Moira Shire Council v Sidebottom Group Pty Ltd

[2019] VSC 569

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

VALUATION, COMPENSATION & PLANNING LIST

S CI 2015 01051

MOIRA SHIRE COUNCIL	Applicant
v
SIDEBOTTOM GROUP PTY LTD (ACN 102 558 869)	First Respondent
and
AUSTRALIAN RUBBER MANUFACTURERS PTY LTD (ACN 086 752 329)	Second Respondent

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JUDGE:	Forbes J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 August 2019
DATE OF JUDGMENT:	23 August 2019
CASE MAY BE CITED AS:	Moira Shire Council v Sidebottom Group Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2019] VSC 569

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CONTEMPT OF COURT – Civil contempt - Breach of undertaking to court – Contempt by breach of court order  - Civil contempt penalised by imprisonment – Difference between criminal and civil contempt – Purpose of imposing a penalty for a civil contempt is to coerce compliance - Imprisonment a significant penalty for civil contempt – No further penalty imposed - Successful party entitled to costs paid – Liberty to apply for a costs order pursuant to Appeal Costs Act (Vic) 1998 - Supreme Court (General Civil Procedure)Rules 2015, Rule 66.05.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr Appaduri	Russell Kennedy
For the First Respondent	Mr D G McCartney, solicitor	Simmons & McCartney
For the Second Respondent	Mr D G McCartney, solicitor	Simmons & McCartney

HER HONOUR:

Background

1. On 14 December 2016 consent orders were made between Moira Shire Council (the ‘Council’) and Sidebottom Group Pty Ltd (‘the company’) dealing with the responsibility of  the company to lawfully dispose of tyre stockpiles and other materials from its land at 7 and 25 Saxon St West, Numurkah (the ‘2016 consent orders’). Those 2016 consent orders set a timetable for removal commencing by 15 January 2017 and concluding by 15 August 2018.  The 2016 consent orders also dealt with various obligations on the company during the removal timetable. 

1. Mr Shanan James Sidebottom (‘Sidebottom’), director of the company at the time, consented to the 2016 consent orders on behalf of the company and gave an undertaking to the Court.  The undertaking was recorded in the orders as part of other matters.  It was in these terms:

Mr Shanan James Sidebottom, director of the First Respondent, undertakes that the First Respondent has the capacity to, and will, comply with this order, and he will personally ensure that the First Respondent complies with each paragraph of this order.

1. Order 1 of the 2016 consent orders required compliance:

(a) by April 2017, all materials located along the southern and western part of the tyre storage area on the land in the attached site plan (“tyre storage area”) referred to as “A” and marked with “+ signs”;

(b) by 15 August 2017, all rubber materials located along the eastern and northern part of the tyre storage area referred to as “B” and marked with “horizontal lines”;

(c) by 15 December 2017, all materials located along the southern part of the tyre storage area referred to as “C” and marked with “triangle signs”;

(d)by 15 April 2018, all materials forming every second row of tyre stockpiles in the tyre storage area referred to as “D” and marked with “wavelength lines”; and

(e)by 15 August 2018, all remaining materials located in the tyre storage area including, but not limited to, tyres, rubber, scrap metal and other similar waste material.

Although some tyres were removed between January and August 2017, Council inspections showed very little progress in removing the tyres. In September 2017  Council notified Sidebottom that the company was in breach of the 2016 consent orders and Mr Sidebottom was in breach of his undertaking to the Court.  Accordingly in December 2017 the Council issued a summons seeking that Sidebottom and the company be committed for contempt, for the failure of the company to comply with the 2016 consent orders and the director’s failure to comply with his undertaking given to the court.

1. Sidebottom and the company then consented to orders that they were in contempt of court.  Those orders, made on the papers on 22 June 2018 (the ‘2018 consent orders’), recorded the contempt admitted by each of the company and Sidebottom as follows:

1.        The First Respondent is in contempt of court, pursuant to O 75 of the Supreme Court (General Civil Procedure) Rules 2015, by reason of its failure to comply with paragraphs 1a, 1b, 1c and 1d of the Order of the Court made on 14 December 2016 and authenticated on 22 December 2016 (‘the December order’).

