Carrying Out Unapproved Works At Property On Foreshore of Sailors Bay Lands Builder In Hot Water!!!

It is a far worse outcome for a builder to be prosecuted in the Land and Environment Court than it is to risk losing a contract.  

That moral has been reinforced by a recent decision that was handed down by Justice Pepper on 9 March 2015, in the case of Willoughby City Council v Livbuild Pty Ltd (2015) NSWLEC 34, http://www.caselaw.nsw.gov.au/decision/54fcee9ee4b0bcd7fe7b831a. 

In this prosecution, a builder has been fined a total of $67,000, and ordered to pay the Council's costs (estimated to amount to an additional $64,000) for doing unapproved work on a property located on the foreshore of Sailors Bay in Northbridge. The illegal construction consisted of two primary elements: external works involving alteration of the land form and the building staircases, concrete terraces and retaining walls, and internal works involving, among other things, building a home theatre, a powder room and a pantry and store room in an area that had been designated as a "subfloor space" in the approved architectural plans.

The story of the case is a classic example of "doing the wrong thing when one knows better", and the builder who was prosecuted wound up paying a heavy price for his indiscretion.  The builder was asked to carry out the unapproved works by the property owner, and agreed to do so even though he was aware that development consent was required for the works but had not been obtained. It is recorded in Justice Pepper's judgement that the builder's reasoning was that he was interested in expanding his company's portfolio into the sphere of high-end home building, and that he was concerned that his company would lose the contract for other works on the property if he declined to do the unauthorised work.

While Justice Pepper's jdugement in the case does make reference to "actual" environmental harm that resulted from the external works in the foreshore area of the property (involving the removal of vegetation, the introduction of large quantities of fill and the increase in areas of hard paving), a major focus of Her Honour's analysis of the issue of harm relates to the harm to the regulatory framework of the Environmental Planning and Assessment Act that was occasioned by the carrying out of the works without prior development approval.  

It is of interest and significance that Justice Pepper declared in the judgement that the harm to the regulatory regime "crystallised the moment the works were undertaken absent development approval". Her Honour was quite specific in stating that the fact that development and building certificate applications had been lodged with the prosecuting Council in an effort to regularise the illegal works did not, in her view, diminish the illegal character of the works, nor did the lodging of these applications carry much weight toward mitigating the final penalty. 

The moral here, then, is that it is unwise to "act against the better angels of one's nature".  When a person is aware that development consent is required for certain proposed building works, it is, in our opinion, an extremely poor choice to proceed with the works in the face of knowledge that development consent has not been obtained. Indeed, as illustrated by the Court's judgement in the case of Ford v Hawkesbury City Council (recently reviewed in this blog) it is a mistake for any contractor not to make independent inquiries to ensure that necessary development approval has been obtained and to rely on representations of the property owner or other person engaging them that consent has been or "will be" obtained. 

In short, it is always absolutely essential to confirm that a required development approval has been secured before going forward with regulated works. Failure to exercise diligence and caution can carry extremely unfavourable consequences, in the form of an indelible criminal record and expensive fines and costs orders.

Fiasco! Council Reportedly Spends $100,000 Trying to Close Allegedly Illegal Brothel - And Loses The Case!

For all who follow with interest the course of environmental enforcement in New South Wales, there is a story in the Sydney Morning Herald on 9 March 2015 that is literally amazing!

The paper reports that Hornsby Shire Council has spent $100,000 on an enforcement case against an allegedly illegal brothel (referred to in the paper as the "Hornsby Massage Centre" or "Hornsby Massage Clinic")  - and that the case has gone down in flames!!!

The article in the SMH which reports on the outcome of the case can be found at the following link:

http://www.smh.com.au/nsw/show-me-more-sex-judge-tells-council-in-landmark-legal-case-20150308-13vx7g.html

Unfortunately, the judgement handed down in the case, which was reportedly heard in the North Sydney Local Court, has not yet been reported on the Internet (it is unusual for judgements of the Local Court to appear there).

