Queanbeyan City Council v Pre-Cast Concrete Solutions Pty Ltd

[2008] NSWLEC 147

Land and Environment Court

of New South Wales

CITATION:

Queanbeyan City Council v Pre-Cast Concrete Solutions Pty Ltd [2008] NSWLEC 147

PARTIES:

APPLICANT
Queanbeyan City Council
RESPONDENT
Pre-Cast Concrete Solutions Pty Ltd

FILE NUMBER(S):

41110 of 2006

CORAM:

Sheahan J

KEY ISSUES:

Contempt :- pleas of guilty; penalty; indemnity costs

LEGISLATION CITED:

Crimes (Sentencing Procedure) Act 1999, ss.3A and 21A

CASES CITED:

Blue Mountains City Council v Fowler [2007] NSWLEC 476
Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683
Greater Hume Shire Council v J and L Cauchi Civil Contracting Pty Ltd [2006] NSWLEC 738
Nambucca Shire Council v Mirage Property Group Pty Ltd [2008] NSWLEC 84
Nambucca Shire Council v Mirage Property Group Pty Ltd (No.2) [2008] NSWLEC 136
Owners Strata Plan 37762 v Pham and Others (2007) 154 LGERA 150
Parramatta City Council v Roy D R Services Pty Limited, Ray Yong, Xu & Ors [2005] NSWLEC 756
Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435
R v Thomson; R v Houlton (2000) 49 NSWLR 383
Registrar of the Court of Appeal v Maniam [No.2] (1992) 26 NSWLR 309
Sutherland Shire Councilv Sawyer [2000] NSWLEC 162
Witham v Holloway (1995) 183 CLR 525
Wood v Staunton (No.5) (1996) 86 ACrimR 183

DATES OF HEARING:

28 November 2007
28 February 2008
14 April 2008

 
DATE OF JUDGMENT: 

17 April 2008

LEGAL REPRESENTATIVES:

APPLICANT
Mr T To
SOLICITORS
Baker Deane & Nutt

RESPONDENT
Mr P Clay
SOLICITORS
Meyer Vandenberg

JUDGMENT:

ENVIRONMENT COURT
OF NEW SOUTH WALES

Justice Sheahan

17 April 2008

41110 of 2006 Queanbeyan City Council v Pre-Cast Concrete Solutions Pty Ltd

JUDGMENT

Introduction

1 His Honour: Precast Concrete Solutions Pty Ltd is one of a group of companies owned and directed in every respect by its “guiding mind” Mr Graham Lester. It has pleaded guilty to two charges of contempt (see Exhibit P1), and this judgment concerns the penalty to be imposed.

2 The company conducts a concrete products manufacture and sale business, specialising in “New Jersey” road barriers, at 63-69 High Street Queanbeyan. The plant is a concrete pouring operation only, and no batching is done on-site. All concrete is brought on to the site by truck on a daily basis, already batched, and poured directly into metal or fibreglass moulds in which reinforcing steel has already been placed. The mould is then left for approximately 6 hours until the concrete has set. After that time, the moulds are inverted by a forklift and dismantled by hand, and the concrete barriers so produced are then stockpiled on site until despatched.

3 The site is a large L-shaped block of land with its only entry point off High Street. There are residential buildings directly opposite that entrance, but the general locality also includes a range of industrial developments and commercial land uses, and a public park. It is situated approximately 1.75km by road from the central business district of Queanbeyan, and is very close to the Queanbeyan River and the ACT/NSW border. Indoor and outdoor production areas adjoin existing industrial development, and the site office and staff etc. parking areas are closest to the access. There is a large vehicle turning area central to the site.