2.        Mr Shanan Sidebottom is in contempt of court, pursuant to O 75 of the Supreme Court (General Civil Procedure) Rules 2015, by reason of:

(a)the failure of the First Respondent to comply with paragraphs 1a, 1b, 1c and 1d of the December order; and

(b)his failure, in contravention of the undertaking he gave to the Court (the terms of which are set out in the December order) to personally ensure that the First Respondent complied with paragraphs 1a,1b,1c and 1d of the December order.

1. At the time of the original  hearing to determine penalty for the admitted contempt in July 2018,  Sidebottom and the company remained in breach of the 2016 consent orders and, in the absence of agreed facts, Sidebottom was extensively cross-examined.  The penalty that was imposed on 1 October 2018 was for a contempt characterised as a criminal contempt.  The company was fined $50,000.  Sidebottom served twenty six days of a four month jail term until the Court of Appeal allowed an appeal against sentence and remitted the matter for rehearing on Sidebottom’s penalty.[1]  This is the rehearing on penalty.

   [1]Sidebottom v The Queen [2018] VSCA 280.

Power to deal with contempt of court

1. This Court has an inherent power to deal with contempt of court.  Contempt is described as an offence and is essentially criminal in nature with proof of a contempt  to the criminal standard of beyond reasonable doubt.  However the procedure is one of a civil proceeding brought pursuant to Rule 75.[2]   

   [2]Supreme Court (General Civil Procedure) Rules 2015.

1. A failure to observe and comply with an order of the Court may be a form of contempt and compliance with the order may be enforced in accordance with the court rules. Rule 66.05 of Supreme Court (General Civil Procedure) Rules 2015 provides:

(1)       This Rule applies where –

(a)a judgment requires a person to do an act and the act is to be done within a time fixed in the judgment or by subsequent order, and the person refuses or neglects to do the act within that time;

(b)A judgment requires a person to abstain from doing an act , and the person disobeys the judgment.

(2)Where this Rule applies, a judgment may, subject to rule 66.10, be enforced by one or more of the following means -  

(a)        committal of the person bound;

(b)       sequestration of the property of the person bound; and

(c)       where the person bound is a corporation, without limiting paragraph (2)(b) –

(i)        Committal of any officer of the corporation; and

(ii)Sequestration of the property of any officer of the corporation.

(3)Paragraph (2) has effect subject to the Imprisonment of Fraudulent Debtors Act 1958.

1. A failure to abide by an undertaking made to the Court is the equivalent of a failure to comply with a court order for the purpose of contempt.[3]

   [3]            Morgan v Victoria (2008) 22 VR 237.

1. In order to establish a contempt by breach of a court order it is necessary to be satisfied beyond reasonable doubt of five elements

(a)An order was made by the court;

(b)The terms of the order were clear unambiguous and capable of compliance;

(c)The order was served on the defendant, or excused in the circumstances, or service was dispensed with according to the rules of court;

(d)The defendant had knowledge of the terms of the order; and

(e)The defendant breached the terms of the order. [4]

[4]NAB Ltd v Juric [2001] VSC 375 [37].

1. The admitted contempt identified breaches of the timetabling parts of the 2016 consent orders: paragraphs 1a, 1b, 1c and 1d as set out above at paragraph 3.  Sidebottom did not admit (nor did the company) other breaches of the orders sought in the Council summons, particularly breaches of paragraph 4.

1. By consenting to orders admitting a contempt Sidebottom accepted that each of the five elements necessary to prove contempt was established to the requisite standard.

