Land and Environment Court of New South Wales CITATION: Sydney City Council -v- Zizza & Ors [1999] NSWLEC 77 PARTIES APPLICANT: Sydney City Council RESPONDENT: Zizza & Ors NUMBER: 40128 of 1998 CORAM: Lloyd J KEY ISSUES: :- Costs -breach of Act committed by lessee - whether lessor liable for costs LEGISLATION CITED: Costs -breach of Act committed by lessee - whether lessor liable for costs DATES OF HEARING: 03/25/1999 DATE OF JUDGMENT DELIVERY: 04/08/1999 APPLICANT: R McCulloch (s) Solicitors: Pike Pike & Fenwick LEGAL REPRESENTATIVES: RESPONDENT: J J Webster Solicitors: Russell C Byrnes JUDGMENT: IN THE LAND AND Matter No: 40128 of 1998 ENVIRONMENT COURT Coram: Lloyd J OF NEW SOUTH WALES Decision date: 08/04/99 SYDNEY CITY COUNCIL Applicant v ZIZZA & ORS Respondent JUDGMENT HIS HONOUR: 1. The first respondent, Mr A S Zizza, is the owner of 199 and 201 Bourke Street, Darlinghurst within the City of Sydney. The first respondent consents to orders restraining him from using or permitting the use of those premises for a commercial use without obtaining development consent therefor beforehand in accordance with the provisions of the Environmental Planning & Assessment Act 1979 and restraining him from using those premises for the purpose of prostitution without obtaining such consent beforehand. The first respondent had earlier, on 28 October 1998, consented to interlocutory injunctions against him in similar terms. On that occasion interlocutory injunctions were also obtained against the third respondent, Diane Peters, who was the lessee of the premises. 2. The applicant now seeks an order for costs against the first respondent, the third respondent having now left the premises and whose whereabouts are unknown. The first respondent opposes the making of any order for costs against him. Although the first respondent consents to the orders sought against him, it is asserted on his behalf that he was not in breach of the Environmental Planning & Assessment Act , neither had he acquiesced in any such breach. 3. The relevant facts may be briefly described. On 22 December 1997 the first respondent entered into a residential tenancy agreement for the premises with the third respondent as tenant. The term of the agreement was for 52 weeks ending on 20 December 1998. By clause 8.1 of the agreement the tenant agreed not to use the premises, or to cause or permit the premises to be used, for any illegal purpose. By clause 33.2 of the agreement the tenant agreed to ensure that occupants and other persons who came into the premises with the tenant's consent complied with the conditions of the agreement. 4. On 12 January 1998 the applicant sent a letter to the first respondent advising him that the premises were being used as a brothel without development consent. The letter advised the first respondent to either cease the unauthorised use forthwith or to obtain development consent if he wished to continue with the use. 5. On 27 January 1998 the first respondent's managing agent notified the third respondent by letter that the use of the property as a brothel was in conflict with the residential tenancy agreement and should immediately cease and that if the property is continued to be used for anything other than residential purposes then the tenancy will be terminated. 6. On 17 April 1998 there was a telephone conversation between the applicant's solicitor, Miss C A Schofield, and the first respondent in which the first respondent said ( inter alia ) that he understood that the use of the premises by the tenant was lawful and in which Miss Schofield said ( inter alia ) that the applicant does not consider the use to be a home occupation and even if it was it still required consent. 7. On 30 June 1998 the applicant commenced the present proceedings, returnable on 28 July 1998. On 24 August 1998 the third respondent, with the written consent of the first respondent, lodged with the applicant a development application for a use described as "continuation of home occupation/use as safe premises with short term lettings". On 6 October 1998 the third respondent commenced proceedings in class 1 of the Court's jurisdiction, being an appeal under s 97 of the Environmental Planning & Assessment Act 1979 against the deemed refusal of the development application. 8. By a letter dated 20 October 1998 the first respondent's solicitor advised the applicant's solicitors that his client was prepared to consent to an order for interlocutory relief. On 27 October 1998 the first respondent's managing agent served a termination notice of the tenancy agreement on the third respondent, citing breaches of the terms of that agreement. On 28 October 1998 the orders for interlocutory relief to which I have referred in paragraph 1 above were made. 9. On 20 November 1998 the first respondent's solicitor advised the applicant's solicitor by letter that the first respondent agreed to the making of permanent orders against him. During November 1998 the third respondent vacated the premises in accordance with the termination notice that had been served upon her. On 3 December 1998 the proceedings in class 1 of the Court's jurisdiction which had been brought by the third respondent were dismissed for want of prosecution. 10. Mrs R McCulloch, who appears for the applicant, submits that in these circumstances there should be an order that the first respondent pay the applicant's costs. In support of her submission Mrs McCulloch relies on Botany Municipal Council v Tsolakis (Holland J, 30 November 1988, unreported), Parramatta City Council v Stonewale Pty Ltd (Hemmings J, 22 February 1991, unreported) and Holroyd City Council v Murdoch (1994) 82 LGERA 197. 