Council of the City of Sydney v Owners Corporation - Strata Plan 18945

[2011] NSWLEC 79

Land and Environment Court

New South Wales

Medium Neutral Citation:

Council of the City of Sydney v Owners Corporation - Strata Plan 18945 [2011] NSWLEC 79

Hearing dates:

9 May 2011

Decision date:

10 May 2011

Jurisdiction:

Class 4

Before:

Pepper J

Decision:

(1) the respondent is convicted of the charge of contempt of the Court as particularised in the statement of charge;

(2) the respondent is ordered to pay the council's costs of and incidental to the notice of motion; and

(3) the exhibits are to be returned.

Catchwords:

CONTEMPT:- failure to comply with Court orders to undertake works for fire safety measures within three months of the orders - guilty plea - whether contempt wilful - whether the Court has the power to impose a fine - whether a fine is warranted - no fine warranted

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999, s 3A
Environmental Planning and Assessment Act 1979 s 121B
Land and Environment Court Rules 2007, r 6.3
Supreme Court Rules 1970, Pt 55 r 13

Cases Cited:

Ark Hire Pty Ltd v Barwick Event Hire Pty Ltd [2007] NSWSC 488
Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98
Environment Protection Authority v Pannowitz (No 2) [2006] NSWLEC 797; (2006) 153 LGERA 126
Fairfield City Council v Adams (No 2) [2010] NSWLEC 45
Jeray v Blue Mountains City Council [2011] NSWLEC 28
Mosman Municipal Council v Kelly (No 4) [2010] NSWLEC 20
Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) [2009] NSWLEC 210
Whitham v Holloway [1995] HCA 3; (1995) 183 CLR 525

Category:

Principal judgment

Parties:

Council of the City of Sydney (Applicant)
The Owners Corporation - Strata Plan 18945 (Respondent)

Representation:

Mr A Hawkes (Applicant)
Mr M Seymour (Respondent)
Council of the City of Sydney (Applicant)
Grace Lawyers Pty Ltd (Respondent)

File Number(s):

40566 of 2010

Ex Tempore Judgment

Introduction

1. This is an application by the Council of the City of Sydney ("the council") that the respondent, Owners Corporation Limited - Strata Plan 18945, be found guilty of contempt.

1. Although in its notice of motion filed 14 January 2011, the council sought orders to this effect, and that the respondent be dealt with according to law for the contempt by way of fine, sequestration of property or both, the council now maintains that a finding of guilt together with an order that the respondent pay the costs of and incidental to the motion is sufficient by way of denunciation and sanction.

1. The respondent pleads guilty to the charge of contempt and admits the facts contained in the statement of charge attached to the council's notice of motion.

1. The statement of charge alleges that the respondent is guilty of contempt in that it has breached orders made by the Court on 13 August 2010 ("the Court orders"). Paragraph 1 of the Court orders provided that the respondent comply with the terms of an order dated 12 November 2008 and served on the respondent by the council pursuant to s 121B of the Environmental Planning and Assessment Act 1979 within 3 months of the date of the Court orders. Compliance with the Court orders was, in fact, not finalised until 6 May 2011, namely, three days before the current contempt proceedings were heard.

1. The question before the Court is what punishment can and should be imposed on the respondent in respect of the admitted contempt.

1. For the reasons given below, it is my view that the finding of guilt of contempt of Court for failing to comply with the Court orders, together with the costs order sought is sufficient and that no fine is warranted.

The Court Orders are Consented to by the Respondent

1. As stated above, the council served the s 121B order on the respondent, requiring the respondent to undertake works for the provision of fire safety measures in the building the subject of the strata plan. The respondent was given up to 12 months to complete these works.

1. However, not all of the works were completed in the time allocated. Therefore, the council sought orders from the Court requiring the works to be completed. Thus on 13 August 2010, the Court made orders, by consent, that the terms of the original s 121B order be complied with by 13 November 2010.

1. The works to be carried out under the Court orders included:

(a) the installation of a sprinkler and building occupant warning system to the car park of the building;

(b) the removal of security screens fitted to all apartment entry doors; and

(c) the completion of a fire safety audit and the submission to the council of a Final Fire Safety Certificate.

1. The evidence relied upon by the council was contained in two affidavits of Mr Rui Ma, a building surveyor employed by the council, sworn 27 January and 20 April 2011 respectively.