Civil or criminal contempt

1. A breach of a court order or undertaking in a civil proceeding is generally described as a civil contempt.  However disobedience of  such an order may amount to a criminal contempt if it is deliberately defiant, often described as being contumacious.   The distinction between the civil and criminal contempt of a court order is sometimes described as “illusory”[5] because the standard of proof of the contempt remains to the criminal standard of beyond reasonable doubt, whether the contempt be civil or criminal.  Both civil and criminal contempt can be penalised by fine or imprisonment of the individual.

   [5]Witham v Holloway (1995) 183 CLR 525 (‘Witham’)[534].

1. Whether the contempt is civil or criminal, the importance of upholding the effective administration of justice is central.[6]  However, there are distinctions to be drawn in the purpose for which the penalty is imposed. For a civil contempt the purpose of the contempt proceeding is primarily to “coerce the recalcitrant party into compliance, and not to punish the party for that breach.”[7]

   [6]Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, 107.

   [7]Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] 47 VR 527 (‘Grocon’) 563 [136].

1. The fact that a contempt is wilful or deliberate does not in itself demonstrate contumacy.  What must be demonstrated for a breach of a court order or undertaking to amount to a criminal contempt is that the breach was both wilful and calculated (in the sense of ‘likely’) to interfere with the course of justice.[8]  In Construction, Forestry, Mining and Energy Union v Grocon Constructors (Vic) Pty Ltd,[9] the Court of Appeal made reference to  Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd,[10] where contumacy was described as:

It is appropriate for the contempt before the Chief Judge to be regarded as involving an element of contumacious conduct.  Contumacy is perverse obstinate resistance to authority; see the Shorter Oxford Dictionary. Deliberate determination to defy the court for reasons founded upon union policy in which it sought to establish immunity from the law would seem within this concept of contumacy.[11]

[8]Grocon (n 7) [138].

[9]Grocon (n 7).

[10](1985) 9 FCR 194 (‘Mudginberri (FFC)’).

[11]Ibid 207.

1. As can be seen Sidebottom admits two contempts: the company’s failure and his individual contravention of the undertaking given.  In reality his conduct is one course of action and  I have approached the question of penalty on the basis of one contempt.

Facts Agreed

1. In the rehearing a comprehensive chronology of relevant facts were agreed.  Affidavits from Stuart Gordon McKenzie,[12] Jacqueline Frances Miller,[13] Shanan James Sidebottom,[14] Clinton Drew Habner[15] were before the court and drawn on heavily for the chronology of agreed facts.  As a result no viva voce evidence was called.  Within that statement of agreed facts the Council and Mr Sidebottom agree that:

   [12]Affidavit of Stuart Gordon McKenzie, 28 November 2018.

   [13]Affidavits of Jacqueline Frances Miller, 28 November 2017; 20 December 2017; 12 February 2018 and 24 April 2018.

   [14]Affidavit of Shanan James Sidebottom, 23 April 2018.

   [15]Affidavit of Clinton Drew Habner, 3 May 2018.

(a)The 2016 consent orders reflected the outcome of a judicial mediation before Associate Justice Efthim on 5 December 2016 where the parties agreed a new timetable for the removal and lawful disposal of the tyres. This mediation followed earlier contempt proceedings arising from failure to comply with earlier orders regarding removal of the tyres.[16]

[16]Moira Shire Council v Sidebottom Group & Anor [2016] VSC 546.

(b)During the period 18 January 2017 to 15 August 2017 (in partial compliance with paragraphs 1(a) and 1(b) of the 2016 consent orders) the company transported a total of 345.69 tonnes of truck tyres to a facility in Somerton, Victoria owned by Tyrecycle Pty Ltd. 

(c)No further tyres were removed between 15 August 2017 and 11 December 2018.

(d)As at 11 December 2018 the land contained 5,298.44 tonnes of used truck and car tyres.

(e)On 11 December 2018 the EPA, in exercise of its power under section 62 of the Environment Protection Act 1970 and assisted by Moira Shire Council, entered the property and commenced removal of all tyres. The work concluded on 8 March 2019. The work cost approximately $2,223,951 and the EPA is in the process of seeking recovery of this sum from the company.