The contempt proceedings

4 The contempt motion was filed on 22 June 2007, and a plea of guilty entered on 11 July 2007. An amended motion and statement of charge were filed on 26 July 2007, specifying 8 breaches of November 2006 consent orders and 10 breaches of March 2007 undertakings given to the Court. On 17 August 2007, the Respondent entered a plea of not guilty to the additional matters set out in the amended statement of charge dated 26 July 2007. The original scheduled hearing dates were vacated by Biscoe J, and the matter was listed for hearing before me on 28 November 2007. When it came on for hearing on that date the Respondent company entered a detailed plea of guilty (Exhibit P1), and the matter was adjourned until 3 March 2008, for hearing on penalty, to afford the Respondent time to “purge” its contempt by attending to some necessary outstanding works.

5 On 28 February 2008, the 3 March hearing date was vacated, by consent, to extend the opportunity to “purge” the contempt, and the matter came on again for penalty hearing on 14 April 2008.

The Evidence

6 There is before the Court a huge volume of documentary material. Fifteen affidavits, including five made by the Council’s Manager, Environment and Health (Natasha Abbott), seven by Mr Lester, one by the Company’s consultant project manager and civil engineer (Bill Swan) and two by the company’s solicitor, Ross Reid, many of them quite large, were formally read by the parties at the hearing on 28 November 2007. The parties have subsequently agreed upon a comprehensive Statement of Facts (Exhibit C3), and Mr Reid has provided a further affidavit dated 11 April 2008, which was read on 14 April, on which date Mr Lester also gave oral evidence.

7 There is no real dispute between the parties as to what the conditions of consent, the consent orders, and the Respondent’s undertakings mean, and Mr Lester’s affidavit and oral evidence indicate his clear awareness of his company’s obligations, and a frank acceptance of his various failures to fulfil or abide by them. I see little point in including all of the agreed factual detail in this Statement of Reasons, but the agreed statement of facts (Exhibit C3) and the detailed plea (Exhibit P1) will remain in the Court file, and the material facts may be shortly summarised as follows.

8 The Respondent company commenced its operations on the subject site on 1 December 2004, following three years of operations elsewhere in Queanbeyan, but without a relevant development consent. According to Mr Lester’s evidence the use of concrete on site did not commence until about twelve months later.

9 On 6 July 2005, it lodged a development application, and a deferred commencement consent was issued on 24 November 2005. The deferred commencement conditions were satisfied on 30 January 2006. The first of several modifications to the consent were negotiated and agreed on 15 March 2006.

10 In September 2006, following a complaint from the public, the company frankly admitted its non-compliance with the conditions of consent.

11 On 20 November 2006 the Applicant Council filed these Class 4 proceedings seeking declarations, inter alia, that the Respondent was continuing the use of premises in contravention of the planning legislation, and an Order that the Respondent cease to use the premises for the purposes of concrete works until it had complied with all the development conditions.

12 On 27 November 2006 the Court ordered, by consent, that the Respondent cease using the premises as a concrete works forthwith, but stayed that “cease use” order until 31 January 2007. Annexed to those Consent Orders was an agreed schedule of works required to satisfy the outstanding development conditions. Formal undertakings were made by the Respondent to the Court on 6 March 2007 regarding rescheduled works required to complete compliance with the outstanding conditions. As part of these ongoing arrangements the “cease use” order was further stayed, eventually, until 8 June 2007 and the proceedings were listed for further directions on 12 June 2007. The Respondent failed to achieve complete compliance with the conditions by 8 June 2007, and did not appear on 12 June 2007. These contempt proceedings were foreshadowed on that date, and, as already noted, they were commenced on 22 June 2007.

13 It must be immediately noted that the use of the subject site has continued throughout the whole of this time, but also that the Council does not allege that the Respondent’s contempt has caused any actual environmental harm. It is acknowledged [agreed facts 12 and 52] that the potential for such harm was eliminated by the Respondent’s installation of emergency bunding.

