Parramatta City Council v Roy D R Services Pty Limited
[2005] NSWLEC 756
•12/14/2005
Land and Environment Court
of New South Wales
CITATION: Parramatta City Council v Roy D R Services Pty Limited, Ray Yong Xu & Ors [2005] NSWLEC 756
PARTIES: APPLICANT
Parramatta City CouncilRESPONDENTS
Roy D R Services Pty Limited,
Ray Yong Xu & OrsFILE NUMBER(S): 41007 of 2004
CORAM: Preston CJ
KEY ISSUES: Contempt :- court order to cease use premises as brothel - subsequent use of premises as brothel - disobedience of court order - kind of contempt - wilful contempt - appropriate punishment is finding of contempt
fine and order to pay costsLEGISLATION CITED: Land and Environment Court Rules 1996 Pt 10 r 7
Supreme Court Rules Pt 42 r 8CASES CITED: Pelechowski v Registrar, Court of Appeal (NSW)(1999)198 CLR 435
DATES OF HEARING: 23/11/05
14/12/05EX TEMPORE JUDGMENT DATE: 12/14/2005
LEGAL REPRESENTATIVES: APPLICANT
Mr I Hemmings
SOLICITORS
Storey & GroughFIFTH RESPONDENT (Roy D R Services Pty Limited)
EIGHTH RESPONDENT (Ray Yong Xu)
Ray Yong Xu (director)
Ray Yong Xu (in person)
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESPRESTON CJ
WEDNESDAY 14 DECEMBER 2005
04/41007
JUDGMENTPARRAMATTA CITY COUNCIL v NOHRA & ORS
1 HIS HONOUR: The fifth respondent, Roy D R Services Pty Limited (“the company”), and the eighth respondent, Ray Yong Xu (“Mr Xu”), are charged with being in contempt of an order of this Court that was made with their consent to cease using premises at 40 Cowper Street, Granville for the purposes of a brothel. The company and Mr Xu do not admit the charge. The applicant, Parramatta City Council (“the Council”), therefore must prove the charge to the requisite standard, namely beyond reasonable doubt.
The Court order
2 The order was made in class 4 proceedings brought by the Council seeking declaratory relief that a number of persons, including the company and Mr Xu, were causing or allowing premises at 40 Cowper Street, Parramatta, being Lot 1 in Deposited Plan 998449 (“the premises”), to be used as a brothel and injunctive relief that they cease using the premises as a brothel.
3 On 12 October 2004, the Court made orders by consent of all of the parties, including the company and Mr Xu. Of relevance is order 2 stating:
“2. An order that the Fifth, Sixth, Seventh and Eighth Respondents cease using the premises at 40 Cowper Street, Granville for the purposes of a brothel without first obtaining the consent of Parramatta City Council.”
4 The fifth respondent is the company and the eighth respondent is Mr Xu in these orders.
5 The consent of the fifth respondent was given by the director and the secretary of the company and their signatures were affixed to a minute of the order. The consent of the eighth respondent was given by Mr Xu by affixing his signatory to a minute of the order. A copy of the minute of the order with the signatures of the fifth and eighth respondents was tendered as exhibit A.
6 The order was made by Lloyd J of this Court on 12 October 2004. Mr Gough, the solicitor for the Council, appeared and mentioned the matter on behalf of and with the consent of the respondents, including the company and Mr Xu. There was otherwise no appearance by the respondents. The minutes of order signed by each of the respondents were filed in Court. On the basis of each of the parties having given their consent, Lloyd J made the orders including order 2 that I have quoted above.
Service of the orders
7 The orders of the Court were variously served on the company and Mr Xu. First, the orders of the Court, containing a typographical error in order 1 but otherwise entered by the Court and affixed with the Court seal and dated 12 October 2004, were received by the company and Mr Xu on about 17 October 2004. Secondly, upon the Court orders being amended pursuant to Pt 10 r 7 of the Land and Environment Court Rules to correct the typographical error in order 1, the amended Court orders, to which the Court seal had been affixed, was served on the company and Mr Xu about 24 October 2004. Finally, another copy of the Court orders, this time endorsed with a note pursuant to Pt 42 r 8 of the Supreme Court Rules (adopted by Pt 6 r1(1) of the Land and Environment Court Rules 1996) but otherwise being in the form that had been secondly served, was served on the company and Mr Xu on 22 July 2005.