1. This evidence shows that at the Annual General Meeting for the respondent on 18 October 2010, it resolved to approve a quotation received from Asset Local Fire in the amount of $50,050 to install a complete sprinkler system in the basement car park.

1. As the respondent readily concedes, with the approval of the quote for the works having only been completed by mid October 2010, it ought to have been obvious to it that it would not be in a position to comply with the Court orders by 13 November 2010.

1. Having said this, the affidavits of Mr Ma demonstrate that works did proceed, albeit exceedingly tardily. The evidence also reveals that to a considerable extent, the respondent's hands were tied by the various contractors it had engaged to install the sprinkler system and building occupant warning system. In addition to Asset Local Fire, these contractors included MID Plumbing and Romtech Grid (fire monitoring).

1. Further adding to the delay, a Road Opening Application was required to be lodged with the council to connect the sprinkler system to the mains. In addition, the council initially incorrectly advised the respondent that a development application was required for a booster pump. It was not. However, in the scheme of the overall delay in complying with the Court orders, the latter error by the council was largely immaterial.

1. The council agreed that the respondent was largely at the mercy of the contractors. It was the council's submission that the respondent had been nave as to the time required to complete the fire safety works.

1. The respondent did not resile from the fact that it was the entity that had engaged the contractors and it bore ultimate responsibility for the completion of the works within the time specified by the Court orders. Moreover, the respondent acknowledged that the clear failure by it to act in a timely way to comply with the orders amounted to a breach of the orders, which was properly classified as a contempt of Court committed by it.

1. There can be no doubt that the initial delay by the respondent in passing a resolution to authorise the expenditure for the works was a significant contributory factor to the non-compliance with the Court orders. However, overwhelmingly, the delay was caused by the contractors engaged by the respondent in completing the works, a delay that can only be described as unreasonable. It was this delay that was ultimately responsible for the council pursuing contempt proceedings.

1. As the evidence of Mr Ma demonstrates, the council gave considerable latitude to the respondent in complying with the Court orders. It cannot be said that the council embraced with unseemly haste the commencement of these proceedings. The evidence is entirely to the contrary.

Applicable Legal Principles

1. The purpose served by contempt proceedings was recently articulated by Craig J in Jeray v Blue Mountains City Council [2011] NSWLEC 28 (at [26]-[27]):

26 The High Court has made clear that the underlying rationale for exercise of the power to commit a party or person for contempt is the necessity "to uphold and protect the effective administration of justice" ( AMIEU v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 at 107). As Kirby J observed in Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; (1999) 198 CLR 435 at [149]:

"Unless courts are seen to respond firmly to deliberate defiance of their Orders, their effectiveness in the authoritative determination of disputes of law would be undermined."

27 An allegation that a party is guilty of conduct that interferes with or seeks to impugn the effective administration of justice is a serious allegation. Disobedience of a court order, if established, requires a firm response. However, a consequence of the seriousness with which a court must view the integrity of its orders by requiring obedience to them is that the standard of proof of acts or omissions said to constitute contempt requires careful consideration....

1. As considered in many cases, contempt can be described as technical, wilful or contumacious. Technical contempt is casual, accidental or unintentional; wilful contempt is when there is deliberate disobedience but without the intention of defying the court's authority; and contempt is contumacious if there is an element of deliberate defiance of a court's orders ( Fairfield City Council v Adams (No 2) [2010] NSWLEC 45 at [13]).

1. The imposition of any punishment for contempt of Court is a consequence of the conviction of a person or entity charged with contempt. The punishment that may be imposed by the Court for contempt is provided for by Pt 55 r 13 of the Supreme Court Rules 1970. Part 55 r 13 provides:

13 Punishment

(1) Where the contemnor is not a corporation, the Court may punish contempt by committal to a correctional centre or fine or both.

(2) Where the contemnor is a corporation, the Court may punish contempt by sequestration or fine or both.

(3) The Court may make an order for punishment on terms, including a suspension of punishment or a suspension of punishment in case the contemnor gives security in such manner and in such sum as the Court may approve for good behaviour and performs the terms of the security.

1. That rule is applicable to proceedings for contempt in this Court by reason of r 6.3 of the Land and Environment Court Rules 2007.

1. Part 55 r 13 refers to "punishment" and identifies the nature of that punishment as including a fine or imprisonment. An issue that has arisen in these proceedings is whether, given the nature of the contempt in question, this Court has the power to impose, by way of sanction on the respondent, a fine.