The Breaches Alleged

14 As already noted (in par [4] above), the amended statement of charge asserts 18 separate breaches or contempts. There is some overlap as between the eight alleged breaches of the November 2006 consent orders and the ten alleged breaches of the March 2007 undertakings. The detailed plea refers to five of the eight, and seven of the ten and, as a result, the Court is dealing with non-compliance with seven conditions of consent (Nos. 13, 27, 31, 36, 48, 19, 21), five of which (13, 27, 31, 36 and 48) figure in both lists. The breaches involving conditions 19 and 21 refer only to the March 2007 undertakings, and not to the November 2006 consent orders.

15 The subject matter of the conditions, the charged breaches by the company, and their admitted duration (taking, for convenience, the longer period where dates vary) may be succinctly summarised as follows. The Respondent company:

(a) failed to comply with condition 13, in that the Respondent failed to erect the required 3m colourbond sheet metal perimeter fencing (intended as a noise barrier) during the period 30 March 2007 to 31 July 2007. [Agreed Facts 21-24].
(b) failed to comply with condition 36, in that from 20 April 2007 to 11 July 2007 the Respondent failed to submit a noise report to the Applicant Council. [Agreed Facts 41-44].
(c) failed to comply with (i) condition 19, in that from 27 June 2007 all stormwater generated within the property was and is not trapped and piped as required, and (ii) condition 31, in that from 20 June 2007 the Respondent was not and is not operating the stormwater treatment system as prescribed. [Agreed facts 30-35 – the on-site system was substantially completed by 14 March 2008, but remains partially inoperative and possible further modification of the consent has been discussed].
(d) failed to comply with condition 21, in that during the period 27 June 2007 to 7 March 2008 overflow waste water from the wash bay was not directed into the tanks required, and the wash bay was not roofed. [Agreed facts 36-40].
(e) failed to comply with condition 27, in that from time to time between 20 June 2007 and 27 November 2007 the Respondent used the vehicle manoeuvring areas for the storage of various goods, materials and products. [Agreed facts 25-29].
(f) failed to comply with condition 48, in that from 20 June 2007 the Respondent did not and has not created the easement required in favour of the Council for stormwater to cross the property known as 77 High Street to join the Council’s system. [Agreed facts 45-49 – the evidence of Mr Lester and Mr Reid indicates that this matter is progressing, but the company has been considering making a modification application to eliminate the need for the easement].

The company’s response

16 Mr Lester’s principal explanation on behalf of the company is the pressure on the company to operate continuously and perform quickly, and the threat of liquidated damages for failure to perform as expected in its contractual arrangements. On the other hand, the Council contends that Mr Lester has always wrongly put the company’s commercial advantage ahead of its legal obligations. Mr Lester clearly conceded in his evidence that he had always found himself too busy with his business responsibilities to comply in a timely fashion with the requirements imposed on his company’s operations by the Council, and later on the company itself by this Court, with its consent, given with the benefit of advice. He expressed remorse in his sworn evidence.

17 Funds available from the company’s successful operations were used not for prompt and/or complete attention to the requirements of the Council and/or the Court, but for further development of the company’s business and the purchase of the subject site in mid-late 2006 for $1.9M. Some relevant financial records of the Respondent and its related entities are before the Court (Exhibit C1, Exhibit C2), and the Court heard some oral evidence from Mr Lester supplementing it. It is fair to conclude that the company trades profitably, but not spectacularly.

18 Mr Lester deposed on 27 November 2007 to the company’s having spent $380,000-$400,000 on compliance with the conditions of consent, and asserted in his oral evidence that that expenditure would now amount to about $500,000.

19 He further testified that general commercial arrangements in the “road barrier” industry provide for substantial penalties for missed deadlines, and the company could not afford at any stage to comply with the “cease use” order in order to divert the effort of its 30-odd staff to compliance with the conditions, orders and undertakings.

20 His counsel, Mr Clay, submitted that, in the absence of the Respondent’s agreement, the “cease use” order would probably not have been made by the Court in all the circumstances of this case, especially the absence of environmental harm, and the threat to 32 permanent jobs in a regional setting.

