Owners' Corporation Avoids Penalty for Contempt of Court

It is a very rare event when a defendant to an enforcement action in the Land and Environment Court is lucky enough to emerge from the proceedings without having to pay a fine. That is especially so when the charge brought by the prosecutor alleges that a contempt of court has occurred, and the contempt has arisen due to an admitted failure by the defendant to comply with a court order. 

Therefore, when the Court decides not to impose a monetary penalty, an understanding of the circumstances can provide an invaluable learning opportunity: one person's good fortune may not be repeated in the future, particularly if the lessons of past cases are not studied carefully and usefully applied.

Excellent guidance can be taken from Justice Pepper's recent judgement in Council of the City of Sydney v Owners Corporation - Strata Plan 18945 (2011) NSWLEC 79, a case where the council sought to enforce court orders that required compliance with a fire safety order that had been issued under
the Environmental Planning and Assessment Act. The court orders had been made with the consent of the Owner's Corporation, and required them to do 3 things in 3 months time: install a sprinkler system and building occupant warning system in the basement car park of their apartment building; remove security screens from the entry doors to the apartments; and complete a fire safety audit of the building and provide the council with a new fire safety certificate.

Although the consent orders were made in August 2010 and allowed until November 2010 for compliance, the Owners Corporation did not approve a contract for the installation of the sprinkler system until late October - leaving less than a month before the final due date. A series of delays then ensued, which prompted the council to file the contempt proceedings in January 2010. The installation of the sprinkler system was not completed until May 2011, just a few days before the hearing on the contempt action was heard.

Justice Pepper determined that it was sufficient punishment to convict the Owners Corporation of contempt, and to require it to pay the council's professional costs, but did not find it appropriate to impose a fine.  Her Honour gave the following reasons for her decision:

* The principal cause the breach of the court orders was unreasonable delay by the contractors that had been hired by the Owners to carry out the installation of the sprinklers.

* The contempt on the part of the Owners was no the product of an intention to defy the Court's authority; while the Owners had a "genuine desire to achieve compliance" they were unable to do so because of their own initial delay in hiring the contractors, and the subsequent delays that were apparently wholly the fault of the contractors.

* By the time that the proceedings were heard by the Court, the installation of the sprinklers had been completed and the Owners had thus purged themselves of contempt.

* The Owners provided an affidavit to the Court in which they apologised for their failure to comply with the orders and expressed contrition.

A number of important morals can be drawn from the outcome of this case. 

First of all, a party that enters into consent orders before the Land and Environment Court must be aware that very serious consequences will attach to any non-compliance. It is therefore critical that the party that accepts obligations under consent orders reviews the practical considerations associated with compliance and ensures that the orders allow sufficient time to carry out any required work. 

Secondly, any contractors that are needed must be engaged at the earliest possible date, informed of the compliance deadlines that are fixed by the court orders and monitored closely to enure that they are making satisfactory progrgress.

Thirdly, the regulator overseeing compliance with the court orders should be informed of any delays, the reasons that they have occurred, the actions that will be taken to cure any non-compliance, and the anticipated date when completion of the required work will occur. Full, frank and open dialogue and cooperation with the regulator may be a successful way to avoid adverse enforcement action if unforeseen circumstances prevent strict compliance with the terms of a court order.