Ryde City Council v Chen
[2012] NSWLEC 63
•22 February 2012
Land and Environment Court
New South Wales
Medium Neutral Citation: Ryde City Council v Chen [2012] NSWLEC 63 Hearing dates: 22 February 2012 Decision date: 22 February 2012 Jurisdiction: Class 1 Before: Preston CJ Decision: Orders as set out at [99]
Catchwords: CIVIL ENFORCEMENT - carrying out prohibited development for the purposes of sex services premises - breach of s 76B of the Environmental Planning and Assessment Act 1979 by lessee of premises - brothel closure orders issued to lessee and lessor of premises - failure to comply by both lessee and lessor - breaches of statute established - injunction restraining lessee from using, and lessor from permitting the use of, premises as a brothel or sex services premises - deferral of utilities order while lessor evicts lessee Legislation Cited: Environmental Planning and Assessment Act 1979 ss 4, 76B, 121B, 121M, 121ZQ, 121ZR, 121ZS, 122, 123, 125
Restricted Premises Act 1943 s 2
Uniform Civil Procedure Rules 2005 Pt 29 r 29.7Cases Cited: Director-General, Department of Environment, Climate Change and Water v Venn [2011] NSWLEC 118
Meriton Apartments Pty Ltd v Sydney Water Corporation [2004] NSWLEC 699; (2004) 138 LGERA 383Category: Principal judgment Parties: Ryde City Council (Applicant)
Mr Jia Chen (First Respondent)
Ms Hyun Kim (Second Respondent)Representation: Mr T G Howard (Barrister) (Applicant)
No appearance for First Respondent
Mr H N Simons (Solicitor) (Second Respondent)
Planning Law Solutions Pty Ltd (Applicant)
No appearance for First Respondent
Remington & Co (Second Respondent)
File Number(s): 10729 of 2011 and 40728 of 2011
EX TEMPORE Judgment
Nature of proceedings and outcome
Ryde City Council is the applicant in both Class 4 proceedings and Class 1 proceedings in which the Council seeks relief in relation to the use of premises at unit 1A, 21-25 Rowe Street, Eastwood as a brothel.
In the Class 4 proceedings, the Council seeks declarations that the first respondent, Mr Chen, who is the lessee and occupier of the premises, has breached s 76B of the Environmental Planning and Assessment Act 1979 ("the Act") by carrying out prohibited development for the purposes of sex services premises, and that Mr Chen and the second respondent, Ms Kim, who is the owner and lessor of the premises, have breached the Act by failing to comply with a brothel closure order under s 121B of the Act. The Council seeks an order that Mr Chen and Ms Kim be restrained from using or permitting the use of the premises for sex services premises and related sex uses.
In the Class 1 proceedings, the Council seeks a utilities order under s 121ZS of the Act directing the providers of electricity to the premises to cease providing that service.
I am satisfied that the Council has established that:
(a) Mr Chen used the premises as a brothel (as defined in s 4 of the Act) and sex services premises (as defined in the Ryde Local Environmental Plan 2010 ("Ryde LEP")) from 15 January 2011, being the commencement date of the lease of the premises to Mr Chen, to at least 19 January 2012;
(b) Mr Chen's use of the premises as a brothel and sex services premises was in breach of cl 2.3(1)(d) and the controls for Zone B4 Mixed Use in the Land Use Table at the end of Pt 2 of the Ryde LEP which prohibits such development, and s 76B of the Act;
(c) Mr Chen has failed to comply with a brothel closure order (being an order No 1 under s 121B of the Act) issued to him on 4 May 2011;
(d) Ms Kim has failed to comply with a brothel closure order (being an order No 1 under s 121B of the Act) issued to her on 4 May 2011; and
(e) Mr Chen and Ms Kim's failure to comply with the respective brothel orders was a breach of the Act, which breach continues to date under s 121ZQ of the Act.
I am also satisfied that the appropriate remedies for the breaches should be:
(i) a declaration that there have been such breaches of the Act; and
(ii) an injunction restraining Mr Chen from using, and Ms Kim from permitting the use of, the premises as a brothel or sex services premises.
For reasons I will explain, I will defer determining whether a utilities order under s 121ZS to enforce compliance with the brothel closure orders should be made until next week.
The hearing of the proceedings
Both the Class 4 and Class 1 proceedings have been heard together, the pleadings and evidence in one being pleadings and evidence in the other, as directed by the Court on 16 September 2011.
