Zhou v Auburn City Council; Chen v Auburn City Council

[2009] NSWLEC 75

Land and Environment Court

of New South Wales

CITATION:	Zhou v Auburn City Council; Chen v Auburn City Council [2009] NSWLEC 75 This decision has been amended. Please see the end of the judgment for a list of the amendments.
PARTIES:	APPLICANTS Xin Xia Zhou Ming Ming Chen RESPONDENT Auburn City Council
FILE NUMBER(S):	60016; 60017 of 2008
CORAM:	Preston CJ
KEY ISSUES:	APPEAL :- appeal against severity of Local Court sentences; - similar illegal works in two units owned jointly by applicants, husband and wife; - council orders to demolish illegal works not complied with; - early plea of guilty; - single course of criminal conduct; - appeal upheld; - fines reduced
LEGISLATION CITED:	Crimes (Appeal and Review) Act 2001 ss 31, 37 Environmental Planning and Assessment Act 1979 s 121B
DATES OF HEARING:	30 April 2009
EX TEMPORE JUDGMENT DATE:	30 April 2009
LEGAL REPRESENTATIVES:	APPLICANTS N Velcic (Solicitor) SOLICITORS Nikola Velcic & Associates RESPONDENT AJ Pickup (Solicitor) SOLICITORS Storey & Gough Lawyers

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

PRESTON CJ

30 April 2009

60016 of 2008
60017 of 2008

Zhou v Auburn City Council
Chen v Auburn City Council

JUDGMENT

1 HIS HONOUR: The applicants in each of these proceedings appeal against the severity of a sentence imposed by Magistrate Johnson of the Local Court of New South Wales in proceedings brought by Auburn City Council for a contravention of the Environmental Planning and Assessment Act 1979 (NSW) (“EPA Act”). The offences involved a failure to comply with two orders pursuant to s 121B of the EPA Act in respect of two residential flat units that the applicants jointly owned. The applicants pleaded guilty to each of the offences and the proceedings came before the Local Court on 24 October 2008. The Local Court convicted the applicants and sentenced each of the applicants on each of the court attendance notices. The sentences were as follows:

- Zhou - offence relating to unit 5042 - breach of order 2 - convicted and fined $15,000, court costs of $73 and professional costs of $350.
- Zhou - offence relating to unit 5042 - breach of order 12 - convicted and fined $10,000, court costs of $73 and professional costs of $350.
- Zhou - offence relating to unit 4513 - breach of order 2 - convicted and fined $15,000, court costs of $73 and professional costs of $350.
- Zhou - offence relating to unit 4513 - breach of order 12 - convicted and fined $10,000, court costs of $73 and professional costs of $350.
- Chen - offence relating to unit 5042 - breach of order 2 - convicted and fined $15,000, court costs of $73 and professional costs of $350.
- Chen - offence relating to unit 5042 - breach of order 12 - convicted and fined $10,000, court costs of $73 and professional costs of $350.
- Chen - offence relating to unit 4513 - breach of order 2 - convicted and fined $15,000, court costs of $73 and professional costs of $350.
- Chen - offence relating to unit 4513 - breach of order 12 - convicted and fined $10,000, court costs of $73 and professional costs of $350.

2 It can be seen, therefore, that each of the applicants, Ms Zhou and Mr Chen, were fined in total $50,000 plus court costs and professional costs in respect of the four summonses relating to them. Each of the applicants says that the total fines are too severe and beyond what is just and appropriate for the criminality involved.

The offence provisions

3 The offences against each of the applicants involve a failure to comply with orders issued under s 121B of the EPA Act. The two orders were orders in items 2 and 12 of the table to s 121B of the EPA Act. Order 2 requires the person to whom the order is given to remove unauthorised building works specified in the order. These unauthorised building works included additional walls, partitions, plumbing and electrical works in each of the two residential units owned by the applicants. Order 12 requires each of the applicants to restore the residential flat units to the condition in which they were before the unlawful building works were carried out.

4 The offence in each case was failing to comply with each of these orders within the time period specified in the orders.

Appeal against the sentence

5 The applicants appealed against the severity of the sentences as of right under s 31(1) of the Crimes (Appeal and Review) Act 2001 (“Appeal and Review Act”). Such an appeal is dealt with by way of rehearing on the basis of certified transcripts of evidence given in the Local Court: s 37(1) of the Appeal and Review Act. Fresh evidence may be given, but only by leave of this court if the court is satisfied that it is in the interests of justice that fresh evidence be given: s 37(2) of the Appeal and Review Act.