The notice of motion and charge
8 The Council moved the Court by notice of motion dated 11 August 2005 for orders that the respondents, including the company as fifth respondent and Mr Xu as eighth respondent, be found in contempt of the orders of the Court made in these proceedings on 12 October 2004. That notice of motion has been amended by leave of the Court to seek orders that the company and Mr Xu be punished for contempt, as specified in the subscribed statement of charge, by fine.
9 The subscribed statement of charge states that the company and Mr Xu respectively are each “guilty of contempt in Court in that it failed to cease the use of premises at 40 Cowper Street, Granville as a brothel”.
Use of the premises
10 The orders of the Court of 12 October 2004 were made in proceedings that had been brought by the Council against the respondents, including the company and Mr Xu, in class 4 of the Court’s jurisdiction. As I have noted above the essential allegation of the Council was that the respondents, including the company and Mr Xu, had caused or allowed the premises to be used for the purpose of a brothel. The orders that were made by consent were that the use of the premises as a brothel should cease. Such an order proceeds on the presumption that there has been a use of the premises for the purpose of a brothel and the effect of the order is to cause that use to cease.
11 The order takes effect immediately upon the making of the order.
12 After the orders were made on 12 October 2004, the premises continued to be used. The essential question of course is: used for what purpose?
13 In answering this question, the evidence of a number of persons who attended the premises or otherwise communicated with persons working at the premises in the period from 12 October 2004 to 29 June 2005 is of particular relevance. I will explain shortly why the latter date of 29 June 2005 is of importance.
14 The first occasion where a person who gave evidence visited the premises is on 26 April 2005. On that occasion, Mr John Stewart telephoned the premises and visited the premises. Mr Stewart is a licensed private inquiry agent. Mr Stewart was asked on 26 April 2004 to visit the premises. After arrival at the premises, and being shown inside, Mr Stewart was told to “come inside, a girl will be with you shortly”.
15 Mr Stewart was shown to a room on the left hand side of the premises. A short time later a woman entered the room. Mr Stewart had a conversation with the woman to the following effect:
Mr Stewart said: “Do you do full service?”
She said: “Yes $85 for half an hour”.
Mr Stewart said: “Half an hour please”.
16 Mr Stewart handed the woman $100 in cash and she left the room.
17 Mr Stewart observed that in the room there was a massage table in the centre of the room about the size of a three-quarter bed. The chair was situated in the right hand corner as he entered the room. Arranged in the left hand corner opposite a small table were tissues, powder and oil placed upon it.
18 The woman returned to the room as Mr Stewart was undressing. The woman placed $15, which Mr Stewart understood to be the change, on the chair in the corner. Mr Stewart then had sexual intercourse with the woman.
19 Mr Stewart gave oral evidence and was cross-examined by Mr Xu. In cross-examination, Mr Stewart stated that he had also visited the premises on other occasions. One of those occasions was on 8 February 2005. Mr Stewart said he had attended on two or three other times before that occasion. Mr Stewart stated that the woman with whom he had sexual intercourse on 26 April 2005 was named Aida. Mr Stewart recognised Aida because he had seen her on 8 February 2005.
20 Mr Stewart was asked whether he had seen signage at the premises saying that “Massage only! No sex! Thanks”. A copy of a sign was shown to him which contains that statement. Mr Stewart recognised the sign and said that he had seen it at the premises. However, Mr Stewart said, on a number of occasions in cross-examination, that although there were “no sex” signs, “it doesn’t work that way”. He said although they have the sign, they still offer sex. Mr Stewart said that he had had sex on other occasions that he attended at the premises.
21 The next event of relevance is a visit by a Mr Stephen Toohey to the premises on 22 May 2005.
22 Mr Toohey, after entering the premises, had a conversation in relation to payment for services. In that conversation a lady who had answered the door of the premises and had let Mr Toohey in stated that “we have eftpos”.