11. In Botany Municipal Council v Tsolakis the Council had sought injunctions to restrain the respondents from using certain premises as a brothel. The first respondents were the owners of the premises. The second respondent was the person who was found to be using the premises for the purpose and was conducting or responsible for the operations of the business or activities occurring at the premises. Holland J granted the injunctive relief sought against both respondents. His Honour said that the first respondents would be included in the relief sought by reason of their apparent acquiescence in the continued use of the premises for the purposes of prostitution after their notice had been drawn to it by the Council and they had failed to take action to terminate the occupancy of those responsible. 12. The present case, however, is distinguishable on its facts from those which led Holland J to include the property owners in the orders made by him. Here there was no acquiescence by the first respondent in the use of the premises. On the contrary, the first respondent entered into a tenancy agreement under which the tenant agreed not to use, or cause or permit the premises to be used for any illegal purpose; his managing agent acted promptly by informing the tenant (by letter dated 27 January 1998) that the unlawful use should be terminated forthwith and if continued the tenancy would be terminated; he consented to the making of a development application by the tenant which may have resulted in the use becoming a lawful one; by his managing agent he served a termination notice on the third respondent requiring that vacant possession of the premises be given; and as a consequence vacant possession of the premises was duly given and the use ceased. I do not agree with Mrs McCulloch's submission that by consenting to the lodgment of the development application the first respondent acquiesced in the unlawful use. That was, at most, an attempt to make the use a lawful one. I do not think that Botany Municipal Council v Tsolakis assists Mrs McCulloch's argument. 13. Parramatta City Council v Stonewale Pty Ltd was an application for interlocutory orders restraining the use of premises as a brothel. In granting interlocutory relief Hemmings J thought that there was a serious question to be tried as to whether the owner and the directors of the owner had been engaged in the use of the premises or had exercised such control over the use that orders could or should be made against them on a final hearing. Hemmings J noted the extended meaning of the use of premises explained by Mahoney JA in Ryde Municipal Council v Macquarie University (1977) 1 NSWLR 304, (1977) 35 LGRA 267. In that case Mahoney JA found that land may be used by an owner even though occupied by a third party, whether a licensee or lessee. 14. The decision in the Macquarie University case upon which Hemmings J relied, was upheld by the High Court ( Ryde Municipal Council v Macquarie University (1978) 139 CLR 663; 55 LGRA 372). In a case which involved similar facts to the present case, Ashfield Municipal Council v Andrews (1986) 60 LGRA 248, Cripps J distinguished the Macquarie University case as being applicable to a rating case but not to a planning case. Cripps J said (at 251-252): It might be thought, with respect, that the facts in the instant case are so remote from those discussed in Macquarie University that even if the word 'used' has the same meaning in planning law as it has in the expression 'used or occupied' in rating law, the council can derive little assistance from the decision …… In my opinion Macquarie University has little bearing upon the issue I have to determine for the following reasons. First, because Macquarie University was a rating case. It was not a planning case. It was made plain by Gibbs ACJ, as he then was, that the court was concerned with the rating statute which imposed a primary obligation to pay rates on the owner of land and that for the purpose of exemption use of the land by a person other than an occupier is relevant. In planning law the court is necessarily concerned with the use of the land rather than with the identity of the user. Secondly, the High Court was concerned with the expression 'used or occupied'. This court is concerned with the meaning of the words 'carry out development' and the meaning of the word 'used' where appearing in the defined meaning of 'development'. Thirdly, as I have mentioned, the factual basis of that decision is remote from the present case in that the actual use of the land in the Macquarie University case was for the express purposes of the Macquarie University in that the establishment of the market was in furtherance of the functions of the university. 15. In adopting, as I do, the reasons of Cripps J in the passage which I have cited above, I am driven to the conclusion that reliance on the Macquarie University case is misplaced. Moreover, in Parramatta City Council v Stonewale Pty Ltd there was evidence that the owner of the premises in question, by its directors, was actively engaged in promoting the use of the premises for the unlawful purpose. As I have noted (at paragraph 12 above) that is not the case here. Accordingly I do not think that Parramatta City Council v Stonewale Pty Ltd is authority for Mrs McCulloch's submission. 16. Holroyd City Council v Murdoch was an application for a mandatory injunction to compel the removal of unauthorised fill and waste materials from a vacant parcel of land. The respondent was an absentee owner living in Queensland. The land was adjacent to a highway, was unfenced and trespassers had dumped fill and waste material on it. Stein J found that the respondent had tacitly approved the dumping of waste on his land, that he was aware of what was happening on a regular and continuing basis but deliberately turned a blind eye to it and refrained from doing anything about it. He took no steps to prevent its continuance. 