Consideration

21 The well-established legal principles governing charges of contempt need not be repeated here. They are common ground between the parties, and have been usefully summarised in recent judgments of this Court such as Greater Hume Shire Council v J and L Cauchi Civil Contracting Pty Ltd [2006] NSWLEC 738 (“Cauchi”) (Biscoe J), Owners Strata Plan 37762 v Pham & Others (2007) 154 LGERA 150 (Pain J), and Blue Mountains City Council v Fowler [2007] NSWLEC 476 (Jagot J), and I applied them most recently in Nambucca Shire Council v Mirage Property Group Pty Ltd [2008] NSWLEC 84.

22 Each case turns on its own facts and circumstances, and the sentencing judge has to characterise the contempt as “technical”, “wilful”, or “contumacious”. See Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 (“Pelechowski”) per Kirby J at 484-5 [147]. See also Registrar of the Court of Appeal v Maniam [No.2] (1992) 26 NSWLR 309 (“Maniam”).

23 A “technical’ contempt has been defined as one with elements of the casual, accidental, or unintentional. See Cauchi at [27]. This is clearly not such a case.

24 A contempt will be seen as “wilful” if there is evidence of “deliberate conduct but without specific intent to defy judicial authority”. Parramatta City Council v Roy D R Services Pty Limited, Ray Yong, Xu & Ors [2005] NSWLEC 756 (per Preston CJ at [48]). This case clearly fits, at least, that description.

25 A contempt will be “contumacious” if it has an element of brazen defiance of the Court’s authority – or “perverse and obstinate resistance to authority” as the Shorter Oxford English Dictionary defines it. I found such a contempt in Sutherland Shire Council v Sawyer [2000] NSWLEC 162 (see pars [77]-[80]). See also Witham v Holloway (1995) 183 CLR 525, at 530.

26 Often a contumacious contemnor will be sentenced to imprisonment. Indeed the Council, through its counsel, Mr To, submits that a term of imprisonment should be considered, imposed and suspended, in this case, on the basis that the contempts charged are “contumacious”, and Mr Lester alone is responsible for them. Mr Clay submits that such a sentence should be imposed only if the Court is satisfied that the contempt is, indeed, “contumacious”, and that monetary penalties are inadequate, and ineffective to achieve compliance and satisfy the need for penalties to serve as specific and general deterrents.

27 I will return to the imprisonment option, but, although I believe the contempts in this matter are very serious indeed, I am not satisfied that they quite meet the “contumacious” test. There are substantial bases for an inference of contumacy, but I am not satisfied beyond reasonable doubt.

28 The Respondent has enjoyed, and profited from, its deliberate, unlawful and continuous use of the subject site for almost three and a half years. Such continued unlawful use is the substance of the first charge. Not only has the Respondent disobeyed the “cease use” order to which it consented, but its guiding mind admitted in evidence having had no intention at any stage to cease operations while he brought his company into line with the Council’s requirements and this Court’s orders. There was, as Mr To submits (par 23 of his written submissions), a “conscious decision – preferring the private commercial interests over compliance with the Court’s orders”, despite Mr Lester’s being on notice from 22 June 2007 that the most serious of sentences was being sought against him personally, and his company, and despite also the company’s original plea of guilty.

29 The second charge (failure to comply with conditions) may be seen as perhaps less serious than the first, and the court acknowledges that compliance with the conditions is being slowly achieved, albeit under threat of punishment, but is not yet complete. There are some circumstances, among the evidence, which tend towards excusing some of the delays, but Mr To submits that the continuing nature of some of the contempts constitutes a deliberate defiance of judicial authority, making the contempts (in the second charge) “contumacious”.

30 The only explanations given for the breach of the fence condition (No.13) are the cost of contractors, the alleged need for a new survey, hitting a Telstra cable, the inability to use a welder during a fire ban, and Mr Lester’s belief that it was not a “high priority” matter. The period of contempt was 4 months.