At the commencement of the hearing, Mr Wong, solicitor, advised the Court that he had filed a notice of ceasing to act for Mr Chen. Mr Wong filed and read an affidavit he had sworn describing the circumstances leading to him having to cease to act for Mr Chen. In essence, Mr Chen had left for China for personal reasons and would not be returning for the hearing. Mr Chen failed to provide Mr Wong with instructions in relation to the proceedings or evidence. Mr Wong said he had notified Mr Chen of all of the Court directions requiring filing of evidence and the fixing of the hearing date, at the time they were made. Mr Wong said he advised Mr Chen of the possible consequences of his actions (or inaction) in relation to these proceedings. Notwithstanding such advice, Mr Chen did not give any further instructions to Mr Wong.
On 1 February 2012, Mr Wong sent Mr Chen a notice of intention to file a notice of ceasing to act and provided further advice to Mr Chen. Mr Wong repeatedly attempted to contact Mr Chen over the next two weeks. Mr Chen did not return any of Mr Wong's communications. Mr Wong therefore withdrew as Mr Chen's solicitor.
As a result, there was no appearance for Mr Chen at the hearing. The Council applied to continue against Mr Chen in his absence. I found that it was appropriate in the circumstances to proceed with the hearing in the absence of Mr Chen under Pt 29 r 29.7(2)(a) of the Uniform Civil Procedure Rules 2005.
Mr Simons, solicitor, appeared for Ms Kim at the hearing.
The Council read affidavits of various council, police and compliance officers concerning: their multiple inspections of the premises and observations of the use of the premises as a brothel; the giving of various notices and orders to Ms Kim, Mr Chen and the former tenant of the premises; the applicable zoning and development consents; and the notices to utility providers. Two officers gave oral evidence and were cross-examined.
Ms Kim read two of her affidavits and an affidavit of her real estate agent concerning her knowledge and attempts to stop use of the premises as a brothel. Ms Kim also gave oral evidence and was cross-examined. She tendered financial statements.
Ms Kim admitted the facts stated in the Council's notice to admit facts dated 13 February 2012 and filed in court at the hearing. These are that the premises were being used for the purposes of prostitution by more than one prostitute on the particular dates of 1 October 2010, 2 and 18 February 2011, 2 June 2011, 11 July 2011, 22 September 2011 and 19 January 2012, and during the period 1 October 2010 to 19 January 2012.
The breaches of the Act concerned
The premises are in Zone B4 Mixed Use under the Ryde LEP. Development for the purpose of sex services premises are a nominated prohibited use in that zone. Sex services premises is defined in the Dictionary of the Ryde LEP to mean "a brothel, but does not include home occupation (sex services)". A "brothel" is defined to have "the same meaning as in the Act" (meaning the Environmental Planning and Assessment Act).
A brothel is defined in s 4 of the Act as "a brothel within the meaning of the Restricted Premises Act 1943, other than premises used or likely to be used for the purposes of prostitution by no more than one prostitute."
Section 2 of the Restricted Premises Act 1943 ("Restricted Premises Act") defines a brothel to mean:
"premises:
(a)habitually used for the purposes of prostitution, or
(b)that have been used for the purposes of prostitution and are likely to be used again for that purpose, or
(c)that have been expressly or implicitly:
(i) advertised (whether by advertisements in or on the premises, newspapers, directories or the internet or by other means), or
(ii) represented,
as being used for the purposes of prostitution, and that are likely to be used for the purposes of prostitution.
Premises may constitute a brothel even though used by only one prostitute for the purposes of prostitution."
Development for the purpose of "home occupation (sex services)", which is excluded from being sex services premises under the Ryde LEP, relates to the "provision of sex services in a dwelling that is a brothel, or in a building that is a brothel and is ancillary to such a dwelling". This purpose is not relevant in this case.
As development for the purposes of sex services premises is prohibited on lands in Zone B4 Mixed Use under the Ryde LEP, a person must not carry out that development on that land by reason of s 76B of the Act. A failure to comply with the Ryde LEP and s 76B is a breach of the Act under s 122 of the Act.
Under s 121B, the Council may give an order No 1 to cease using premises for a purpose specified in the order where premises are being used for a purpose that is prohibited. An order No 1 can be given both to the owner of the premises and to a person by whom premises are being used for the purpose specified in the order. The order must specify a reasonable period within which the terms of the order are to be complied with (s 121M of the Act), which period must be no less than five working days for brothel closure orders (s 121ZR(5) of the Act). An order No 1 under the Table to s 121B to cease using premises as a brothel is termed a brothel closure order (s 121ZR(1) of the Act). An order that specifies a time by which, or period within which, the order must be complied with continues to have effect until the order is complied with even though the time has passed or the period has expired (s 121ZQ(1). A failure to comply with an order under s 121B is a breach of the Act (ss 122(a)(i) and (b)(v) of the Act).