The evidence on the appeal

6 The appeal proceeded on the basis of the evidence that was before the Local Court, namely:

(a) the statement of Jason Mooney dated 3 July 2008 which related to unit 4513;

(b) the statement of Jason Mooney dated 3 July 2008 which related to unit 5042;

(c) a reference from Ms Queeny M K Liu dated 23 October 2008;

(d) a reference from Naxin Jiang dated 20 October 2008;

(e) a transcript of the proceedings in the Local Court on 24 October 2008.

7 The applicants also sought leave under s 37(2) of the Appeal and Review Act to adduce fresh evidence in the form of two affidavits, one from each of the applicants. The respondent did not oppose leave being granted to the applicants to read those affidavits on the appeal. Having been satisfied that it was in the interests of justice I granted leave to the applicants to read the affidavit of Mr Chen sworn 25 March 2009 and the affidavit of Ms Zhou also sworn 25 March 2009 in each appeal.

The incident

8 Mr Chen and Ms Zhou are married. They purchased the two units the subject of the offences off the plan in a residential flat building which was being developed in Auburn. The first unit, unit 4513, was purchased in June 2003. The second unit, unit 5042, was purchased in 2005. The circumstances in which Mr Chen and Ms Zhou purchased the second unit are relevant to how the offences were committed.

9 Mr Chen and Ms Zhou state in their affidavits that they were contacted by Mr Justin Wong in mid-2004 about purchasing a second unit off the plan for the development. Mr Chen and Ms Zhou were concerned about the financial consequences of purchasing a second unit. However, Mr Wong said that “I can make you more money by increasing the number of bedrooms in your unit.” Mr Wong gave examples about other properties that he was associated with in the residential flat building complex where the internal size of the units had been increased so as to improve the return to their owners. Mr Wong told Mr Chen and Ms Zhou that he could make five bedrooms from each three-bedroom apartment.

10 Mr Wong introduced Mr Chen and Ms Zhou to another person, a Mr Danny King. Mr Chen and Ms Zhou were told that Mr King worked for Raylan Property Services Pty Limited with Mr Wong.

11 After the conversation with Mr Wong, Mr Chen and Ms Zhou discussed the matter and they made a decision to purchase a second unit off the plan. They entered into a new contract for the purchase of the second unit. Settlement for the second unit was to occur on 26 May 2005. Shortly prior to settlement taking place, Mr King arranged for a tradesman to carry out the internal works designed to turn each of the three-bedroom apartments into five bedroom apartments. Mr Chen paid $5,500 cash to Mr King for the work.

12 After the work was carried out, Mr King looked after rental of the property. The rental for each of the units was apparently around $590 per week. This was a rental on the basis that each of the units had five bedrooms. Mr Chen and Ms Zhou stated that if the bedrooms had remained at three bedrooms the rental would have been lower, some $450 per week. Although it is not clear as to the precise time when each of the units were let, it would seem that they were let shortly after the works to the apartments were completed. This would have been in mid-2005.

13 All of the rent collected for the two units of Mr Chen and Ms Zhou was put into their mutual bank account.

14 The council, upon becoming aware that illegal works had been carried out in the units owned by Mr Chen and Ms Zhou, issued a notice of intention to give an order. In the case of unit 4513 the notice of intention was issued on 11 October 2007 whilst in the case of unit 5402 the notice of intention was issued on 15 February 2008. The notices of intention were forwarded to the residential address of Mr Chen and Ms Zhou, namely 43 Norval Street, Auburn. Mr Chen and Ms Zhou did not respond to the notices of intention. Mr Chen and Ms Zhou say that on occasions they have had difficulty with the mail. They also say that Ms Zhou was pregnant with their second child and it may have been that they simply overlooked the notices from the council. Whether the notices were received or noticed by Mr Chen and Ms Zhou or not, certainly they took no action in response to the notices.

15 The council then issued formal orders under s 121B, order 2 and order 12. In the case of unit 4513 the order was issued on 6 November 2007 whilst in the case of unit 5042 the order was issued on 4 March 2008.