As best as can be deciphered from the article in the SMH, it appears that the Council prosecuted the operator of the alleged brothel under the Environmental Planning and Assessment Act 1979. Presumably, the charge was commenced by means of a Court Attendance Notice and would have claimed that the alleged brothel was operating without required development approval.  Although the SMH report says that the Council enforcement action sought "closure of the brothel", as a matter of law this remedy would have been beyond the powers of the Local Court.  A Local Court can do no more than impose a penalty (maximum amount $110,000) against a defendant for a breach of the Act; only the Land and Environment Court can grant an injunction to restrain a breach (i.e. to prevent someone from carrying out an activity on land that requires development consent in circumstances where such consent has not been granted). 

On the face of the situation, and again presuming that the report in the SMH is accurate, the Council's strategic choices in this case appear, with respect, to be somewhat "strange".  It is our opinion (having ourselves handled many cases against brothels on behalf of local councils) that taking a penalty action in Local Court is not a direct or effective way to seek closure of an unlawful brothel.  Rather, in our view, it is much more sensible to proceed, in the first instance, through issuing a "Brothel Closure Order" under section 121ZR of the Act.  If that initial step does not prompt closure of the premises, then further civil enforcement remedies are available either by way of an action for an injunction to restrain the illegal use or by way of seeking a "utilities order" under section 121ZS to cut off water, electric and gas services to the illegal brothel.

In the event, the report in the SMH indicates that the Council was not able even to get a fine against the brothel owner/operator (it is not clear from the article precisely who the party was who was prosecuted). 

Instead, the entire case went "down the chute" because the magistrate who presided over the case (who is not identified in the article) was not satisfied that the premises as operated indeed fell within the definition of "brothel" as provided in the Act.  That definition, at section 4, specifies that the term brothel means premises used or likely to be used for the purposes of prostitution by more than one prostitute.  The Herald article indicates that, even though the Council hired a private investigator to inspect the premises, the presiding magistrate was not satisfied that the premises were being used by more than one prostitute.

It appears, again, on the basis of the SMH article, that there were numerous problems in the way that the Council ran this case. For one thing, the article indicates that the Council received complaints about the alleged brothel (which was located at a prominent location, near Hornsby Girls High and the Westfield Shopping Centre in Hornsby) in January 2014, and yet the prosecution was not heard before the Local Court until mid-January 2015. Thus, it appears that a substantial time period elapsed after the Council first received complaints until the charge was filed (in the ordinary course it should take far less than a year's time for a charge in the Local Court to be brought to hearing).  Again, it appears that in the year that elapsed from the time that the Council first received complaints, it could easily have issued a Brothel Closure Order and sought enforcement of such an Order in the Land and Environment Court.

Secondly, it seems plain that the Council should have made certain that it was in possession of proof that the premises were being, or were likely to be, used by more than one prostitute before it went forward with the charge (if it indeed it was the case that the Council lacked such proof, as appears to be the case from the report in the SMH).

If there is one saving grace about this story, it is that the SMH's characterisation of the Local Court's decision as a "benchmark" is almost certainly incorrect, because decisions of the Local Court have very little value as precedents and surely are not binding on the Land and Environment Court or other courts of superior jurisdiction in NSW. It is indeed a shame, however, that the Council's enforcement objectives have apparently not been achieved, and that such a large amount of ratepayers' money was lost in this failed enforcement proceeding (in our experience, $100,000 seems to be an exceptionally high cost for any enforcement action in the Local Court, and it is altogether unclear from the SMH report exactly why the Council's costs of running this case were as high as they were).

Our readers will of course be familiar with the old saying that: "The definition of insanity is doing the same thing over and over and expecting a different result".  Equally well might it be said that in New South Wales, where the maximum potential penalty that may be imposed under the Protection of the Environment Operations Act against a corporation for breaching the condition of an Environment Protection Licence is now $1,000,000 (with the possibility of additional penalties of $120,000 for each day that an offence continues) that the definition of "risky business practises" is repeatedly engaging in a pattern of corporate conduct that contravenes the Act.  To do so exposes the corporation to the peril of serial prosecutions by the Environment Protection Authority, and to the imposition of increasingly severe penalties by the Land and Environment Court.

