the reasons discussed above.
Counsel for the appellant in the court below then made substantial submissions against a conviction not being recorded, concluding with the submission that “the fact that a wrong assumption was made by the contractor would not be a reason to make it (sic) to exercise the discretion not to impose a conviction”.
In my opinion nothing was said which would preclude the making of a submission on appeal by the appellant that the Judge erred in holding that there were extenuating circumstances providing the existence of good reason for not recording a conviction.
The exercise of the discretion
Although it is not necessary for the purpose of this appeal to do so, I also consider whether the exercise of the discretion by the Judge in not recording a conviction miscarried. In that respect I accept that I must be satisfied that the Judge either misunderstood some relevant matter or took into account a matter to which regard should not have been had or gave weight to a matter which was not entitled to any weight.[11]
[11] See House v The King (1936) 55 CLR 499, 504-505.
As to the exercise of the discretion the Judge said:
While the discretion to fine a guilty defendant without recording a conviction should be exercised sparingly in the interests of general deterrence (Piva v Brinkworth (1992) 59 SASR 92; Hemming v Lukin (1996) 67 SASR 248), I am satisfied there is a good reason for not recording a conviction.
The Court is also required to weigh the potential benefit to the defendant for not recording a conviction with the public interest in convictions being recorded: Zefi v Police [2003] SASC 218. In this matter I am satisfied that as a result of action taken on behalf of Ahrens Group, there is no detriment to the public interest. I have been informed that the supervisor of the Builders Licensing Division in the Office of Consumer and Business Affairs has been notified of the offending by Ahrens Group and that the company would be pleading guilty to undertaking development without the relevant approval. The information was conveyed by letter from the defendant’s solicitors dated 1 March 2010.
No conviction will be recorded.
The Judge seems to have been influenced in the exercise of the discretion by the fact that the respondent, through its solicitors, had voluntarily made full disclosure of the circumstances surrounding the prosecution to the Commissioner for Consumer Affairs. The inference was that, if there were no conviction, there would not have been any obligation on the respondent to make disclosure to the Commissioner. The respondent had done so voluntarily, so nothing would be gained by recording a conviction and there would be no detriment to the public interest by not recording a conviction.
In my opinion, in so acting, the Judge took an irrelevant matter into account and failed to take other relevant matters into account. In determining whether there is cause for disciplinary action against the respondent the Commissioner is only concerned, under s 21(1)(c) of the Building Work Contractors Act 1995, with the behaviour of the contractor. The plea of guilty constitutes an admission by the respondent of unlawful conduct. It is not made any less unlawful by the non-recording of a conviction. Likewise, a conviction would not render the conduct any more or less unlawful. The conduct had been disclosed to the Commissioner. A conviction would not change the nature of the conduct and whether or not it constitutes a proper cause for disciplinary action against the respondent.
Furthermore, the respondent is a company operating nationally throughout Australia. Its activities extend beyond this State. It is likely to require a licence to operate as a building contractor in each State or Territory of the Commonwealth. Unlawful conduct in one State could well be of interest to licensing authorities in another. There is a public interest in ensuring true and full disclosure of unlawful conduct in other States and Territories where licensing is necessary. There can be no assurance that that will occur without a conviction for this offence being recorded.
As Gray J observed in Police v Zefi:[12]
In deciding whether to impose a conviction, this court should weigh the potential benefit to Ms Zefi in proceeding without convictions with the public interest inherent in convictions being recorded.
That public interest extends beyond licensing authorities. It may be an interest which is shared by a number of authorities. As was pointed out by the Queensland Court of Criminal Appeal in R v Briese,[13] persons who have an interest in knowing the truth in such matters include potential employers, insurers, various government departments and, I would add, other developers.
[12] [2003] SASC 218, [16].
[13] (1996-1997) 92 A Crim R 75, 79.
There is also a counterveiling and compelling public interest not mentioned by the sentencing Judge in favour of recording a conviction for this type of offence by way of general deterrence to others who may be tempted to carry out substantial development without or in anticipation of gaining necessary Development Approval, or in commencing substantial development work without making any reasonable enquiry as to whether Development Approval has been obtained. That important aspect of the public interest does not seem to have been considered by the Judge.
I would not wish what I have said to influence in any way any decision by a licensing authority as to whether disciplinary action should or should not be taken against the respondent based on its conduct in this case. That is a matter entirely for the licensing authority concerned and on its assessment of the conduct in question.
There were no other relevant circumstances which would properly justify the exercise of the court’s discretion not to record a conviction. The requirements of the Development Act for obtaining Building Rules consent and Development Approval serve an important purpose in the planning regime of this State in ensuring that proper standards of construction are maintained. It is not unusual for an offence of this nature to be inadvertent. As I have pointed out, the requirements of the Act could easily have been complied with. There was a failure to take any active steps towards compliance. It was a substantial building and the respondent’s contract was for a substantial sum. The respondent was aware of its obligations under the Act but simply failed to comply with then.
Although there was no relevant guilty intent, it is an important regulatory regime which requires compliance for very good reasons, including the safety of construction workers and of occupants of the building. Although there was no actual harm caused to any person, and although the building was said to be compliant with the Building Regulations, the potential for harm, had there been non-compliance with some important condition of the consent, could have been substantial. It was a large structure the height of, and incorporating in part, a two storey building. It was to support a five tonne gantry mobile crane as well as substantial wind resistance. The fact that the development proceeded without approval meant that the appellant was deprived of the opportunity of specifying the stages at which the respondent was required to notify the appellant before commencement or after completion so that it would have an opportunity to inspect the work in question.[14] The regime in place for ensuring compliance by the respondent was deficient.
[14] See Development Act 1993, s 59; Development Regulations 1993 (SA) (which applied at the relevant time), Rule 74.
There were, therefore, significant matters which the Judge failed to take into account in exercising the discretion not to record a conviction. The reasons advanced at the hearing and on the appeal were insufficient either to enable the discretion to be exercised or to justify its exercise.
Conclusion
For these reasons I consider that the Judge should have recorded a conviction. The appeal is allowed. The order of the Environment Resources and Development Court made on 10 March 2010 is varied to record a conviction of the respondent. In all other respects the order of the Environment Resources and Development Court is confirmed.