Breaches are established
Ms Kim has owned the premises since 1998. She has let the premises to various tenants over the years. There is one current development consent for the premises, being development consent DA176/2002, granted on 3 April 2002, for a remedial massage clinic. The terms of that development consent do not permit the use of the premises as sex services premises or a brothel.
Ms Kim leased the premises to Mr Chen for a term of three years commencing on 15 January 2011 and terminating on 14 January 2014, with an option to renew for a further three years.
Mr Chen is the owner of a business called "JC Sapphire Massage" which he operates from the premises. He purchased the business from a previous tenant, Ms Xiang Ying Yu, who leased the premises from Ms Kim from about 2002 until Mr Chen purchased the business in January 2011.
In these proceedings, the persons who are claimed to be in breach of the Act are Mr Chen, who uses the premises, and Ms Kim, who owns the premises. Mr Chen's use starts on the commencement of the lease on 15 January 2011. However, in determining the relief that should be granted for the breaches of the Act since that time, it is relevant to note that the business Mr Chen bought and that was operated at the premises before Mr Chen bought it also involved use for the purposes of a brothel. Hence, I will start the factual chronology earlier than the date of commencement of use of the premises by Mr Chen.
As I have noted, Ms Kim had leased the premises to Ms Xiang Ying Yu from about 2002. The last lease was from 8 May 2008 to 7 May 2011. That lease had the usual condition that the premises only be used for the approved use as a health clinic for therapeutic massage.
The evidence establishes that by at least 2010 the premises were not being used in conformity with the approved use of therapeutic massage, but rather were being used as a brothel.
On 29 July 2010, the Council issued to Ms Kim a brothel closure order requiring that the premises cease being used as a brothel by 11 August 2010.
On 17 September 2010, the Council issued a penalty infringement notice to Ms Kim for failing to comply with the brothel closure order issued on 29 July 2010.
On 1 October 2010, council officers, including Mr Mamouzelos, attended the premises. Mr Mamouzelos deposes to seeing three females on the premises together with various paraphernalia, including vaginal lubricant and condoms.
Following the inspection on 1 October 2010, a Joint Agency Group comprising officers of NSW Police, Department of Immigration and Ryde City Council commenced ongoing investigations into the operation of the premises.
On 1 and 13 November 2010, Ms Kim made submissions to the Council with statutory declarations in relation to the brothel closure order and penalty infringement notice issued to her. As a result of her submissions, on 16 November 2010, the Council withdrew the brothel closure order it had issued on 29 July 2010 and revoked the penalty infringement notice.
On 19 November 2010, Joint Agency Group officers, including Mr Mamouzelos, attended the premises. On this occasion, Mr Mamouzelos deposes that two Asian females were engaged in providing services to two males subsequently identified as customers within respective service rooms on the premises. Mr Mamouzelos observed one of the male patrons engaging in a physical act with one of the sex workers in one of the service rooms. Various paraphernalia, including condoms and vaginal lubricant, were found on the premises in addition to diary entries indicating the receipt of cash for services.
On 25 November 2010, the Council issued a second brothel closure order requiring that the premises cease being used for the purposes of a brothel by 9 December 2010. Ms Kim said she had discussions with Ms Yu who told her she could not run her business at the premises because of the Council's actions and that she intended to sell the business to another person.
On 6 January 2011, Ms Kim's then solicitor, Mr Mollenbeck, received an application from Mr Chen's then solicitor for a lease of the premises on similar conditions as the lease to Ms Yu.
On 14 January 2011, Ms Kim said she met with Ms Yu at the premises. Ms Yu advised that she would be selling her business to Mr Chen and that the premises would only be used for remedial massage.
Ms Kim entered the lease with Mr Chen from 15 January 2011.
Hence, at the time of leasing the premises to Mr Chen, Ms Kim knew that the previous tenant, Ms Yu, had been using the premises as a brothel under the guise of operating the massage business, and that Mr Chen was buying that business from Ms Yu. There was therefore a risk that the premises would continue to be used as a brothel under the guise of the massage business.
On 2 February 2011, council officers Justin Howe, Sergio Pillon, and Scott Cox, attended the premises with other members of the Joint Agency Group. Mr Chen was in attendance at the premises behind the counter in the reception area. Mr Howe found a significant number of condoms and lubricant behind the counter.