This exact scenario has just unfolded in two recent proceedings brought against M A Roche Pty Ltd, the operator of a quarry located at Wauchope on the "mid-north coast" of NSW. These cases - the first being Environmental Protection Authority v M A Roche Group Pty Ltd (2014) NSWLEC 114 and the second being the very recently decided case of  Environmental Protection Authority v M A Roche Group Pty Ltd (2015) NSWLEC 29  (2 March 2015) - arose from virtually identical conduct. In each case, the company contravened a condition of an Environment Protection Licence that was granted by the EPA that imposed a limit on the quantity of material that could be handled at the quarry within a 12 month period.

The condition of M A Roche's Environment Protection Licence that was at issue in each of these prosecution restricted the quantity of material that could be handled at the quarry during any given 12 month period to 30,000 tonnes. However, in the period from January 2012 - January 2013, Roche actually handled over 88,000 tonnes. This breach occasioned the first prosecution, which was adjudicated by Justice Sheehan in July 2014 and which resulted in a penalty of $30,000 and a costs order.

The second prosecution before the Court involved a somewhat less severe exceedence of the 30,000 tonne handling limit. This prosecution dealt with the amount of materials that were handled during the period from January 2013 - January 2014, which was over 62,000 tonnes. This second prosecution resulted in a fine of $52,000.

A noteworthy aspect of this case is that the defendant disclosed to the EPA during an interview that was conducted in August 2013 that the defendant was aware that it was likely to breach the materials handling limit during the reporting period January 2013 - January 2014. Nonetheless, after this admission was made to the EPA, the defendant continued handle and sell material from the quarry (in other words, increasing the quantity of material over the handling limit and consequently worsening the severity of the breach of the licence condition). Unsurprisingly, this evidence led the Court (Justice Craig) to conclude that the breach was "deliberate".

It goes without saying that such an adverse finding by the Court can spell trouble for a defendant! Even though the POEO is a "strict liability" statute, it is the Land and Environment Court's standard practise in determining sentence to consider a defendant's underlying "state of mind". Evidence that an offence has been committed "intentionally" or "knowingly and purposefully", as was present in this case, can surely result in heavier sanctions.

It is thus our observation that in situations like this case, where a company is aware beforehand that its course of conduct is likely to result in a breach of licence condition, it behooves the company to take all available steps to avoid the offence altogether, or at least to reduce its seriousness.  The defendant could have done so in this case either by suspending operations for the balance of the year once it became aware that it had reached its materials handling limit, or at least by reducing its production and sale of material.

There is one additional aspect of Justice Craig's judgement in this case that is worthy of mention: The defendant in this prosecution had a record of two prior convictions for environmental offences: one of course for the previous breach of the materials handling limit, and another for a water pollution offence at the same quarry. Justice Craig stated in his judgement that he did not consider these previous convictions to be "aggravating circumstances". However, it appears that this conclusion is in conflict with the Crimes (Sentencing Procedure) Act, as section 21A(2)(d) expressly provides that a record of prior convictions is to be considered as an "aggravating factor".

It is our opinion that a future defendant with a string of previous convictions for environmental offences (particularly of offences against an identical licence condition, as in this case) would be at significant risk of having those earlier convictions "weighed in the balance" when the Court calculates a penalty. At the least, a lengthy record of previous environmental convictions would, in our view, work against a finding that a defendant is of "good corporate character" and would prevent a penalty from being mitigated on that basis.