1. The respondent submitted that, notwithstanding the clear language of r 13(1), there was no power to impose a fine for a civil contempt that was wilful but not intentional. In support of this submission it relied on the decision by White J in Ark Hire Pty Ltd v Barwick Event Hire Pty Ltd [2007] NSWSC 488.

1. In Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 the High Court discussed the distinction drawn in cases between civil contempt and criminal contempt. In the joint judgment of Gibbs CJ, Mason, Wilson and Dean JJ the High Court stated (at 106):

Punishment for contempt serves two functions: (a) enforcement of the process and orders of the court, disobedience to which has been described as 'civil contempt'; and (b) punishment of other acts which impeded in the administration of justice, such as obstructing proceedings and court while it is sitting or publishing comments on a pending case, which have both been described as 'criminal contempt'...

1. Their Honours went on to discuss the power of a Court to impose a fine for civil contempt (at 112-113). This discussion was quoted, endorsed and applied by White J in Ark Hire (at [36]):

36 In Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, Gibbs CJ and Mason, Wilson and Deane JJ, in a joint judgment upholding the power of a court to impose a fine for a civil contempt, said (at 112-113):

"... In Mileage Conference, the members of the Restrictive Practices Court ([1966] 1 WLR at p 1162; [1966] 2 All ER at p 862;) accepted as correct the view of the law expressed by Warrington J in Stancomb ([1901] 2 Ch at p 194), namely, that it is no answer to proceedings for contempt "to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order". Thus, it would suffice that the relevant act or omission was wilful even if, in a case where the breach was constituted by an act or failure to act by a servant or agent, the act or omission of the servant or agent was "through carelessness, neglect, or even in dereliction of his duty" (per Warrington J in Stancomb, at p 194). In Mileage Conference itself, substantial fines were imposed on companies for contempt by breach of undertaking which was not merely non-contumacious but was committed reasonably on legal advice.

The correctness of the approach outlined in the preceding paragraph was endorsed by the House of Lords in Heatons Transport ([1973] AC at p 109); their Lordships explicitly citing Steiner and Mileage Conference as precedents for the imposition of a fine in a case of disobedience to an order which is more than casual, accidental or unintentional . This endorsement was evidently based on the reasoning in the decisions to which we have referred, including an appreciation of the unsatisfactory consequences which would flow from the adoption of the view that there is no power to fine in such cases. To those reasons we would add the comment that lying behind punishment for a contempt which involves wilful disobedience to a court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the court. In our view the reasons supporting the recent decisions are compelling and they should be accepted by this court. It follows that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional. " (My emphasis.)

1. Thus his Honour concluded (at [37]-[38]):

37 The breaches of the undertakings are admittedly wilful in the sense that the defendants were conscious that the lists and verifying affidavits were required to be served, and were conscious that the affidavits of 16 April 2007 did not constitute compliance with their undertakings and, in that sense, the omission to provide the lists and affidavits was deliberate. Nonetheless, I would not characterise the breaches of the undertakings as intentional. The first and seventh defendants did not intend not to comply with the undertakings. They found themselves unable to do so. Their omission to do so was deliberate only in the sense that they did not think that they had supplied what they were required to supply.

38 Although the breaches were admittedly wilful in the sense described by senior counsel for the plaintiff, I do not consider that the breaches constituted wilful disobedience of the undertakings, in the sense described by the High Court in Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd. In my view, whilst the omissions were deliberate in the sense that the defendants knew that they were not supplying what was required, they were unintentional. I do not consider that the contempts were of such a kind as to be punishable by a fine.

1. White J held that conscious non-compliance with undertakings by two defendants to serve a list of all equipment referred to in a summons that was in their possession, and to serve an affidavit verifying such a list, did not amount to a contempt punishable by a fine. This was because although the breach of the undertakings by the defendants was deliberate, in the sense that they knew they were not supplying the required information, the breaches were nonetheless unintentional. That is to say the defendants did not intend not to comply with the undertakings they merely found themselves unable to do so.

