Randwick City Council v Arxidia Pty Ltd

[2021] NSWLEC 105

Land and Environment Court

New South Wales

Medium Neutral Citation:

Randwick City Council v Arxidia Pty Ltd [2021] NSWLEC 105

Hearing dates:

18 August 2021

Date of orders:

30 September 2021

Decision date:

30 September 2021

Jurisdiction:

Class 4

Before:

Duggan J

Decision:

See paragraphs 95 to 97

Catchwords:

CONTEMPT – sentencing for contempt – breach of court orders – appropriate penalty – guilty plea – seriousness of contempt – wilful conduct – fine imposed

Legislation Cited:

Fines Act 1996 (NSW)

Corporations Act 2001 (Cth)

Cases Cited:

Burwood Council v Ruan [2008] NSWLEC 167

Environment Protection Authority v Pannowitz (No 2) (2006) 153 LGERA 126

Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435

Witham v Holloway (1995) 183 CLR 525

Wood v Staunton (No 5) (1996) 86 A Crim R 183

Category:

Principal judgment

Parties:

Randwick City Council (Applicant on the Notice of Motion)
Arxidia Pty Ltd (Respondent on the Notice of Motion)

Representation:

Counsel:
Ms J Reid (Applicant)
Mr J Doyle (Respondent)

Solicitors:
Wilshire Webb Staunton Beattie Lawyers (Applicant on the Notice of Motion)
Connor & Co Lawyers (Respondent on the Notice of Motion)

File Number(s):

2016/314834

Publication restriction:

No

Judgment

Nature of proceedings

1. By Notice of Motion filed 21 August 2020 the Applicant (the Council) seeks orders that the First Respondent, Arxidia Pty Ltd (Arxidia), be found guilty of contempt by its failure to comply with Order 4 made by this Court in proceedings 2016/00314834 made and entered by the Court on 8 July 2017 (the Court Order) and be punished for that contempt. The nature of the asserted conduct was particularised in Charge 1 of the Statement of Charge (Charge 1) which provides:

Charge 1

In breach of order 4 of the orders made by the Land and Environment Court in the proceedings No 2016/00314834 on 8 June 2017 (and entered on 8 June 2017 – “the Orders”) the First Respondent Arxidia Pty Ltd did, on 20 June 2020, cause, permit and allow the land in lot 2 DP 939299 known as 23 Harbourne Street Kingsford (“the Land”) to be used for a purpose for which development consent was required (“the Uses”) when:

a.   no development consent had been obtained for the Uses on the Land (including any structures on the Land), and

b.   no occupation certificate had been issued for the occupation of all buildings and structures on the Land in association with the Uses.

Particulars

(a)   Order 4 of the Orders is in the following terms:

The respondents (and their servants, agents and contractors) be restrained from using, or causing, permitting or allowing the use of, the Land for any purpose for which development consent is required unless and until:

a)   that development consent (including a complying development certificate) has been obtained for the Land (including any structures to be erected on the Land),

b)   all the approved building works have been carried out in accordance with that development consent and in accordance with all necessary construction certificates, and

c)   all final occupation certificates have been issued for the occupation of all of the buildings and structures on the Land.

(b)   Complying Development Certificate No. MSA0362AC-CDC1 dated 22 February 2013 was issued by Matt Shuter and Complying Development Certificate No. MSA0362AC-CDC2 dated 22 March 2013 issued by Matt Shuter (collectively referred to as ‘the Shuter CDCs’).

(c)   Final Occupation Certificate No. MSA 0362AC-OC1a dated 26 July 2013 was issued by Matt Shuter for the Shuter CDCs (‘the Shuter OC’).

(d)   On 6 August 2017 Jon Hall certifier issued complying development certificate No CDC 23/2017 for “Internal works and alterations Existing dwellings” for the Land (‘the Hall CDC’).

(e)   On 9 August 2017 Jon Hall certifier issued a final occupation certificate No 23/2017 for the Hall CDC (‘the Hall OC’).

(f)   The Shuter CDCs and the Hall CDC were together a development consent for the purposes of Order 4(a) of the Orders which approved the use of the Land for the purposes of a single dwelling house (‘the Approved Single Dwelling House’).

(g)   The Shuter OC and the Hall OC were together final occupation certificates for the Approved Single Dwelling House for the purposes of Order 4(c) of the orders.

(h)   The Approved Single Dwelling House was a different dwelling house to the dwelling house approved by the Shuter CDC as referred to in order 3(a) of the Orders.