Justice Craig's judgement in this prosecution can be found at the following link:

http://www.caselaw.nsw.gov.au/decision/54f3b447e4b007ec2d9fb3a7

Court Rejects Claim of "Honest and Reasonable Mistake of Fact" - Decision Reinforces That Contractors Must Make Independent Enquiries to Confirm That Work Complies With Approvals

The Land and Environment Court (per Justice Biscoe) has confirmed a conviction and fine imposed in the Parramatta Local Court against a contractor who felled 12 trees without required development consent in a rural area in the local government area administered by Hawkesbury City Council.  The judgement of the LEC, in the case of Ford v Hawkesbury City Council, (2015) NSWLEC 19 (16 February 2015) upheld the Local Court's orders which required the contractor to pay fines of $8,000 as well as the Council's legal costs, which were said to be on the order of $20,000.  Justice Biscoe's decision can be found at  the following link:

http://www.caselaw.nsw.gov.au/decision/54e280f4e4b024df3936b881

The circumstances of the case were that the contractor who was the subject of the prosecution (Ford) had been engaged by a property owner to carry out works on his land.  The Council had issued a development approval to the landowner which had given approval to the clearing of native vegetation, the construction of a dam, and the use of the land for the purposes of a "market garden". The development consent contained a condition which required that the work on the land be conducted in accordance with a "Vegetation Management Plan". This plan in turn specified that an area of the property that was designated a s a "conservation area" (containing trees and vegetation characteristic of Cumberland Plain Woodlands) not be disturbed.  

It was within this conservation area that the defendant Ford was observed by an officer of the Council to be felling trees with a bulldozer.

The defence to the prosecution that was put forward by the contractor before the Local Court was that he had carried out the clearing of the land as a result of "honest and reasonable mistake of fact". Where proven, evidence of such a mistake of fact can be a full defence to a prosecution for a strict liability offence, such as the offence of carrying out development without required development approval. 

In this prosecution, the defendant contractor asserted that a finding of honest and reasonable mistake of fact could be made based on the following factors: a) that a development consent had been granted in respect of the land; b) that the owner of the land had directed the contractor to carry out the removal of trees both within and outside the areas of the property where such work had been authorised by the development consent; c) the landowner had told the contractor that a development consent had been granted; and d) the landowner and his brother had been present on the property when the tree clearing work was being done; e) the owner had given the contractor a copy of a structural engineering plan relating to the works (but not a copy of the underlying development consent itself). 

In the event, neither the magistrate who presided over the prosecution in the Local Court, or Justice Biscoe on appeal, was persuaded that the contractor's mistaken assumption that a consent had been given authorising the tree felling was "reasonable".  The contractor had conceded while under cross-examination in the Local Court proceeding that he had been carrying out similar works on land for 30 years, and that he was aware from that experience that the types of work that he was directed to do by the landowner typically required development consent.  On that evidence, the magistrate and Justice Biscoe both concluded that is was not reasonable for the contractor to fail to make independent enquiries of the Council as to whether development consent had indeed been granted authorising the felling of trees within the conservation area.

Consequently, even though at the time that he carried out the work the contractor held a "subjective belief" that he was not doing anything unlawful, both the magistrate at the Local Court level and Justice Biscoe found that his failure to make his own independent investigation was not reasonable. Therefore, the contractor's claim that he believed that there was a consent in place allowing the trees to be removed was found not to be a valid defence to the prosecution.  

The clear moral of the decision in this case is that all persons who contemplate carrying out works that require development consent must be scrupulous to ensure that a consent for the works has actually been granted.  It is not enough for a contractor - whether engaged to perform land clearing or other work (such as building work) - to take the property owner's "word for it" that a consent covering the works has been obtained. The contractor must take steps of its own - including checking with the relevant council - to be sure that the relevant consent does exist. 

As the result here illustrates, the failure to make independent enquiries can result in significant adverse consequences, including costly fines, costs orders, and the reputational damage associated with having a criminal conviction recorded. 

Indeed, in the circumstances of this particular case, where the clearing was done in an ecologically sensitive area that has been designated as "critically endangered" under the NSW Threatened Species Conservation Act, it could be fairly said that this contractor was in some sense fortunate that the fine and costs were "only" about $28,000 in total. The sanction could easily have been more severe, and there can surely be no assurance that in a future prosecution involving similar facts it would not be.