23 The woman showed Mr Toohey to a room and said to him:
- “Girl will see you soon”.
24 Mr Toohey waited in the room and a woman entered dressed in a cream bikini top and wraparound skirt. After each saying “hello” a conversation ensued which included the following:
Mr Toohey said: “What services can I get and how much?”
The woman said: “Full service is $85 . $100 with French”.
25 Mr Toohey then said that he would have to get some money and left the premises ostensibly to do so, however he did not return.
26 I now come to the date of 29 June 2005. This was the date upon which there was a transfer of the lease and, it is said, also the business from the fifth or eighth respondents (I will come to explain which in a moment) to a new person, a Ms Zhixian Fan. There was a lead up to this transfer of lease and business.
27 Mr Xu has, in his affidavit sworn 24 October 2005, enclosed documents evidencing the process that led to the transfer of lease. The first step seems to have been on 21 October 2004, not long after the Court had made orders on 12 October 2004. That document was a receipt from GP Solicitors for $330 described as being for costs in the matter of a transfer of lease. The money was received by cheque and is stated to have been received from David Denton and Roy D R Services. The latter person is evidently the company.
28 The next document is a document being a transfer of lease. The transferor is stated to be the company, Roy D R Services Pty Limited, and David Denton. The transferee is stated to be Zhixian Fan. The property is identified as Lot 1 in DP98449. The transfer of lease bears a duty stamp of 13 January 2005. With that transfer of lease was a deed of assignment dated 28 January 2005 between the lessor and Roy D R Services Pty Limited and David Denton, both described as the transferor, and Zhixian Fan, described as the transferee. Although the deed of assignment is dated 28 January 2005 it was not signed by the lessor at that time. Indeed, it did not seem the lessor came to sign the transfer until June 2005.
29 Another document annexed to Mr Xu’s affidavit is dated 10 June 2005. This is a letter from the real estate agent, L J Hooker Granville, enclosing a copy of the transfer of the lease. L J Hooker Granville noted that the transfer had not been completed and asked that this fact be checked.
30 On 21 June 2005, the company wrote to L J Hooker Granville requesting that the bonds for the property be transferred to the new lessee. It is not clear precisely when thereafter the lessor signed the transfer but it is reasonable to assume that it was somewhere around this time, that is 21 June 2005.
31 On 22 June 2005, the company entered into an agreement with Ms Fan. A copy of the agreement was tendered in evidence. The agreement was in the Chinese language. However, the document was translated by an official language translator. The agreement is stated to have been reached on 22 June 2005 and was to this effect:
“1. A Party B [Zhixian Fan] is to take over the management and operation of the business at 40 Cowper Street, Granville NSW 2141 as of 29 June 2005.
2. Considering that party B’s command of English language is not yet adequate and that several procedures, such as business registration, company account and GST number, have not been finalised, party A [Roy D R Services Pty Limited] consents that prior to the final handover, party A’s company name and cheques be used for the time being in the payments of bills for rent, electricity, telephones, gas and advertising, until the end of October or early November 2005, after party B returns to Australia and finalises the business registration procedures.
4. Both parties agree for the quarterly payments of electricity, gas and Fairfax advertising fees before and after 29 June 2005 will be calculated based on a ratio of the total amounts of payments to the total number of days.”3. Considering that party B [Ms Fan] uses party A’s company eftpos machine for financial transfers, both parties agree that party A [Roy D R Services Pty Limited] will pay the rent at L J Hooker Granville, as well as paying other bills, including advertising, telephone, electricity and gas, and be reimbursed by party B in cash.
32 The agreement was signed by Mr Xu on behalf of the company, Roy D R Services Pty Limited, and by Ms Fan.
33 Mr Xu gave evidence that the agreement of 22 June 2005 was implemented in accordance with its terms.
34 Mr Xu tendered in evidence a printout of receipts received from L J Hooker Granville from the company, Roy D R Services Pty Limited, for rent paid under the lease of the premises from 8 October 2003 through to 30 September 2005. Of relevance is that the payments were made by the company for the rent. The company paid rent not only before the date of 29 June 2005 but also subsequently up until at least 30 September 2005.