(i)   On 20 June 2020 the ground floor of the front main building on the land contained two separate dwelling areas (‘D1’ and ‘D2’) and the rear smaller building contained one dwelling area (‘D3’).

(j)   On 20 June 202 [sic] each of the dwelling areas D1, D2, and D3 contained their own separate ground floor entry/exit, kitchen, bathroom, living, bedrooms. The occupants of the dwellings shared the laundry area and facilities between the main building and the rear building.

(k)   Each of the dwelling areas D1, D2, and D3 were set up as separate and distinct dwellings.

(l)   On 20 June 2020 thirteen (13) persons were occupying, living in and residing in the buildings on the Land.

(m)   On 20 June 2020 three (3) persons were occupying, living in and residing in D1.

(n)   On 20 June 2020 three (3) persons were occupying, living in and residing in D2.

(o)   On 20 June 2020 seven (7) persons were occupying, living in and residing in D3.

(p)   The occupation and use of the Land identified in paragraphs (k)-(o) above was not for the purpose of the Approved Single Dwelling House or for the purpose of Shuter CDCs.

(q)   The occupation and use of the land identified in paragraphs (k)-(o) above was for the purposes of a boarding house, or multi dwelling housing as defined in Randwick Local Environment Plan (“RLEP”).

(r)   Since 8 June 2017 the Land has been and continues to be zoned R3 Medium Density under RLEP.

(s) The Uses are permissible on the Land with development consent under the Environmental Planning and Assessment Act 1979 and RLEP.

(t)   No development consent has been obtained or granted for the Uses.

(u)   No final occupation certificate had or has been issued for the occupation of the buildings on the land in association with the Uses.

(v)   Other than the Shuter CDC’s and the Hall CDC, there are no development consents or complying development certificates for the Land.

2. Arxidia has pleaded guilty to Charge 1 and that plea has been accepted.

Facts and evidence

3. The parties agreed on an extensive Statement of Agreed Facts which was tendered at the hearing. Whilst I have had regard to the totality of those facts the most pertinent to the determination of this hearing are outlined below.

Consent Orders

4. On 8 June 2017, orders were made by consent in these Class 4 proceedings (Consent Orders).

5. Order 4 of the Consent Orders provided:

The respondents (and their servants, agents and contractors) be restrained from using, or causing, permitting or allowing the use of, the Land for any purpose for which development consent is required unless or until:

(a)   That development consent (including a complying development certificate) has been obtained for the Land (including any structures to be erected on the Land),

(b)   All the approved building works have been carried out in accordance with that development consent and in accordance with all necessary construction certificates, and

(c)   All final occupation certificates have been issued for the occupation of all the buildings and structures on the Land.

The subject Property

6. The property at Lot 2 DP 939299, known as 23 Harbourne Road, Kingsford (Property) has been owned by the First Respondent, Arxidia since around 28 February 2013.

7. The Property is currently occupied by two buildings, each comprised of two storeys, with a single lock-up garage accessed from the rear off Meeks Lane.

8. A main large building on the Property fronts Harbourne Road (the Main Building).

9. A separate building is located at the rear of the Property (the Rear Building).

10. The Property is zoned R3 Medium Density Residential under Randwick Local Environment Plan 2012. Pursuant to the land use table for zone R3 Medium Density Residential, dwelling houses, boarding houses and multi-dwelling housing are permissible with development consent.

11. The objectives of the R3 zone include to provide for the housing needs of the community within a medium density residential environment and to provide a variety of housing types within a medium density residential environment.

12. At all relevant times up until 10 August 2021, there had been no development consent (including any complying development certificate) in force for multi-dwelling housing or a boarding house.

Letting arrangements of the Property

13. On 1 March 2018, Arxidia entered into a 12-month Management Agency Agreement with Realty Trading Australia Management Pty Ltd, trading as Laing & Simmons Kingsford in respect of the Property which was described as “23 Harbourne Road, Kingsford (including granny flats)” (the Management Agency Agreement).

14. The effect of the Management Agency Agreement was that Arxidia authorised Realty Trading Australia Management Pty Ltd to let and manage “all or part” of the Property (clause 1).

15. Clause 5 of the standard printed form of the Management Agency Agreement records an indemnity from Arxidia to Realty Trading Australia Management Pty Ltd against “all proceedings, claims and expenses for matters properly undertaken by the Agent on behalf of” Arxidia in accordance with the terms of the Agreement.