(f)       The undertaken given by Sidebottom to the court was given voluntarily.

(g)Prior to giving the undertaking to the court Sidebottom had not:

(i)contacted Tyrecycle to ascertain its capacity to accept tyres in accordance with the schedule or the pricing structure that would apply.

(ii)made an agreement with Tyrecycle for receipt of all tyres located on the land, although Tyrecycle was at all times willing to negotiate the price for acceptance of the tyres.

(iii)made any other enquiries to ascertain that the company could then comply with paragraph (1) of the 2016 consent orders.

1. The agreed facts also stated that between July 2015 and January 2016 Tyrecycle had an agreement with the company to accept 20,000 truck tyres at a rate of $20 per tonne with a review of this pricing once the 20,000 threshold was reached.  This agreement was subject to some qualifications.  Despite not having received 20,000 tyres as at January 2017 Tyrecycle charged deliveries made by the company at $80 per tonne. In June 2017 Tyrecycle advised the company that its pricing structure was to increase to between $233 to $450 per tonne.  Negotiations resulted in an agreed price of $70 per tonne in February 2017 and then $95 per tonne in August 2017.  

1. In an affidavit sworn 23 April 2018  Sidebottom  deposed to a number of other circumstances occurring after the undertaking was given that impacted upon his and the company’s ability to meet the timetable that had been previously agreed.  In addition to the increases in the price charged by Tyrecycle they included:

a.Repayment of a loan of $395,708.50 to Mr Buckingham, demanded in full in September 2017 by the estate of Mr Buckingham after his sudden death.  Efforts of the company to obtain funds to pay out that loan were detailed.

b.Attempts to obtain support for a temporary pyrolysis plant on site and permission to use tyres in construction of a potential flood levee as alternative methods of disposal. These proposals and the Council’s refusal of them were also part of the agreed statement of facts.

1. Sidebottom deposed to his view that “I have been open, honest, communicative and responsive with the Council.”[17]  In his affidavit sworn 12 July 2018 he deposed:

   [17]Affidavit Shanan James Sidebottom, 23 April 2018 [58].

……

3. Notwithstanding the above clarification of my evidence, the main purpose of this affidavit is to apologise to the Court for the failure of the Sidebottom Group to comply with the timetable to remove the tyres from the property at 7 and 25 Saxton Street West, Numurkah in contravention of the orders dated 14 December 2016, and for the breach of my undertaking.

4.I was not responsible for the tyres coming on to the property but I became director of the Sidebottom Group in May 2015 to clean up the mess the company found itself in because of earlier mismanagement and because of that I am responsible for the removal of the tyres. I regret and am sorry to the Court, the Moira Shire Council and the local community that I have failed in that responsibility.

5.I am extremely sorry to be back in court and I never wanted to be in this position, but I have honestly done everything that I believe possible and to the best on [sic] my ability to comply with the orders. I have the utmost respect for our country’s legal system and understand the importance of giving an undertaking in court. I would never have given it if I was not 100 per cent sure at the time I could comply with it.

…..

1. Before me, the Council no longer sought to cross-examine Sidebottom as to the genuineness of his apology, a matter it contested at the first hearing.  There is no challenge to his apology and I accept it. 

Analysis

1. The first issue for determination is whether, on the agreed facts, the contempt which is admitted by Sidebottom is properly characterised as civil or criminal.  The Council submits that while voluntarily given, Mr Sidebottom’s lack of proper inquiry as to whether the company could meet the timetable, made giving the undertaking reckless and therefore showed ‘perverse obstinate resistance’ or contumacy.  On behalf of Mr Sidebottom it was submitted that whilst he may not have paid sufficient attention to the practicality of compliance, his behaviour was not perverse or defiant. 

1. Even allowing for the concession that inquiries could, and perhaps should, have gone further than they did, I could not be satisfied beyond reasonable doubt that any shortcoming was such that it was reckless or an attempt to deliberately mislead the court.  Moreover, the contempt that Sidebottom has admitted lies in the breach of the undertaking not in some impropriety associated with entering into it.  In ascertaining the nature of the breach it would not be appropriate to take into account shortcomings that led to the giving of the undertaking.  Therefore I do not accept the Council’s submission.