16 Again Mr Chen and Ms Zhou did not take any action in response to the orders. Again Mr Chen and Ms Zhou give as a reason for their inaction that they had had difficulties with the mail or again they may have just overlooked the mail due to the fact that Ms Zhou was pregnant with their second child. There being no response by Mr Chen and Ms Zhou the council commenced the prosecutions by way of court attendance notices. The prosecutions were commenced in July 2008.

17 Mr Chen and Ms Zhou were ultimately spurred into action and they took steps to carry out the work required by the orders to remove the illegal works and restore each of the units back to the condition they should have been in before the illegal works were carried out. These works were done in August 2008. Mr Chen states that the rectification works carried out in August 2008 cost $3,500. It is common ground that the works rectified the illegality in respect of each unit.

18 Mr Chen and Ms Zhou state in their affidavits that they were unaware of the need to seek council permission to carry out internal works and for that reason they did not make any enquiries of the council. They state that they now accept that that assumption was incorrect and that they should have contacted the council before carrying out the works.

The appropriate sentence

19 On a re-hearing of the matters by this Court, the Court should determine for itself the appropriate sentence that should be imposed for each of the offences. In determining the appropriate sentence the Court should take into account both the objective gravity of the offences together with the subjective circumstances of each applicant. There also needs to be a final check to see whether the sentences that would result for each offence, when considered in aggregate, result in a penalty that is just and appropriate and proportionate to the overall criminality involved.

Objective gravity

20 In determining the objective gravity of the offences it is appropriate for the Court to have regard to the maximum penalty for the offence, the objective harmfulness of each applicant’s actions, the applicant’s state of mind in committing the offences and the applicant’s reasons for committing the offences.

Maximum penalty

21 The maximum penalty for an offence against the EPA Act is $1.1 million. It needs to be remembered, however, that that maximum penalty applies to all conduct that constitutes an offence against the Environmental Planning and Assessment Act. There is a diverse range of conduct that can constitute an offence against the EPA Act.

Objective harmfulness of the applicants’ actions

22 In relation to the objective harmfulness of the applicants’ actions, the following circumstances are relevant:

(a) Each of the units are owned by Mr Chen and Ms Zhou. They were originally built as three bedroom units. The two additional bedrooms that were constructed were in an area that was designed as a living area but each bedroom had a door lock and each door had a number on it, indicating a separate domicile. The additional rooms contained a number of beds. Such works would have required development consent under the EPA Act, but no development consent was sought or obtained.

(b) The additional bedrooms constructed were not compliant with the Building Code of Australia. The construction of the two additional bedrooms and the location of those bedrooms in each unit resulted in the occupants having unacceptable amenity with regards to the available living area and space.

(c) The locked bedrooms could have led to injury or possible death in the event of a fire occurring in the unit.

(d) Whilst the works to demolish the additional rooms and restore the unit to its original condition were eventually carried out, the works were not carried out until such time as the council had commenced proceedings against the applicants.

(e) The works were carried out for the purposes of financial gain and without regard to the potential public safety of the occupants.

The applicants’ state of mind

23 The works that were carried out on the instructions of Mr Chen and Ms Zhou involved a deliberate decision of Mr Chen and Ms Zhou. However, they said they did know it was illegal. They said, and there is no evidence from the prosecutor to the contrary, that they were unaware of the legal requirement to obtain consent for the carrying out of the internal works. No doubt they relied upon the representations of those persons who wished to sell the unit to Mr Chen and Ms Zhou, that such works could be carried out.

24 Nevertheless ignorance of the law, of course, is no defence. As has been said in many cases the system of planning and development control established under the EPA Act depends on persons taking steps to obey the law by ascertaining when development consent is required and then obtaining development consent before carrying out development.

25 Accordingly, in was incumbent upon the applicants to have made proper inquiries to ascertain what constituted development and whether development consent was needed for such development.

26 In sentencing, the purpose of general deterrence is important. There is a need for general deterrence for offences against the EPA Act.

27 In particular there is a need for general deterrence so others, like the applicants in this case, will be put on notice that they are obliged to make the necessary inquiries about the need to obtain development consent before carrying out works and, if needed, obtain the requisite development consent.

The applicants’ reasons for committing the offence

28 The applicants, Mr Chen and Ms Zhou, were induced to purchase the second unit by the representation that internal works could be carried out to not only the second unit but also the unit they had already purchased, to convert the units to five bedroom units and, thereby, receive increased rent.