16. On 14 September 2018, a residential tenancy agreement was entered into between Arxidia and Dacheng Zhu which granted a right of occupancy of land described as “23 Harbourne Street, Kingsford NSW 2031” (the Main Building Lease). The residential tenancy agreement bears a signature that looks similar to that used by the real estate agent for Arxidia (for example as endorsed upon the managing agents' agreement).

17. An unnumbered condition on the front page of the Main Building Lease was that “no more than 1 person per room may ordinarily live in the premises at any one time”.

18. Clause 32 of the Main Building Lease states that the whole or part of the premises may be sublet “with the landlord's written permission” (which permission the landlord may refuse, but in the case of a sublease of part of the Property, permission can only be refused on reasonable grounds).

19. Special condition 1 of the Main Building Lease was crossed out and initialed by the agent for the landlord and the tenant.

20. The words in special condition 1 of the Main Building Lease which were crossed out read: “Not to sublet the premises or part of the premises without the written consent of the owner or owner's agent”.

21. Special condition 2 of the residential tenancy agreement requires that the tenant may “not change any locks or add any locking or access device to any apartment without the written permission of the owners' agent”.

22. The rent that was payable under the Main Building Lease was $5,217.29 per month and a rental bond of $2,400.

Rear Building Lease

23. Also on 14 September 2018, a residential tenancy agreement was entered into between Arxidia (signed by its agent) and Dacheng Zhu which granted a right of occupancy of land described as “Granny Flat 1/23 Harbourne Street, Kingsford NSW 2031” (the Rear Building Lease).

24. A condition of the Rear Building Lease was that “no more than 1 person per room may ordinarily live in the premises at any one time”.

25. Clause 32 of the Rear Building Lease states that the whole or part of the premises may be sublet “with the landlord's written permission” (which permission the landlord may refuse, but in the case of a sublease of part of the Property, permission can only be refused on reasonable grounds).

26. Special condition 1 of the Rear Building Lease was crossed out and initialed by DZ, the tenant. It is a reasonable assumption that the initials DZ are those of Dacheng Zhu.

27. The words in special condition 1 of the Rear Building Lease which were crossed out read: “Not to sublet the premises or part of the premises without the written consent of the owner or owner's agent”.

28. Special condition 2 of the residential tenancy agreement requires that the tenant may “not change any locks or add any locking or access device to any apartment without the written permission of the owners' agent”.

29. The rent that was payable under the Rear Building Lease was $5,217.29 per month and no rental bond was payable.

Inspections of the Property and characterisation of use – the first inspection

30. On 18 April 2018, the Council inspected the Property.

31. On the inspection of the Property on 18 April 2018, the Council's officers observed that the Main Building and granny flat were both unoccupied.

32. On the inspection of the Property on 18 April 2018, the Council's officers observed that the garage was used as a commercial office at this time with two persons working in the office at the time of the inspection.

33. As at 18 April 2018, the Main Building and Rear Building had been configured so that they were capable of being occupied as three separate dwellings:

1. A dwelling at the front of the Main Building with a kitchen, lounge room, 4 bathrooms and 8 rooms capable of being used as bedrooms (D1) accessed by a door fronting Harbourne Road;

2. A dwelling at the rear of the Main Building with a kitchen, lounge room, 5 bathrooms and 7 rooms capable of being used as bedrooms (D2) accessed from a door on the southern elevation of the Main Building; and

3. A dwelling in the Rear Building with a kitchen, 2 lounge rooms, 4 bathrooms and 6 rooms capable of being used as bedrooms (D3) accessed from Meeks Lane.

34. On 18 April 2018, the Council's solicitor sent an email to the former solicitors for the Respondents confirming “please note that following the inspection the council is firmly of the view it would be unlawful for any of the buildings on either property to be occupied as they currently stand”.

The second inspection and use of the Property

35. On 9 August 2018, the Council received information suggesting that the Property was occupied for residential purposes.

36. On 1 December 2018, Fulmay Pty Ltd entered into a sublease for the rear part of the Main Building being D2 with 3 individuals nominating a tenancy for the period 25 July 2018 to 5 February 2019.

37. Feng Zhu is the director and sole shareholder of Fulmay Pty Ltd.

38. Feng is the son of Dacheng Zhu, the tenant of the Property.

39. Neither Feng Zhu or Dacheng Zhu are associated with the Respondents within the meaning of the Corporations Act 2001 (Cth) (other than Dacheng Zhu being the nominated tenant in the Main Building Lease and the Rear Building Lease).