In the counter at the reception area there was a filing cabinet. In the bottom drawer of the filing cabinet an attending police officer was seen by Mr Howe to find a black garbage bag of rubbish containing open condom packets, used condoms and used tissues. A blue plastic bag was also found in the filing cabinet full of unopened condoms. One of the police officers searched a handbag belonging to a female working on the premises. This handbag was seen to contain a substantial number of condoms. In one of the rooms of the premises, Mr Howe found lingerie, including a G-string, night garment and bra. Similar observations were made by Mr Pillon.
On 3 February 2011, the Council issued a penalty infringement notice to Mr Chen for carrying out development not in accordance with consent.
On 4 February 2011, the Council issued a brothel closure order to both Mr Chen and Ms Kim to cease using the premises as a brothel. These orders were later withdrawn on 4 May 2011 on legal advice.
Between 4 and 9 February 2011, Ms Kim consulted her solicitor, Mr Mollenbeck, about the brothel closure order of 4 February 2011. Mr Mollenbeck wrote to the Council saying that he would advise his client, Ms Kim, to take whatever action she is empowered to take under the lease between the parties which commenced on 15 January 2011. Ms Kim said in evidence that Mr Mollenbeck did advise her that the actions she could take included giving a termination notice under cl 17.6 of the lease, thereby determining the lease, re-entering the premises and removing the lessee's contents under cl 17.13 and cl 19.3 of the lease.
On 13 February 2011, Ms Kim inspected the premises, meeting Mr Chen for the first time. Afterwards, Ms Kim attended her solicitor, Mr Mollenbeck, who prepared a termination notice dated 15 February 2011. The termination notice stated that Mr Chen had breached cl 3 of the lease in that he had used the premises for a purpose other than that specified in the lease and in particular as an unlicensed brothel, that such breach was a breach of an essential term and amounted to a repudiation of the lease, and that the lease was determined from the date of the notice, and required Mr Chen to surrender possession of the premises. Ms Kim said she personally served the termination notice on Mr Chen on 15 February 2011.
On 16 February 2011, an advertisement Mr Chen had placed appeared in the Northern District Times, a local newspaper, stating "At Eastwood, grand opening, best professional massage," and giving telephone numbers and the address of the premises.
Also in February 2011, an investigating officer, Mr Mamouzelos, searched and located an advertisement on a Chinese language internet site for sex premises which listed the premises under Eastwood as "Young Asian beauty every day, pretty warm for you, the best of different services," and gave the address of the premises and a telephone number.
On 18 February 2011, council officers Mr Mamouzelos, Mr Howe and Mr Pillon attended the premises with other members of the Joint Agency Group. Mr Chen was in attendance at the premises at the counter. Mr Mamouzelos asked Mr Chen "How many girls are on the premises?" to which Mr Chen replied "Two, they are busy with customer." Mr Mamouzelos saw two scantily clad females of Asian appearance emerging from within rooms at the rear of the premises. He also saw two male persons exiting the same rooms. During the course of the inspection, Mr Mamouzelos saw numerous sealed condoms located at various places within the premises.
In the sitting area of the premises, which was sectioned off by a seethrough lace curtain, Mr Howe saw a young lady of Asian appearance sitting on one of the lounges. She was wearing a black singlet type top under a silk dressing gown that came to half way down her thighs. Each of the service rooms had a bed in it, as well as a massage table in each room. One of the women working on the premises was seen by Mr Howe to be of Asian appearance wearing a pink t-shirt and not appearing to be wearing shorts or a skirt.
Also on 18 February 2011, the Council issued another two penalty infringement notices to Mr Chen for unauthorised use of the premises and for failure to comply with a brothel closure order.
On 20 February 2011, Ms Kim said she went to the premises to see Mr Chen but he was not there. She spoke to Mr Chen's wife, Karen, requesting her to ask Mr Chen when he was going to vacate the premises.
Notwithstanding the giving of the termination notice to Mr Chen and the determination of the lease, Mr Chen did not surrender possession of the premises. Ms Kim did not change the locks, re-enter the premises or remove Mr Chen's contents, take court proceedings to evict Mr Chen, or cause her solicitor to send a letter of demand to Mr Chen requiring that he vacate the premises. Instead, Ms Kim continued to accept rent under the lease.
On 4 May 2011, the Council again issued a brothel closure order to Mr Chen and to Ms Kim requiring cessation of use of the premises as a brothel by 16 May 2011.
On 8 May 2011, Ms Kim said because she was by then aware that Mr Chen was using the premises as a brothel, she went to speak to Mr Chen at the premises, but she cannot recall what she said to him.
Between 4 May and 13 May 2011, Ms Kim conferred with her solicitor, Mr Mollenbeck. He advised her to enforce the brothel closure order against Mr Chen to its full extent.