1. The respondent submitted that the facts of this case were relevantly analogous to those of Ark Hire. That is to say, in the present case the contempt was not wilful, inasmuch as there was an absence of intention on behalf of the respondent to defy the Court orders, but the disobedience was nevertheless deliberate insofar as it could not be described as casual, accidental or unintentional in light of the knowledge that the respondent had as to the date upon which compliance with the Court orders was required. Accordingly, the contempt could not properly be characterised as criminal but was civil, and therefore, the Court had no power to impose a fine by way of punishment.

1. The distinction between civil and criminal contempt has in recent years become an increasingly subtle one. In Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 the High Court stated (at 534 per Brennan, Deane, Toohey, Gaudron and McHugh JJ, citations omitted) that:

The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory. They certainly do not justify the allocation of different standards of proof for civil and criminal contempt. Rather, the illusory nature of those differences and fact that the usual outcome of successful proceedings is punishment, no matter whether primarily for the vindication of judicial authority or primarily for the purpose of coercing obedience in the interest of the individual, make it clear as Deane J said in Hinch, that all proceedings for contempt "must be realistically be seen as criminal in nature".

1. The question of whether or not this Court has the power to impose a fine pursuant upon a finding of contempt that is more than technical but less than contumacious, or even for a contempt premised upon wilfully disobedient conduct, does not appear to have been squarely considered by this Court. Yet, this Court is replete with instances where it has imposed fines for such contempts (a recent example is that of Fairfield City Council v Adams (No 2) ). Further, the decision in Ark Hire has not been the subject of subsequent judicial consideration on this point.

1. Given my conclusion as to the unsuitability of a fine in any event, it is unnecessary for me to determine this question to finality. Suffice it to say, that in Mudginberri, upon which Ark Hire relied, the Court did not propose that wilful contempt could not be punished by way of the imposition of a fine. Rather, as I read the passages referred to by White J in Ark Hire, the High Court simply stated that technical contempts did not attract that form of sanction.

1. Furthermore, Ark Hire may be distinguished from the present case insofar as in that case White J found that the contempt was "unintentional", that is to say, on the contempt spectrum (for there is no bright line neatly confining the three categories of contempt) the conduct of the defendants was more akin to a technical contempt, thereby eschewing any attraction of a monetary penalty.

1. In the present case, I neither find the contempt to be merely technical in nature nor was it contumacious. The contempt was wilful because the respondent deliberately did not comply with the Court order, but, as I accept, did so with no intention to defy the Court's authority. Like the defendants in Ark Hire , the respondent had a genuine desire to achieve compliance with the Court orders but it was unable to do so due to its initial tardiness and the continuing delay by its contractors. Unlike Ark Hire , however, and with respect to his Honour, I have no difficulty in characterising the contempt as sufficiently wilful that the imposition of a fine would, in my opinion, be within the power of the Court.

Appropriate Sentencing Principles

1. In the recent decision of Mosman Municipal Council v Kelly (No 4) [2010] NSWLEC 20 Biscoe J helpfully summarised the relevant sentencing principles for contempt. They are as follows (at [6]):

6 The following ten factors relevant to sentencing for contempt identified by the Court of Appeal in Wood v Staunton (No 5) (1996) 86 A Crim R 183 at 185 were endorsed by the Court of Appeal in Matthews v Australian Securities and Investments Commission [2009] NSWCA 155 at [129] and applied in this Court in Burwood Council v Ruan [2008] NSWLEC 167, Liverpool City Council v Palerma Pty Ltd (No 2) [2009] NSWLEC 45 at [7] and Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) [2009] NSWLEC 210 at [92]:

1) the seriousness of the contempt proved;

2) whether the contemnor was aware of the consequences to himself or herself of what he or she did;

3) the actual consequences of the contempt on the relevant trial or inquiry;

4) whether the contempt was committed in the context of serious crime;

5) the reason for the contempt;

6) whether the contemnor has received any benefit by indicating an intention to give evidence;

7) whether there has been any apology or public expression of contrition;

8) the character and antecedents of the contemnor;

9) general and personal deterrence; and

10) denunciation of the contempt.

1. Section 3A of the Crimes (Sentencing Procedure) Act 1999 also applies when sentencing for contempt ( Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) [2009] NSWLEC 210 at [93] and Kelly (No 4) at [8]).