40. Between 11 April 2019 and 20 May 2020, the Council carried out surveillance at the Property and observed lights on at the Property and food deliveries to the Property consistent with residential occupation.

41. On 23 April 2020, Fulmay Pty Ltd entered into a sublease for the front part of the Main Building being D1 with 3 individuals for the period 27 April 2020 to 26 October 2020.

42. On 25 May 2020, Fulmay Pty Ltd (signed by Feng Zhu and acting through N G Farrah as agent) entered into a sublease for the Rear Building on the Property being D3 with 4 individuals and a maximum of 7 occupants, for the period 11 June 2020 to 17 June 2020. The Respondents were not a party to that agreement.

43. The lease and sublease were marked as signed by Feng Zhu for Fulmay Pty Ltd.

44. On 18 June 2020, the Council obtained a search warrant to enter and inspect the Property.

45. On 20 June 2020, the Council officers inspected the Property.

46. At the time of the inspection on 20 June 2020, the Main Building and the Rear Building had been configured so that it was capable of being occupied as three separate dwellings:

1. A dwelling at the front of the Main Building with a kitchen, lounge room, 4 bathrooms and 8 rooms capable of being used as bedrooms (D1) accessed by a door fronting Harbourne Road;

2. A dwelling at the rear of the Main Building with a kitchen, lounge room, 5 bathrooms and 7 rooms capable of being used as bedrooms (D2) accessed from a door on the southern elevation of the Main Building; and

3. A dwelling in the Rear Building with a kitchen, 2 lounge rooms, 4 bathrooms and 6 rooms capable of being used as bedrooms (D3) accessed from Meeks Lane.

47. The configuration of the Property into three separate dwellings was not in accordance with any development consent.

48. At the time of the inspection on 20 June 2020 only the ground floor levels of D1 and D2 were occupied. The upstairs levels of the Main Building (both D1 and D2) were unoccupied.

49. As at 20 June 2020, the Property was used for the purpose of three separate residential uses.

Steps since filing of Notice of Motion for contempt

50. On 21 August 2020, the Council filed its Notice of Motion for contempt of the Consent Orders made on 8 June 2017.

51. On 16 November 2020, Laing & Simmons sent an email to Fulmay Pty Ltd requesting that 1 of the 3 tenants in the granny flat vacate the Property.

52. On 9 March 2021, Laing & Simmons sent letters to Dacheng Zhu and Fulmay Pty Ltd requesting that they cease acting contrary to the Residential Tenancy Agreements and asking that any extra tenants vacate the Property.

53. On 7 July 2021, Development Consent was granted to DA 576/2020 for the use of the Property as multi-dwelling housing.

Costs

54. Arxidia has agreed to the assessment of the Council's costs in this case at $30,000 and has paid that amount to the Council.

Affidavit of Damien Vasales sworn 10 August 2021

55. Mr Vasales is a shareholder of Arxidia and was director during 2011 to 2015.

56. Mr Vasales deposes as to much of the background facts referred to above. By way of summary of his evidence he also gave evidence that:

1. At the time of the engagement of the agents for the Property he advised the agent that Arxidia preferred family tenants and asked that the agent lease the Property;

2. Until evidence was filed by the Council Arxidia was unaware that any person was residing in the back section of the main house;

3. The sublease to Fulmay Pty Ltd was entered into without the consent of Arxidia;

4. When Arxidia became aware of what was occurring at the Property through correspondence from the Council:

46   I spoke to the agent Dean Efrossynis about that correspondence, and he advised that Arxidia could not evict anybody during the term of the lease and particularly due to the COVID-19 pandemic. Because of the added complication that the people living on the property were there under agreements with our tenant, I did not know what to do. I was so busy at work I just left it to the agent.

5. Arxidia obtained a development consent on 7 July 2021 to use the Property as multi-dwelling housing allowing the Property to be occupied as three separate dwellings. Arrangements have been made to carry out the works necessary to give effect to that consent once the pandemic health restrictions allow.

57. In addition, Mr Vasales deposed his regret for the breach of the Court Order in the following terms:

54   I regret that there was a breach of the Court Orders which I did not intend. I can see that Arxidia needs to monitor the tenancies of its properties more closely, and not leave things to real estate agents to prevent anything like this happening in the future. I told the agent to ensure that any future tenancies are to comply with the Council approvals.