On 13 May 2011, Mr Mollenbeck wrote to the Council enclosing a copy of the termination notice of 15 February 2011 served on Mr Chen.
Also on 13 May 2011, Ms Kim spoke to a council officer, Mr Pillon, on the telephone. She says Mr Pillon advised her that she should not let the premises be used as a brothel and that it would be best if she had the tenant move out.
On 20 May 2011, Ms Kim said she spoke to Mr Chen asserting that he had not complied with the termination notice served in February 2011 and asking when he was going to move out. Mr Chen claimed it was unfair as he had done nothing wrong and that he was going to have an interview with a council officer, Mr Pillon.
On 30 May 2011 and 28 June 2011, first the Council and then the Council's solicitors responded to Ms Kim's solicitor's letter of 13 May 2011. The Council's solicitors advised that if the premises continued to be used for the purposes of a brothel after 12 July 2011, the Council would commence proceedings against Ms Kim in the Land and Environment Court seeking a utilities order under s 121ZS of the Act. The Council's solicitor wrote on 28 June 2011 the same letter of demand to Mr Chen.
Meanwhile, on 2 June 2011, members of the Joint Agency Group, including council officers Mr Mamouzelos, Mr Cox and Mr Pillon, again inspected the premises. Mr Cox saw a small blue bag inside a larger black bag, containing approximately 50 or more condoms, under a lounge in the common area of the premises. Through the course of the inspection, at which time Mr Chen was present, Mr Mamouzelos deposes that he had a conversation with one of the women working on the premises. She said, "I only work here one or two days a week. The rest of the time I work at Gladesville." Mr Mamouzelos said, "Do you mean the brothel at Buffalo Road, Gladesville?" She said, "Yes, that one."
On 4 July 2011, Ms Kim says she visited the premises. After a delay, Ms Kim was able to inspect the premises in the company of Mr Chen, his wife Karen and Mr Chen's previous solicitor, Mr Jeffrey Choi. She noticed one of the two rooms was closed and was advised by Mr Chen that, "There is a client in that room." Ms Kim said she saw two ladies with heavy make-up with short skirts and tops. Ms Kim said, "It seems to me the premises look like a brothel and the two ladies look like sex workers." She directed Mr Chen, "Please move out by this Sunday." Mr Choi said, "I will fix everything in 48 hours."
On 8 July 2011, Ms Kim said she attended the premises again to serve another termination notice. The termination notice had a reference date of 10 May 2011 but was stated in the formal part to be dated 10 June 2011. Ms Kim signed it and dated it on 8 July 2011. Ms Kim personally served it on Mr Chen when she later met him at Strathfield on 8 July 2011.
On 10 July 2011, Ms Kim inspected the premises and asked Mr Chen to remove everything from the premises and clean up by that afternoon. She said the Council wants to inspect the property. Mr Chen said he would speak to his solicitor.
On 11 July 2011 Ms Kim said she spoke to Mr Chen's wife, Karen, on the telephone and requested, "Please remove everything from the premises."
Also on 11 July 2011, members of the Joint Agency Group again inspected the premises, including council officers Mr Mamouzelos and Mr Pillon. During this inspection, Mr Mamouzelos had a conversation with Mr Chen. Mr Mamouzelos said, "Hello again James. Officers from the police, Council and immigration are here to conduct an inspection as we have reason to believe you are continuing to operate an illegal brothel from within these premises, in spite of the warnings and fines you have received." Mr Chen said, "It's really hard for me, I am trying hard to sell the business."
The search of the premises again disclosed numerous condoms in various rooms and locations. At the conclusion of the inspection, Mr Mamouzelos spoke with one of the females working at the premises who told him that she was providing full sex service to the customers at the premises and that she had been brought across from premises at Buffalo Road, Gladesville. Mr Mamouzelos said that the premises at Buffalo Road, Gladesville are known to him as the "Infinity" brothel. During the inspection, Mr Pillon said he found a quantity of condoms and lubricant gel.
On 12 July 2011, Ms Kim said she telephoned council officer Mr Pillon and asked for help to get the tenant, Mr Chen, to move out as she had tried but he would not move out. Mr Pillon advised Ms Kim to get separate legal advice.
Later that day, Ms Kim met with Mr Chen at Strathfield. Mr Chen notified her about the council inspection that had occurred on 11 July 2011. Ms Kim asked, "Can you give me the key to the premises as arranged?" but Mr Chen answered, "I did not bring the key".