35 Mr Xu also tendered in evidence an exercise book which contained the accounting between the company and Ms Fan as foreshadowed in the agreement of 22 June 2005. There were four pages of entries in the exercise book, one for each of the months of July, August, September and October 2005. The pages followed a similar format and involved a specification of the income that had been received in the month stated followed by a specification of the expenses broken up into the categories of rent, telephone and advertisements. Next, a total was given of the expenses. There then followed a specification of the balance, that is the income less the total expenses. If the balance was in the negative, that is the expenses exceeded the income, there was an annotation of a receipt by the company from Ms Fan for that balance. This occurred in the months of July, August and September. The only month where there was a surplus, that is the income exceeded the expenses, was in the month of October. On that occasion, there was a payment by cheque from the company to Ms Fan.
36 There was also tendered in evidence by the Council, an eftpos receipt that had been issued to another investigator, Mr Cooper, when he paid for services, which included sexual intercourse, on 7 August 2005. Of relevance is the fact that the eftpos receipt is in the name of Roy D R Services Pty Limited.
37 Accordingly, it can be seen from the rental payments, the accounting exercises and the eftpos receipt that there was an implementation of the agreement between the company and Ms Fan of 22 June 2005.
38 After 29 June 2005, the evidence is that Ms Fan carried out the business at the premises. There was evidence given of visits by persons to the premises and the activities that occurred after that time. However, none of the evidence given that related to the period after 29 June 2005 established that either the fifth respondent, the company, or the eighth respondent, Mr Xu, was carrying on the business or, more importantly, using the premises for any purpose at all.
39 There was a period when Mr Xu, pursuant to a power of attorney, did manage the business for Ms Fan whilst she was away in China from 30 September until 21 October 2005. However, such actions by Mr Xu do not establish that either the company or Mr Xu used the premises themselves.
Disobedience of the court order
40 On the facts that I have found above, I find beyond reasonable doubt that the premises were used for the purpose of a brothel. There really was no contest by Mr Xu that sexual intercourse for reward occurred on 26 April 2005, or that there was an offer to do so, although not consummated, on 22 May 2005. I also find that there was sexual intercourse for reward on 8 February 2005.
41 The fact that these constitute only a few occasions, does not mean that there was not a use of the premises for a brothel. The Court orders that were made by consent on 12 October 2004 presupposed that there was a use of the premises for the purpose of a brothel. From that starting position, any further events where the premises are used in a way which permits sexual intercourse for reward to occur constitutes a continuation of the use for the purpose of a brothel.
42 Accordingly, I find beyond reasonable doubt that there has been disobedience of the Court order of 12 October 2004 that the premises cease being used for the purpose of a brothel.
43 The next question is to identify the person who has disobeyed the order. All of the evidence points to the relevant person being the company. The lease is in the name of the company. The rental payments were made by the company. The company had the eftpos machine and the bank account into which proceeds of the business were paid. The agreement with Ms Fan dated 22 June 2005 states that the company would be used to pay bills for rent, electricity, telephone, gas and advertising. Although that agreement was talking to the future, it was quite clear that the agreement was to continue the practice that had been carried out to that date, namely that the company would pay rent, electricity, telephone, gas and advertising.
44 There is no evidence that Mr Xu in his personal capacity, as distinct from acting as a director of the company, carried out a business on the premises or used the premises for any purpose.
45 I therefore find beyond reasonable doubt that the company was the person that used the premises for the purpose of a brothel up to 29 June 2005.
Contempt
46 The disobedience of Court order 2 made on 12 October 2004 by the company constitutes a contempt. The next step is to determine the kind of contempt. The law on contempt draws a distinction between different kinds of contempt. They may be technical, wilful but without a specific intent to defy the authority of the Court, and contumacious. In the last category, a serious act of deliberate defiance of judicial authority is evidenced: Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 484-485.
47 In this case, there is no evidence of deliberate defiance of judicial authority, in the form of the orders. The Council does not submit to the contrary.
48 There obviously is a technical contempt, in the sense that there has been a disobedience of the Court order. The question is whether it could also be classified as wilful. Contempt will be wilful if there is deliberate conduct but without specific intent to defy judicial authority.