Finding of contempt

58. In all contempt matters the criminal standard of proof applies. The consequence is that the Council must establish beyond reasonable doubt on the evidence that Arxidia has committed contempt: Witham v Holloway (1995) 183 CLR 525 at 534.

59. As Arxidia has entered a plea of guilty to Charge 1 and on the basis of the admissions contained in the Statement of Agreed Facts tendered in the proceedings it is appropriate that I find that Arxidia is guilty of contempt in that it failed to comply with Order 4 of the Court Order.

60. However, on the evidence adduced at the hearing by way of the Statement of Agreed Facts and the affidavit of Mr Vasales, the only evidence of the asserted breach related to the use of the Property at the time of the inspection undertaken by the Council on 20 June 2020. On this evidence, whilst I accept that the Council has established beyond reasonable doubt that Arxidia was in contempt of Order 4 of the Court Order on 20 June 2020 I am unable to be satisfied to the relevant standard that such conduct in breach of the Court Order occurred either before or after the date of the Council inspection. Charge 1 did not nominate any period of time in which the conduct was taking place and, accordingly, the plea of guilty to Charge 1 does not alter this finding on the evidence.

58. Accordingly, I find Arxidia guilty of contempt in that on 20 June 2020 it failed to comply with Order 4 of the Court Order in the manner particularised in Charge 1 of the Statement of Charge.

Determination of sentence

The purpose of sentencing for contempt

62. The authorities on the principles relating to the nature and purpose of punishment where a finding has been made of contempt have been summarised in Environment Protection Authority v Pannowitz (No 2) (2006) 153 LGERA 126, 131-132 at [20]-[24] as:

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 Ltd (1986) 161 CLR 98 at 106-107. In Mudginberri (at 107) the High Court referred 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 (NSW) (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. 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.

24   In Court of Appeal, Registrar of v Maniam (No 2) (1992) 26 NSWLR 309, Kirby P, Hope AJA concurring, in an important passage said (at 314):

A conviction of contempt of court is a conviction of an offence, criminal in nature. Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the courts according to law. Thus, in determining the punishment which is apt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way: see Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741. In this jurisdiction, contempt is a common law offence for which there is therefore no maximum penalty in this Court: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434 at 442. Any limits which are imposed upon the Court’s powers derive from the purposes stated above and the limitations expressed in the Tenth Article of the Bill of Rights 1688 which restrains the imposition of cruel or unusual punishments or “excessive fines”: see Smith v The Queen (1991) 25 NSWLR 1, noted (1991) 65 ALJ 695.

Determination of appropriate penalty

63. There are no specifically identified matters that must be taken into account in the sentencing for contempt, however, in Wood v Staunton (No 5) (1996) 86 A Crim R 183 Dunford J identified a number of relevant considerations, which have been adopted with approval by many courts in sentencing for contempt, including this Court, and have been adopted by both the Council and Arxidia as the relevant considerations in this matter. The factors identified at 185 were:

1.   the seriousness of the contempt proved;

2.   whether the contemnor was aware of the consequences to himself of what he 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.

64. Of those identified factors, those numbered 1, 2, 3, 5, 6, 7, 8, 9 and 10 were identified by the Council as relevant considerations with respect to the conduct in this matter. With the exception of factor numbered 3, I accept that those are the relevant matters for consideration. As to factor 3, the Council approached this matter as one relating to the consequences of the contempt, such as risks to the environment and fire safety, however, the factor is not framed in that manner. Factor 3 relates to the consequence of the contempt on the trial or inquiry. In this case, there is no evidence of such impact and, accordingly, that factor is not relevant. That is not to say that if there were an impact of the type identified by the Council it could not be considered in relation to factor 1, being the seriousness of the contempt proved: Burwood Council v Ruan [2008] NSWLEC 167 at [20]. However, if such consequences was contended by the Council to be considered an aggravating feature of the contempt (to adopt the language of sentencing consideration), it would be necessary that the Council prove beyond reasonable doubt such consequences, and it has not done so.

65. I will consider each of the remaining identified relevant factors.

The seriousness of the contempt proved

66. The Council submits that the nature of the contempt is such that it would be considered wilful in the sense that term is used in Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435, 484-485 at [147] that:

147   In approaching this submission, it is essential to remember a number of general propositions which govern punishment for contempts of the kind in question here where the punishment is not limited by statute but is at large. In determining the order which is appropriate to the contempt found, the Court must take into account those general principles which govern the sentencing of persons convicted of criminal offences which are apt to the peculiar character of contempt. The underlying purpose of the law on this form of contempt is to vindicate the due administration of justice. Contempts of the kind illustrated in this case 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.