Later still that day, Ms Kim received a text message from Mr Chen's wife, Karen, advising, "Don't try to open our door anymore it is illegal". Nevertheless, Ms Kim went to the premises and knocked on the door but was not let in. However, Mr Chen did meet Ms Kim later on. Ms Kim again said to Mr Chen, "Please move out immediately as this is getting me into trouble. The Council have told me they will apply to cut off all utilities." Mr Chen said, "The Council is not allowed to cut the utilities unless the Council wins the case. I have done nothing wrong with the Council and have not breached the lease contract. I will continue to run my business". Ms Kim advised Mr Chen that she would appoint a real estate agent to handle matters from now on. Subsequently Ms Kim appointed David Kim and Jay Lee of Century 21 Real Estate at Eastwood.
On 18 August 2011, the Council commenced both the Class 4 and the Class 1 proceedings. The proceedings were returnable before the Court on 16 September 2011. Ms Chen and Ms Kim appeared by their respective solicitors.
On 22 September 2011, the Joint Agency Group again inspected the premises, including a council officer Mr Mamouzelos and Senior Constable Marc Osborn of the New South Wales Police. Senior Constable Osborn deposes to seeing two females of Asian descent sitting on lounges in the sitting room, both of whom were scantily clad. In one of the rear rooms, which Senior Constable Osborn describes as a "small bedroom", he found a handbag with vaginal lubricant. He also found a number of other tubes of vaginal lubricant in a linen cupboard in the hallway. He found six condoms under the front reception counter and an empty condom packet in the sitting area where the two females were located. Senior Constable Osborn also inspected Mr Chen's car and located a plastic bag in it containing about 40 condoms in the back seat. Mr Chen denied knowledge of those condoms. Mr Mamouzelos's evidence corroborated Mr Osborn's account.
On 10 November 2011, Ms Kim says she attended her new solicitor, Mr Simons, and read the Council's affidavits filed in these proceedings, describing the use of the premises as a brothel. Ms Kim said she was shocked.
On 29 November 2011, Ms Kim said she went to her appointed real estate agent, Century 21 at Eastwood, and instructed them to change the locks and reenter the premises. On 30 November 2011, the locks were changed as instructed by Ms Kim. At this time Mr Chen was in arrears in rent. However, subsequently on 2 December 2011, Mr Chen paid the rent arrears. Mr Lee of Century 21 at Eastwood then gave Mr Chen the new keys. Mr Chen repossessed the premises.
On 19 January 2012, the premises were inspected by members of the Joint Agency Group, including council officers Mr Mamouzelos and Mr Cox. This inspection was carried out pursuant to a search warrant. The officers entered the premises without using force.
Mr Cox deposes to seeing an Asian lady wrapped in a bath towel. He then deposes to seeing a naked man in a bathroom adjacent to a bedroom. Mr Cox says that the naked man admitted to Mr Cox that he, the naked man, had been having sex with the woman. In the room adjoining the bathroom, Mr Cox saw a bra, female underwear and clothing and also saw clothes that appeared to belong to the naked man, into which the man began to get dressed. Mr Cox saw a condom wrapper in the room along with two unopened condom packets and vaginal lubricant. During further inspection of the premises, Mr Cox saw a bin filled with multiple used tissues, condom wrappers and at least 10 used condoms, some of which he says contained whitish fluid that resembled semen. He inspected the woman's handbag and saw at least 30 condom packets of various brands in it.
Mr Cox saw on a computer located in the reception area of the premises, records showing that there were appointment times beyond 8.00pm on the following dates: 5 January 2012, 12 January 2012, 13 January 2012 and 15 January 2012. He also saw on the computer a list of female names and the hours that they had worked. In the waiting room, on top of the fridge, he saw a handbook on the front cover of which was written the title "Sexually Transmitted Infections Handbook".
On 17 February 2012, Mr Lee of Century 21 at Eastwood wrote to Mr Chen advising that the monthly rent due on 14 February 2012 and certain outgoings had not been paid by Mr Chen and that, "Century 21 Total Real Estate took an action to repossess the property. Please note 'No Trespassing' sign has been posted and it is illegal accessing to the property for any reason."
Mr Lee did not attend to give evidence and therefore was not able to be crossexamined as to what was the action to repossess the property he had taken.
As I have noted, the Court was advised by the former solicitor of Mr Chen, Mr Wong, that Mr Chen was overseas in China, and had been for about four weeks prior to the hearing. It is unclear whether this meant that Mr Chen was not operating his business at the premises whilst he was overseas.
Finally, I should note the admissions by Ms Kim of the facts that the premises were being used for the purposes of prostitution by more than one prostitute during the period 1 October 2010 to 19 January 2012 and in particular on the dates of various inspections being 1 October 2010, 2 and 18 February 2011, 2 June 2011, 11 July 2011, 22 September 2011 and 19 January 2012.