29 It was the belief that they would receive greater rental from carrying out the works to the units that persuaded Mr Chen and Ms Zhou to purchase the second unit. Indeed, the representations that there would be increased rent proved to be correct. The rent that was received for a period of about three years for each of the units was $590 a week instead of $450 a week, an increase of $140 from what would otherwise have been received.

30 Accordingly, there was a financial reason for committing the offence and the appellants have profited from committing the offences. In approximate terms, Mr Chen and Ms Zhou have jointly received increased rent of $140 a week for fifty-two weeks for three years for two units which equates to over $40,000.

31 Of course, off this increase in income must be taken the expenses associated with carrying out the original works and the restoration works. These total $9,000, being $5,500 for the original works and $3,500 for the restoration works. That gives a net profit of $31,000 to Mr Chen and Ms Zhou over the period.

32 This profit that the applicants have received by reason of commission of the offence should be taken into account in determining the appropriate penalty. Offenders should not profit from their crimes.

33 The applicants do submit, however, that the court should also take into account the fact that the evidence as to the profit that has been received by the applicants is only before the court as a result of the full disclosure made by the applicants. I will come later to deal with the mitigating factors in relation to the assistance provided by the applicants to the prosecutor and their contrition and remorse. However, I note at this stage that the applicants submit that what would otherwise clearly be an aggravating factor, namely, the profit that has been received by commission of the crime, should be discounted in the circumstances of this case where it is the evidence of the applicants that enabled the court to be aware of that profit.

Subjective circumstances of the applicants

34 A proportionate sentence depends not only on the objective circumstances of each of the offences but also on the subjective circumstances of the particular offenders.

35 The subjective circumstances of the applicants that ought to be considered in this case include the following:

(a) Neither of the applicants has any prior criminal record;

(b) The applicants are persons of good character, as evidenced by the references tendered in evidence;

(c) The applicants are unlikely to re-offend;

(d) Each of the applicants has expressed remorse for their conduct. Each has stated that they feel ashamed for having committed the offences and having to face court and state that they will never commit such an offence again;

(e) Each of the applicants has entered a plea of guilty at the earliest practical opportunity. Consistent with authorities, the utilitarian value of such an early plea is high. It should be given a discount at the top of the range, namely 25%;

(f) The degree of pre-trial disclosure by the applicants. The applicants were forthcoming in providing information to the council’s investigating officer, including information concerning the circumstances that led to their conduct that constitutes the offence and the profit that they have received by way of increased rental. The preparedness of the applicants to provide this information is evidence of their remorse as well as, of course, providing assistance to the prosecutor;

(g) The assistance that has been provided to the prosecutor by the applicants, including not only the pre-trial disclosure, but also the offer that the applicants made to provide information and give evidence in any investigation or proceedings that might be brought by the council against the developers and those who were selling the units to persons such as Mr Chen and Miss Zhou.

Synthesis of objective and subjective factors

36 Taking into account each of the objective circumstances of the offences and the subjective circumstances of each of the applicants, and allowing a discount of 25% for the utilitarian value of the plea of guilty, the appropriate penalties for each of the offences would be as follows:

- For the offences in relation to unit 4513, the penalty for the offence against order 2 would be $14,000 and against order 12 would be $8,500.
- For the offences in relation to unit 5042, the penalty for the offence against order 2 would be $14,000 and against order 12 would be $8,500.

This would amount to an aggregate penalty for each of the applicants of $45,000.

Totality principle

37 However, where there are multiple offences and where the offences can be seen to be part of the same course of conduct, the totality principle must also be taken into account. At least three issues of totality need to be addressed in the circumstances of this case.

38 First, there is the fact that the two orders under 121B, namely orders 2 and 12, were in the one notice that was issued to the applicants. Furthermore, when one looks at the nature of the works that were required by these orders, they are essentially the same works. What both orders required was to remove the unauthorised building works so as to restore each of the residential flat units to the condition they were in before the illegal works were carried out. True it is, in the way in which the table to s 121B and the particular items 2 and 12 are drawn, a distinction is made. But in the circumstances of this case, if one looks in a practical way at what the council was endeavouring to achieve by way of issuing the orders under s 121B, it was to return each of the units to the condition they were in before the illegal works of creating the two extra bedrooms had been carried out.