67. The contempt in this case, whilst not at the most serious end of the scale, is still serious. The contempt was wilful in that it was not technical or contumacious.

68. Arxidia submits that there is no element of wilful disregard or contempt for the Court’s authority. Rather, the conduct comprised a lack of commitment to ensuring that the real estate leased the property to a tenant sufficiently bound to ensure the orders were complied with, and that the terms of the lease would be complied with.

69. Further, there being no evidence of the conduct being part of a pattern of offending and no evidence of harm the conduct should be considered at the low end of the scale.

70. I accept the characterisation of the seriousness of the contempt as submitted by the Council. Arxidia, whilst not taking any positive actions to breach the terms of the Court Order, took no positive steps to ensure that the terms of the Court Order were complied with. This inaction discloses a lack of attention to the need to comply with the orders made.

71. The submissions of Arxidia at [68] above appear to suggest that it was merely a matter of the lease not being complied with by the lessee, this is not the cause of the breach. The evidence is clear, that whilst Arxidia was prepared to leave the leasing to an agent, it took no steps to bring the terms of the Court Order to the agent’s attention or to limit the agent’s authority to deal with the Property only in accordance with the terms of the Court Order. By failing to do so, and by failing to take any positive steps itself by enquiry of the agent or inspection of the Property, its conduct demonstrated a disregard for the requirements of the Court Order and its obligations to ensure that any dealings with the Property were not in breach of the Court Order. Its conduct, through its inactivity and inattention, was wilful without a specific intent to defy the Court Order. It was not inadvertent or a technical breach.

72. However, the conduct that has been proved only relates to the single day. Accordingly, having regard to the full range of conduct that could amount to wilful contempt the limited period renders the conduct at the low end of wilful conduct amounting to contempt.

Whether Arxidia was aware of the consequences to itself of what it did?

73. The Council submitted that Arxidia should be taken to have been aware of the consequences of the conduct as:

1. The relevant order was made by consent in proceedings in which Arxidia was legally represented;

2. The order made by the Court, together with a penal notice, were served at the registered office of Arxidia; and

3. Arxidia was aware through the proceedings in which the Court Order was made and in other related proceedings that the Property could not, without development consent, be used for multi-dwelling housing.

74. Arxidia submitted at that there were no serious consequences that have arisen. There is no evidence to establish that Arxidia was aware of any such consequences.

75. I accept the submissions of the Council. This factor relates to the knowledge of the contemnor as to the risk and consequences of failing to comply with the Court Order. The evidence before me, particularly as to Arxidia consenting to the Court Order being made and the service of the penal notice, permit a finding that Arxidia was or should have been aware of the consequences to it if it did not comply with the Court Order.

The reason for the contempt

76. The Council submitted that there is no positive evidence adduced by Arxidia as to the reason for the contempt apart from evidence of complacency and a reliance upon the real estate agent.

77. Arxidia submitted that the reasons were identified in connection with factor 1.

78. In the circumstances of this case, I have considered the evidence relating to the reasons for the commission of the contempt in the context of identifying the seriousness of the conduct. In those circumstances I consider that it would be inappropriate to again consider the same matters in the context of the reasons. The reasons were found to demonstrate wilful contempt and further reconsideration would, in the context of this factor, potentially lead to the undesirable result of Arxidia being in effect punished twice for the same conduct. Accordingly, having regard to the circumstances of this case, I decline to consider the reason for the conduct as a separate consideration from the consideration in factor 1.

Whether Arxidia has received any benefit by indicating an intention to give evidence?

79. The Council’s submissions on this factor related to the receipt of financial benefit by way of the payment of rent pursuant to the leases for the Main Building and the Rear Building.

80. Arxidia submits that it has given evidence in these proceedings through Mr Vasales and the preparation of agreed facts and has not received any benefit.

81. I accept the submissions of Arxidia; this factor is related to any benefit that comes from the intention to give evidence. There is no evidence in these proceedings that any benefit has been obtained.