I find that this evidence, being both direct and circumstantial, establishes that at all material times the premises had been used as a brothel within each of the limbs of the definition of brothel in the Restricted Premises Act (although it is sufficient if only one of the limbs is satisfied); that the premises had been used for the purposes of prostitution by more than one prostitute, so as to fall within the definition of brothel in the Act; and that the premises are being used for the purposes of a brothel but not for home occupation (sex services), so as to fall within the definition of sex services premises under the Ryde LEP.
As a consequence:
(a) the use of the premises as sex services premises by Mr Chen from 15 January 2011 to date is a breach of the Ryde LEP and the Act, being prohibited development; and
(b) the use of the premises as a brothel from 16 May 2011 to date is a breach of the brothel closure orders issued to Mr Chen and to Ms Kim on 4 May 2011, and hence is a breach of the Act.
Ms Kim sought to rely on s 121ZR(7) of the Act to establish that there was no breach of the Act. Section 121ZR(7) provides that:
"It is a sufficient defence to a prosecution for an offence that arises from a failure to comply with a brothel closure order if the defendant satisfies the Court that:
(a) if the defendant is the owner of the premises, the defendant has taken all reasonable steps to evict the persons operating the brothel or using the premises for the specified related sex uses, or
(b) in all cases, the defendant has taken all reasonable steps to prevent the use of the premises as a brothel or for the specified related sex uses."
Neither the Class 4 nor the Class 1 proceedings are prosecutions for an offence. The Class 4 proceedings are civil enforcement proceedings under s 123 of the Act to remedy and restrain a breach of the Act; they are distinct from a criminal prosecution for an offence under s 125 of the Act: see Meriton Apartments Pty Ltd v Sydney Water Corporation [2004] NSWLEC 699; (2004) 138 LGERA 383 at [15],[16] and Director-General, Department of Environment, Climate Change and Water v Venn [2011] NSWLEC 118 at [23].
Accordingly, the taking of all reasonable steps by an owner of premises to prevent the use of premises as a brothel or to evict the person operating the brothel, if unsuccessful in preventing the use of the premises as a brothel, will not negate a finding of a breach of the Act in civil proceedings.
Remedies for breaches of the Act
In the Class 4 proceedings, it is appropriate to make declarations that Mr Chen has breached the Act by carrying out the prohibited development of sex services premises and that Mr Chen and Ms Kim have each breached the Act by failing to comply with the brothel closure orders issued to them on 4 May 2011. The breaches were denied in their defences by Mr Chen and Ms Kim. They are of a continuing nature. There is a need to publicly expose and denounce on behalf of the community the unlawful behaviour. Declarations serve to declare the law and underline the breaches: see Director-General, Department of Environment, Climate Change and Water v Venn at [276]-[284] and cases therein referred to.
It is also appropriate to grant a prohibitory injunction restraining Mr Chen from using, and Ms Kim from permitting the use of, the premises for the purposes of sex services premises. There is a demonstrable purpose in granting such an injunction. The injunction restrains the established breaches of the Act from continuing. It upholds the public duty imposed by the Act and the integrated and coordinated nature of planning law. Mr Chen and Ms Kim have failed to comply with the brothel closure orders, which are administrative orders issued under the Act. There is a need to add the gravity and force of a court injunction, with the attendant powerful sanctions for noncompliance, including punishment for contempt.
There are no cogent discretionary reasons for not issuing the injunctions against both Mr Chen and Ms Kim. The injunctive relief is sought with respect to continuing breaches by conduct which can easily be modified to bring it into compliance with the law. Mr Chen and Ms Kim have had multiple warnings and ample opportunity to comply with the law. No injustice will be caused by issuing an injunction now restraining the illegal use of the premises.
Mr Chen's conduct has been in breach of the Act and the lease from the commencement of the lease, by using the premises as a brothel. Mr Chen was well aware from the terms of the lease that the only permitted use of the premises was the approved use of remedial massage clinic. However, within weeks of commencement of occupation, Mr Chen caused advertisements to be placed in a newspaper and on an internet site for sex services premises representing use of the premises for the purposes of prostitution. Within three weeks of commencement of occupation, Mr Chen was discovered on inspection to be using the premises as a brothel. He was issued a penalty infringement notice for that illegal use and a brothel closure order. Mr Chen was not deterred. Two weeks later, another inspection revealed he was still operating a brothel on the premises. Two more penalty infringement notices were issued to Mr Chen for using the premises as a brothel. Ms Kim gave Mr Chen a termination notice determining the lease on the ground that he was using the premises other than for the approved use and in particular as an unlicensed brothel. Mr Chen still was not deterred.