31 The continued illegal use of the manoeuvring area for storage (condition 27) was allegedly the result of accommodating the fencing work, yet it continued for four months after the fencing was completed. Again a four month period in contempt.

32 The illness of Mr Swan in April 2007 is blamed for the delay in designing the stormwater system (conditions 19 and 31), but more progress could certainly have been achieved and the construction completed much earlier. A Construction Certificate issued for the modified system by 1 August 2007, but the system was not completed by 14 March 2008 and its future remains unclear. The period of this contempt is already nine months and continuing.

33 There is no evidence of any real commitment to the wash down bay element of the project (condition 21) until its eventual completion on 7 March 2008. The period of this contempt exceeded eight months.

34 There is some evidence of a conscious decision to take no action on noise monitoring (condition 36), and also an assertion that the company’s failure in this respect was due to a misunderstanding of Mr Swan’s role. The monitoring report was given to Council on 11 July 2007, representing a contempt period of just less than three months.

35 The easement requirement (condition 48) was imposed in November 2005, yet the company gave its solicitors instructions to create it only on 3 July 2007 and it has still not been finalised. The contempt period is nine months and continuing.

36 I am certainly satisfied that these contempts are very serious indeed, but I am not satisfied that they quite meet the “contumacious” test.

37 I conclude, therefore, that the two charges to which the Respondent company has pleaded guilty are for “wilful” contempts at the high end of the scale of seriousness, and I proceed now to apply the sentencing considerations laid out by Dunford J in Wood v Staunton (No.5) (1996) 86 ACrimR 183 (at 185), and in the relevant sections of the Crimes (Sentencing Procedure) Act 1999 (ss.3A and 21A).

38 The Respondent company’s relevant conduct was deliberate, and the resulting breaches serious and long-running. The Respondent was on clear notice from an early stage of the possibly serious consequences of its stance on compliance. I gave a relevant warning on 28 November 2007, and the Respondent company has had well-regarded legal representation at every stage. Almost five months have passed since the Respondent sought on that date a further opportunity to rectify the situation and much still remains to be done.

39 As Kirby J indicated in Pelechowski (at 485 [148]), courts must respond firmly, and be seen to respond firmly, to any deliberate defiance of their orders, or the authority of their determinations will be undermined, and the justice system damaged. In Nambucca Shire Council v Mirage Property Group Pty Ltd (No.2) [2008] NSWLEC 136, I observed (at [26]) that “nothing short of scrupulous obedience to Court orders, whether made by consent or otherwise, is acceptable in our society”. Both specific and general deterrence must inform the penalty.

40 I have come to the conclusion that the Respondent simply agreed to orders and gave undertakings to “get the Council off its back” while it concentrated on making profits, and slowly attended to the outstanding conditions of consent, on its own terms and in its own timeframe, with a somewhat reckless disregard for the possible consequences, so long as it avoided being forcibly closed down. I simply do not accept the assertions in Mr Lester’s affidavit of 27 November 2007 that the company was then “working feverishly to complete the remaining conditions”, nor his assertion in the witness box that he had “tried [his] best to comply”.

41 The pleas of guilty (on 11 July and 28 November) are some evidence of remorse or contrition, yet the contempts continued and the effort to comply did not noticeably increase, even after 28 February 2008. I acknowledge that the wash bay condition was satisfied, and the stormwater system completed, shortly after that date, but much remains to be done. Mr Clay submits that “the Respondent has now complied with all obligations which are under its control” (par 3(f) of his written submissions), but he acknowledged in his oral submissions that his client “could have tried harder”. If its difficulties were beyond its control a variation of the orders or an extension of time or permission to work on-site outside normal operational hours should have been sought.