49 Mr Xu was asked in cross-examination whether:
“Q. Before 29 June 2005, you knew that people were having sex on the premises?
A. I don’t know.
Q. Most of the time you’re not there?Q. You don’t know?
A. Because most of the time I not be there.
A. I not there, I not the reception there.”
50 Nevertheless, the fact is that the company was the lessee of the premises and conducted the business at the premises. It had the control and direction of the business and the activity conducted at the premises. Mr Xu stated in cross-examination that when he was conducting the business, that is prior to 29 June 2005, he would make decisions in relation to the women who worked at the premises and at the reception. After 29 June, those decisions were made by Ms Fan.
51 The company must be held responsible for the actions of the persons it employs to work at the premises. It had sufficient control over the premises and the ability to direct the work practices of the persons working at the premises. The evidence of the persons who attended the premises show that they are not large. A map of the premises was appended to the statement of Mr Cooper which showed there was two bedrooms, an office and a lounge and a corridor. It would be an easy matter to determine what activities were being carried out at the premises.
52 I find that the company did carry out the business and did use the premises for the purpose of a brothel deliberately, however, without any specific intent to defy the Court orders. The contempt is, therefore, wilful.
Appropriate punishment for the contempt
53 The question now arises: what is the appropriate punishment having determined the kind of contempt? In Pelechowski v Registrar,Court of Appeal(NSW) (1999) 198 CLR 453 at 484-485, Kirby J sets out a number of general propositions which govern punishment for contempt. Kirby J states that where a wilful contempt is shown, in the sense of deliberate conduct but without specific intent to defy judicial authority, a finding of contempt and an order for the payment of costs may not be sufficient. In such a case, a fine may be needed to vindicate the authority of the Court.
54 In this case, I find that it will be necessary to make a finding of contempt and an order for the payment of costs. But in addition, as Kirby J has stated, there is a need for a fine.
55 In determining the quantum of the fine, the Court can have regard to general principles which govern the sentencing of persons convicted of criminal offences which are apt to the peculiar character of contempt: see Pelechowski at 484 [147].
56 One of the purposes of sentencing is specific deterrence. In this case, by reason of the transfer of the lease and the taking over of the management operation of the business on 29 June 2005, the company is no longer disobeying the orders of the Court. Furthermore, by reason of it no longer being in possession of the premises, it is not in a position to disobey the orders in the future. The element of specific deterrence in the circumstances of this case is not, therefore, of particular relevance.
57 However, the element of public deterrence is of importance. The community at large, and any other persons who might consider acting in a similar way, need also to be deterred from the temptation to act in a similar way to the contemnor in disobeying orders of the Court.
58 I take into account the fact that the company, shortly after the making of the orders of the Court on 12 October 2004, set in train a process of transferring the lease and handing over the management and operation of the business. As I have recounted, that process did not culminate until around 21 or 22 June 2005. Nevertheless, it does show that there was an attempt by the company to put itself into a position where it would no longer be in breach of the orders.
59 Against this, however, is the fact that although the company cannot be blamed for the fact that there was a delay by the owner, or lessor, of the property in executing the necessary legal documents, nevertheless the company continued to operate a business and to use the premises in a way which contravened the orders of the Court. There was no necessity for the lawful use that was the subject of the development consent to be conducted in a way that was unlawful.
60 In the circumstances, I consider that a fine of $7,500 is an appropriate punishment for the contempt.
61 The Court makes the following orders:
1. The fifth respondent, Roy D R Services Pty Limited, is guilty of contempt as charged.
2. The fifth respondent, Roy D R Services Pty Limited, is fined the sum of $7,500.
3. The fifth respondent, Roy D R Services Pty Limited, is to pay the applicant’s costs of the notice of motion dated 11 August 2005.
5. The applicant, Parramatta City Council, is to pay the eighth respondent’s costs of the notice of motion dated 11 August 2005.4. The notice of motion as against the eighth respondent, Mr Roy Yong Xu, is dismissed.
………………………… …………………………I certify that this and the 13 preceding pages are a true copy of the reasons for the judgement of The Honourable Justice B. J. Preston.
Associate Date
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