82. Further, if this factor did relate to a financial benefit, I am not satisfied on the evidence that the breach of the Court Order did generate additional income to Arxidia. The leases of the Main Building and the Rear provided for a payment of rent. The occupation as multi-unit housing related to the conversion and use of the rear of the Main Building and that use generated rent under the sublease not the head lease. Arxidia was not the beneficiary of any additional rent as a consequence of the use of the rear of the Main Building as a separate residence. There was no evidence that the rent devised by Arxidia was inflated by any use in breach of the Court Order. In addition, to the extent that the buildings may have been altered such that they were capable of being used for multi-unit housing, but not in fact so used, there is no evidence of a financial benefit received as a consequence of those works.

Apology or public expression of contrition

83. The Council accepts that there is some statement of remorse in [54] of Mr Vasales affidavit. However, it submits that the genuineness of that statement should be considered in the context that there was no action taken to rectify the situation once it had come to the company’s attention.

84. Arxidia relies on the affidavit of Mr Vasales as an expression of apology.

85. As identified at [57] above, Mr Vasales has indicated regret and states that he has now given instructions to the real estate agent that future tenancies are to comply with Council approvals. Whilst I accept the regret expressed, I am not satisfied that Arxidia, through Mr Vasales, has taken responsibility for the conduct. There is no mention of the company taking positive steps apart from deferring responsibility to the real estate agent to ensure that breaches of the Court Order and environmental planning laws are complied with. It was the action of deferring responsibility to the agent that formed part of the conduct that I have found to comprise wilful contempt. A vague direction requiring compliance with Council consents does not indicate a positive mechanism to overcome the conduct of the type that gave rise to the circumstances of this contempt.

86. I accept that there has been a public expression of regret, however, the weight to be attributed is not great.

Character of the contemnor

87. I accept that Arxidia is of otherwise good character and has no antecedent record of unlawful behaviour.

General and personal deterrence and denunciation of the contempt

88. The Council submits that the relevant factors of denunciation and specific and general deterrence are warranted in this case.

89. Arxidia submits that there is no purpose to be served in a further punishment to denounce the conduct. The punishment, including the payment of the costs, will be sufficient to punish and denounce the conduct. As to specific and general deterrence, Arxidia has taken steps to rectify its breaches of the planning laws and there is no need for deterrence.

90. In this case, Arxidia has focussed upon the breach of the planning laws that gave rise to the making of the Court Order. Whilst the breach of the planning laws is important, it is not the subject matter of these proceedings. The company failed to comply with the Court Order. In this context, whilst I accept that the company has expressed genuine regret, I am not satisfied that it discloses a full appreciation of the circumstances that gave rise to the conduct and the responsibility that Arxidia bore to ensure compliance with the Court Order, its focus remained on the initial conduct that gave rise to the Court Order and not the obligation to comply with the Court Order itself. Accordingly, I consider that specific deterrence is warranted in the circumstances of this case. A penalty should be imposed so that Arxidia is deterred from engaging in the type of wilful conduct that has been found in these proceedings.

91. As to general deterrence and the denunciation of the conduct I consider that both of these factors will be discharged by the finding of contempt and the imposition of a fine that takes into account the seriousness of the conduct together with the relevant factors identified above.

Costs

92. Arxidia agreed to pay the Council’s costs of the proceedings in the sum of $30,000 and such sum has been paid. Accordingly, whilst I take the quantum of such payment into account, an order requiring payment of that agreed sum is not required.

Section 6 of the Fines Act 1996 – capacity to pay

93. Arxidia has not provided any evidence to suggest that it has any limited capacity to pay a fine of any sum.

Guilty plea

94. Arxidia entered a plea of guilty in this matter. I take that matter in account in the determination of an appropriate sentence.

Conclusion and orders

95. Accordingly, I find Arxidia guilty of contempt in that on 20 June 2020 it failed to comply with Order 4 of the Court Order in the manner particularised in Charge 1 of the Statement of Charge.

96. Taking into account all of the circumstances of this case and the period of the contempt found I consider that in addition to the conviction Arxidia should be ordered to pay a monetary penalty that I determine to be in the sum of $5,000.

97. The Court Orders that:

1. Arxidia is convicted of contempt in that on 20 June 2020 it failed it to comply with Order 4 of the Court Order made by this Court on 8 July 2017 in the manner particularised in Charge 1 of the Statement of Charge;

2. Arxidia is ordered to pay a fine in the sum of $5,000; and

3. The exhibits are returned. Parties are to collect the exhibits from my Associate within 7 days.

**********

Decision last updated: 30 September 2021