42 The only evidence of the character or antecedents of the Respondent or its principal is the disclosure in Mr Lester’s affidavit of 27 November 2007 that he and the company pleaded guilty in August 2007 to charges in the Chief Industrial Magistrate’s Court, consequent upon an industrial accident. He deposed that the company was fined $55,000 and he was fined $7,500. There is no evidence of bad character or past environmental infractions.

43 The Respondent ignored the need for a consent, ignored the conditions of consent which did not sit easily with its corporate objectives, acted slowly to implement orders to which it consented, gave undertakings which the evidence suggests it was not motivated to honour, and then made little apparent extra effort to comply when charged with contempt.

44 I am satisfied beyond reasonable doubt that the Respondent was motivated by maximising financial gain and minimising financial detriment from its daily operations – s.21A(2)(o). On the other hand, I accept the submission made by both parties that no substantial harm and no actual environmental harm flowed from these contempts – s.21A(3)(a).

45 Some discount on penalty is appropriate following a plea of guilty. In the end analysis the plea of guilty upon which the Respondent must rely for a utilitarian discount is that entered on 28 November 2007, the day the trial was scheduled to commence, and three months after a plea of not guilty had been entered. I will apply a discount of 10%. R v Thomson; R v Houlton (2000) 49 NSWLR 383. I apply no discount in response to Mr Clay’s submission (par 3(r) of his written submissions) that the Respondent “cooperated throughout the process with the Prosecutor”, as the whole case turns on the Respondent’s lack of cooperation with the Council in very many respects over a very long period of time.

46 I have also applied the principle of “totality” in arriving at the penalties to impose. Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683, per Kirby P at 704. However, I have decided to impose only pecuniary penalties and not to impose (or even suspend) a term of imprisonment on the company’s responsible officer, Mr Lester.

47 The financial benefits to the company from its non-compliance with the conditions are hard to estimate, but I am satisfied they are very substantial indeed. Maniam suggests that any fine must reflect the seriousness of the contempt, the benefit obtained, and the need to denounce the contempt in an emphatic way.

48 On the first charge the Respondent company should be fined $100,000 less 10% for the absence of actual harm, and 10% for the guilty plea. On the second charge the Respondent company should be fined $60,000, less 10% for the absence of actual harm, and 10% for the guilty plea.

49 To its credit the Respondent has agreed to pay the costs of the Prosecutor on an indemnity basis. I will make that order in respect of those costs referable to the contempt proceedings, separate from the orders made by my colleagues on 27 November 2006, and 2 and 7 March 2007. Costs were reserved on 9 and 19 February 2007, and a “non-indemnity” order was made on 11 July 2007, when the Respondent first appeared to answer these charges.

50 The Respondent cannot be allowed to simply absorb these imposts and continue to avoid total compliance with the conditions, orders, and undertakings. Accordingly, I have decided to impose also a daily penalty, but suspend its operation for a generous period, in order to encourage the Respondent to progress rapidly towards total compliance.

51 The formal orders of the Court will, therefore, be:

1. The Respondent company is convicted of the two charges of contempt of court in the amended statement of charge dated 26 July 2007.
2. In respect of the first of those charges the Respondent company is fined $80,000.
3. In respect of the second of those charges the Respondent company is fined $48,000.
4. In respect of the first of those charges the Respondent is ordered to pay a daily penalty of $2,000 per day.
5. In respect of the second of those charges the Respondent is ordered to pay a daily penalty of $1,200 per day.
6. Orders 4 and 5 are suspended until 30 June 2008 to enable total purging of the Respondent’s contempts.
7. The Respondent is ordered to pay the Applicant’s costs of the substantive proceedings, up to and including 11 June 2007, as agreed or assessed.
8. The Respondent is ordered to pay the Applicant’s costs of these contempt proceedings, from and including 12 June 2007, on an indemnity basis, as agreed or assessed.
9. All other questions of costs are reserved.
10. Exhibit C3 and Exhibit P1 are to remain with the Court file, and the other exhibits may be returned.