1. In my view the proper characterisation of the breach of the undertaking is that it was deliberate but not contumacious, therefore amounting to a civil contempt.  In part the deliberate nature of the continuing contempt is demonstrated by the subsequent steps in prioritising other commercial interests of the company (such as arrangements to repay the Buckingham loan) over the obligations to adhere to the Court orders and undertaking. 

1. In discussing the persisting difference between a civil and a criminal contempt the Court of Appeal said:

A conviction has usually followed as a necessary incident of a finding of criminal contempt.  Indeed, a finding of guilt of criminal contempt has itself been regarded as the equivalent of a conviction.[18]

…

If a contemnor is adjudged guilty of a civil contempt, Biscoe J observed in Waverley Council v Tovir Investments Pty Ltd and Rappaport(No 3),[19] no conviction should be recorded. In ASIC v Sigalla (No 5),[20] the contempts proved were held to be civil in nature. Justice White said that the appropriate language was ‘that of a declaration of [the contemnor’s] guilt, rather than conviction of an offence’[21].[22]

[18]Grocon (n 7) 570 [174].

[19][2013] NSWLEC 35 [23].

[20][2012] NSWSC 82.

[21]Ibid [84].

[22]Grocon (n 7) 571 [177].

1. The deliberate nature of the contempt and the importance of preserving respect for the court require a declaration that Sidebottom is guilty of contempt of court.

1. The second issue for determination is what penalty should be imposed for the admitted contempt.  Describing the contempt as civil contempt, the purpose of imposing a penalty is primarily to coerce compliance with the orders.  The position now is that compliance with the orders has substantially been achieved by the involvement of EPA who is seeking recovery of the cost of removal from the company.  

1. Sidebottom admitted the contempt prior to the hearing and the orders that he was in contempt of the court were made with his consent. He has placed before the court a statement of remorse and an apology to the court, the Council and the community of Numurkah.  Sidebottom served 26 days of imprisonment in October 2018 pursuant to the sentence that was ultimately set aside.

1. With removal of the tyres, the coercive role requires no further penalty.  The Council have made a submission as to sentence, recognising that there is no obligation on the court to receive such a submission nor seeking to limit the discretion of the Court.[23]  They point out that the sentence sought by Council at the previous hearing was for a sentence suspended pending compliance with an imposed timetable. They submit now no further penalty be imposed beyond time already served. 

   [23]Barbaro v The Queen (2014) 253 CLR 58.

1. The time served on his sentence by Sidebottom was a penalty with a punitive element to it, being for a criminal contempt as previously found.  Whether or not such a step was necessary to ensure coercion cannot now be known. By effluxion of time and the intervention of others the removal of the tyres from the land has now come about.  The fact that Sidebottom has in fact spent nearly one month imprisoned for his contempt is in my view a significant penalty for a civil contempt.  In all of the circumstances no coercive  purpose would be addressed by the imposition of any further penalty. In the circumstances I will declare that Sidebottom is guilty of contempt of the court and impose no further penalty on him. 

1. The third issue for determination is the question of the costs of this rehearing.  The Council submits that Sidebottom should pay its costs.  Mr McCartney for Sidebottom, acknowledges that costs would ordinarily follow the event but submits that Sidebottom’s financial ability to meet such costs is limited in light of his financial circumstances generally, the previous costs orders made against him. I am not persuaded that Sidebottom’s financial circumstances should cause me to depart from the convention that a successful party is entitled to have their costs paid.   I also have had regard to the nature of the proceeding where the Council sought no advantage but merely compliance with what Sidebottom had agreed to and undertaken to bring about.  However, as I raised with the parties, in light of my costs order Sidebottom may make an application  pursuant to the Appeals Costs Act 1998 and I will grant liberty for any such application to be made.