On 4 May 2011, Mr Chen received another brothel closure order in substitution for the earlier one. Notwithstanding, Mr Chen continued to operate the brothel. A letter of demand to cease the prohibited use as a brothel was sent to Mr Chen on 28 June 2011. A second termination notice determining Mr Chen's tenancy was given to Mr Chen by Ms Kim on 8 July 2011 on the ground he was using the premises for an unlicensed brothel. Neither of these demands caused Mr Chen to cease the use of the premises as a brothel.
The commencement of these proceedings on 18 August 2011 were similarly unsuccessful. Mr Chen denied any breach of the Act and defended the proceedings until his nonappearance at the hearing.
Mr Chen can have no grounds for resisting an injunction restraining him from continuing to breach the Act by using the premises as a brothel. Mr Chen has already profited for more than a year from his illegal use. He should not be allowed to continue to do so.
Ms Kim did not oppose the granting of an injunction restraining her from permitting use of the premises as a brothel. Ms Kim said she intended to evict Mr Chen and change the use of the premises. She has no intention of permitting the continuation of the use of the premises as a brothel.
Accordingly, it is appropriate to grant prohibitory injunctions restraining both Mr Chen and Ms Kim from using the premises as a brothel.
In the Class 1 proceedings, the Council seeks a utilities order under s 121ZS that the provider of electricity to the premises be directed to cease providing electricity to the premises for three months. The Council did originally seek, but no longer seeks, a utilities order in relation to water or gas. In relation to water, the building in which the premises are located does not have separate water meters for each unit and it is therefore not possible to cease providing water to the premises alone, without significant cost of installing separate water meters for every unit. In relation to gas, there is no provision of gas to the premises.
Ms Kim opposed the making of a utilities order. She submitted that a utilities order may impede her intended action to reenter the premises, and remove and store the contents of the premises, being Mr Chen's chattels and equipment. Ms Kim said she wished to take such action by this weekend.
I raised with the parties the idea that the issue of whether a utilities order should be made, and if so, the period for which it should apply, should be adjourned for a limited time to permit Ms Kim to take her intended action and to provide proof that action had in fact been taken as intended. Such a course would remove any impediment that the making of a utilities order could have on taking the intended action. Both Ms Kim and the Council agreed to this course.
On further enquiries, Ms Kim informed the Court that she has arranged for a removalist to remove Mr Chen's contents of the premises this Thursday, 23 February 2011, and for the contents to be stored at a storage warehouse at West Ryde. The premises could thereafter be cleaned. Ms Kim would make available the premises for inspection by the Council on Monday, 27 February 2011 to verify that the action has been taken. Ms Kim would prepare, file and serve an affidavit deposing to the action taken. The matter could then be listed for further hearing on Friday, 2 March 2012 to determine the appropriateness of making a utilities order in light of the action taken.
Accordingly, I will adjourn the further hearing of the issue of the relief of a utilities order until Friday, 2 March 2012 and will direct Ms Kim to file and serve an affidavit by 4.30pm on Wednesday, 29 February 2012.
The issue of the costs in both the Class 4 and Class 1 proceedings needs to be determined. Ms Kim seeks for costs to be argued at the further hearing on 2 March 2012. The Council does not oppose this course. Ms Kim also filed a crossclaim in both proceedings against Mr Chen claiming indemnity from Mr Chen with respect to any costs orders that might be made against Ms Kim. This crossclaim can be determined also on 2 March 2012.
Orders
Accordingly, the Court:
(1) Declares that the first respondent has breached s 76B of the Environmental Planning and Assessment Act 1979 ("EPA Act") by carrying out development for the purposes of a sex services premises at 1A, 21-25 Rowe Street, Eastwood, described as Lot 12 SP 13267, being development that is prohibited on land within Zone B4 under the Ryde Local Environmental Plan 2010 ("Ryde LEP 2010").
(2) Declares that the first and second respondents have breached the EPA Act by failing to comply with an order issued to each of the respondents under s 121B of the EPA Act on 4 May 2011 to cease using the premises as a brothel.
(3) Orders that the first and second respondents be restrained from using, or permitting use of, the premises for a sex services premises as defined in the Dictionary to the Ryde LEP 2010 and related sex uses as defined in s 121ZR of the EPA Act.
(4) Directs the second respondent by 4.30pm on 29 February 2012 to file and serve an affidavit of Ms Kim as to the actions she has taken in relation to re-entry of the premises.
(5) Adjourns the further hearing of the proceedings to 2 March 2012.
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Decision last updated: 29 March 2012
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