39 Secondly, although there were two units involved, there was single course of criminal conduct by the applicants. There relevantly was no difference in the way in which the applicants dealt with the two units. The works that were done to convert the three bedroom units to five bedroom units were done for both units. They were done at the same time. They were done as a result of the same representations by the developers of the residential flat building in response to the same decision by the applicants. The same payment was made in the one sum. Although the criminality involved in converting two units from three bedroom units to five bedroom units is greater than if only one unit had been done, nevertheless it should be recognised that the criminal conduct was part of the same course of conduct.

40 Thirdly, it needs to be recognised that the applicants are in a relationship with one another, both marital and financial. The applicants have the one bank account. They have the one business which is a shop. They both work in the shop that is their principal source of income. They do own property, but again, the property is in their joint names and the income received from the properties goes into the joint account. There needs to be a recognition that penalties imposed upon one of the applicants has a consequence on the other applicant by reason of this relationship between them, and of course, vice versa.

41 Having regard to the principle of totality, I consider that an aggregate penalty of $45,000 for each of the applicants would be greater than that which is just and appropriate and would be disproportionate to the overall criminality involved. There ought to be an adjustment to that aggregate amount so as to bring the penalty to an amount which is just and appropriate and in proportion to the criminality involved in the commission of these offences.

42 In my opinion, the appropriate adjustment is to reduce the aggregate penalty for each of the applicants to an amount of $30,000 each. This amount should be apportioned as follows:

- For the offences in relation to unit 4513, in relation to order 2 the amount should be $9,300, and in relation to order 12, the amount should be $5,700.
- In relation to the offences against unit 5042, in relation to order 2, the amount should be $9,300 and in relation to order 12, the amount should be $5,700.

Such amounts and apportionments should apply to each of the appellants.

43 Accordingly, the appeals by each of the applicants should be upheld and the penalties imposed by the Local Court should be set aside and, in lieu, penalties in the amounts that I have stated should be imposed. The Local Court also made orders requiring the applicants to pay court costs and professional costs in each of the offences. Those orders are appropriate and should not be set aside.

44 In relation to the costs of the appeals to this court, the applicants, very fairly, accepted that, if they succeeded in the appeal, it was appropriate that there be no order as to the costs of the appeal. The council did not oppose such a course.

45 Accordingly, the court orders are as follows:

- In proceedings number 08/60016 Zhou v Auburn City Council, I make the following orders:


1. Allow the appeal.

2. Set aside the sentence of the Local Court at Parramatta imposing the following fines:
(a) Matter number 152442/08/3, $15,000;
(b) Matter number 152434/08/3, $10,000;
(c) Matter number 152418/08/3, $15,000;
(d) Matter number 152426/08/3, $10,000.

3. In lieu thereof impose the following penalties:
(a) Matter number 152442/08/3, a fine of $9,300;
(b) Matter number 152434/08/3, a fine of $5,700;
(c) Matter number 152418/08/3, a fine of $9,300;
(d) Matter number 152426/08/3, a fine of $5,700.


4. Confirm the orders of the Local Court in respect of court costs and professional costs in respect of each matter number.

5. Make no order for costs of the appeal.

- In proceedings number 08/60017 Chen v Auburn City Council, I make the following orders:


1. Allow the appeal.

2. Set aside the sentence of the Local Court at Parramatta imposing the following fines:
(a) Matter number 152240/08/3, $15,000;
(b) Matter number 152258/08/3, $10,000;
(c) Matter number 152231/08/3, $15,000;
(d) Matter number 152266/08/3, $10,000.

3. In lieu thereof, impose the following penalties:
(a) Matter number 152240/08/3, a fine of $9,300;
(b) Matter number 152258/08/3, a fine of $5,700;
(c) Matter number 152231/08/3, a fine of $9,300;
(d) Matter number 152266/08/3, a fine of $5,700.


4. Confirm the orders of the Local Court in respect of court costs and professional costs in respect of each matter number.

5. Make no order for costs of the appeal.

10/08/2012	-	Both matters referred to in orders paragraph as 08/60016, change made to reference for one of the matters from 08/60016 to 08/60017. - Paragraph(s) 45
10/08/2012	-	Change of party name in paragraph for proceedings 08/60017 from Zhou to Chen - Paragraph(s) 45