1. The purpose of the exercise of the power of the Court in punishing for contempt was described by Lloyd J in Environment Protection Authority v Pannowitz (No 2) [2006] NSWLEC 797; (2006) 153 LEGERA 126 (at [20]-[23]);

20 The underlying purpose of the exercise of the power of the court to punish for contempt is to protect the effective administration of justice by demonstrating that the court's order will be enforced: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Limited (1986) 161 CLR 98 at 106-107. In Mudginberri the High Court referred (at 107) to Borrie and Lowe's Law of Contempt , (2nd ed, 1983), p 3:

If a court lacks the means to enforce its orders, if its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute.

21 The function of punishment for contempt serves two purposes: the enforcement of the process and order of the court and punishment as vindication of the authority of the court: Mudginberri at 108. Thus, in addition to its coercive purpose punishment also serves the purpose of deterring both the contemnor and others who might be so minded from flouting the authority of the court.

22 Non-compliance with an order or a judgment of the court necessarily constitutes an interference with the administration of justice: Witham v Holloway (1995) 183 CLR 525 at 533-534. Any punishment must therefore show that obedience to a court's order is important and should reflect its gravity.

23 Finally on the question of the nature and purpose of a penalty for contempt it is worth noting the judgment of Kirby J in Pelechowski v Registrar Court of Appeal (1999) 198 CLR 435 at 485[149]:

Unless courts are seen to respond firmly to deliberate defiance of their orders, their effectiveness in the authoritative determination of disputes of law would be undermined. And if they were not effective, "serious and lasting damage to the fabric of the law may result". [ Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 115]. Obviously, the culpability of the contemnor is relevant to the order which must be made [ Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741]. The contemnor must then be punished in an emphatic way. He or she must be deterred effectively from any temptation to re-offend. However, the focus of attention is not solely on the contemnor. It is also addressed to the community at large and to any others who might consider acting in a similar manner.

1. The need for punishment for contempt in order to uphold the effective administration of the Courts has been referred to in a number of recent judgments of this Court, which I adopt ( Pittwater Council v Brown Brothers Waste Contractors Pty Ltd (No 2) at [88]-[90]; Kelly (No 4) at [9] and Fairfield City Council v Adams (No 2) at [17]).

Conclusion

1. There was little difference between the submissions of the council and the respondent with respect to the circumstances giving rise to the commission of the contempt. Both parties agreed that, while nevertheless the responsibility of the respondent, in large part the delay in complying with the Court orders had been due to the failure of the contractors engaged by the respondent to carry out the works in a timely manner. Further, it could not be said that the respondent had at all times not made genuine attempts to ensure compliance with the Court orders. I accept these submissions.

1. The respondent relied on an affidavit of Mr Ben Cabello, sworn 14 April 2011. Mr Cabello is the strata manager of the respondent. In his affidavit Mr Cabello expressed sincere contrition and remorse for the respondent's failure to comply with the Court orders. He went on to state that he appreciated that the respondent's non-compliance was "of the utmost seriousness and the consequences severe". I accept this sincere apology on behalf of the respondent.

1. It follows from the discussion above concerning the nature of the contempt, and in light of the background circumstances of its commission, that I find that the contempt was not serious. In addition, it should be noted that the contempt is not ongoing and has now been purged.

1. Given the expression of contrition by the respondent and given that there was no evidence before the Court to suggest that the respondent was anything other than of good character, I do not find that there is any need for specific deterrence.

1. In addition, while general deterrence and denunciation of the conduct of any contemnor is a consideration in the imposition of a penalty for contempt - if for no other reason than Courts must respond firmly, and be seen to be responding firmly, to any defiance of their orders lest the authority of their determinations be undermined and the justice system imperilled - it is my opinion that in the present case, general deterrence will be adequately served by the pronouncement of the Court that the respondent is found guilty of the charge of contempt as particularised and by the order that it pay the council's costs.

1. I do not, therefore, consider that in the particular circumstances of this motion the imposition of a monetary penalty is either necessary or appropriate.

Costs

1. It is appropriate to order, as an exercise of the Court's discretion, that the respondent pay the council's costs of and incidental to the notice of motion. An order that the respondent pay costs incidental to the notice of motion will naturally extend the ambit of the order for costs to include costs incurred as part of the preparation for the application ( Ark Hire at [47]).

Orders

1. In conformity with the Court's reasons the following orders are made:

(1) the respondent is convicted of the charge of contempt of the Court as particularised in the statement of charge;

(2) the respondent is ordered to pay the council's costs of and incidental to the notice of motion; and

(3) the exhibits are to be returned.

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Decision last updated: 28 June 2011