17. After referring to Parramatta City Council v Stonewale Pty Ltd , to the Macquarie University case and to Botany City Council v Tsolakis (but not to Ashfield Municipal Council v Andrews ), Stein J held that an owner of land may be liable under planning law to be restrained from leaving his land in such a condition so as to be an open invitation to illegal dumpers. Accordingly Stein J held that the applicant was entitled to the relief which it sought. 18. Again I do not think that this case assists Mrs McCulloch's submission. It was a case which, it seems, was determined on its own somewhat unique facts. I have not been referred to anything in the present case which suggests that the respondent approved the unlawful use of the premises. Such evidence which exists on the question is to the contrary. I have referred to some of it in paragraph 12 above. It could thus not be said that the first respondent in the present case turned a blind eye to what was happening or that he refrained from doing anything about it. Importantly, in Holroyd Municipal Council v Murdoch there was no lease of the land as is the case here; the owner retained full possession and control of it. Finally, it seems that Stein J was not referred to the judgment of Cripps J in Ashfield Municipal Council v Andrews , since it is not referred to by him and is an authority which is contrary to those which he does cite. 19. The facts in Ashfield Municipal Council v Andrews are analogous to those in the present case. The respondents were the owners of premises which they had leased to a tenant. The lease stipulated that the permissible use was to be an office and a residence and the premises were not to be used except for the stipulated purpose. The Council brought proceedings to restrain the owners from using or permitting the premises to be used as a brothel. After citing the passage which I have set out in paragraph 14 above, Cripps J said (at 252): But if I had to characterise the purpose of the use of the land by Mr and Mrs Andrews upon an assumption that the reasoning in Macquarie University ought to be applied to the present facts I would say they were using the land for the purposes of investment. 20. Cripps J further said (at 252-253): But whether Mr and Mrs Andrews were using the land for the purpose of investment or not, they were not using the land for the purpose of a brothel. They were not using it for any unauthorised planning purpose. Even if it be assumed that Sandra Gordon had obtained development consent for the stipulated use (which she had not) Mr and Mrs Andrews would not have been relevantly using the premises for an office and residence. But even if they had been, they would not have been carrying out development within the meaning of s 76. It may be that the mere entering into of a lease does not necessarily compel a conclusion that the lessor was not 'using' land for a planning purpose. … But, as I have said, I need not consider the matter further because on any view Mr and Mrs Andrews were not in breach of the Environmental Planning and Assessment Act. In my opinion, they were not using the land for an unlawful purpose and they were not persons carrying out development within the meaning of s 76. 21. For the same reasons which are described by Cripps J in Ashfield Municipal Council v Andrews I am of the view that it cannot be said that in the present case the first respondent was carrying out development under the Environmental Planning & Assessment Act . Neither was the first respondent otherwise in breach of the Environmental Planning & Assessment Act . As I have noted, the facts in Ashfield Municipal Council v Andrews correspond closely with the facts of the present case. 22. It follows that there should be no order that the first respondent pay the applicant's costs. The first respondent does not seek an order that the applicant pay his costs. 23. I make the following orders Nos 1 to 4 by consent. Orders 5 and 6 are not consented to but are made for the reasons which I have described above. 1. The first respondent, his lessees, agents, employees, invitees and occupiers be restrained from using or permitting to be used the premises known as 201 Bourke Street, Darlinghurst within the City of South Sydney for a commercial use without obtaining development consent therefor beforehand in accordance with the provisions of the Environmental Planning and Assessment Act 1979. 2. The first respondent, his lessees, agents, employees, invitees and occupiers be restrained from using or permitting to be used the premises known as 201 Bourke Street, Darlinghurst within the City of South Sydney for the purpose of prostitution (other than as a "home business" as defined by South Sydney Local Environmental Plan 1998) without obtaining consent therefor beforehand in accordance with the provisions of the Environmental Planning & Assessment Act 1979. 3. The first respondent, his lessees, agents, employees, invitees and occupiers be restrained from using or permitting to be used the premises known as 199 Bourke Street, Darlinghurst within the City of South Sydney for a commercial use without obtaining development consent therefor beforehand in accordance with the provisions of the Environmental Planning & Assessment Act 1979. 4. The first respondent, his lessees, agents, employees, invitees and occupiers be restrained from using or permitting to be used the premises known as 199 Bourke Street, Darlinghurst within the City of South Sydney for the purpose of prostitution (other than as a "home business" as defined by South Sydney Local Environmental Plan 1998) without obtaining consent therefor beforehand in accordance with the provisions of the Environmental Planning & Assessment Act 1979. 5. Order that the applicant pay the first respondent's costs of the hearing before me. 6. Otherwise no order as to costs. 7. The exhibits may be returned. I certify that this and the preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd. Associate Dated: 08/04/99 ` DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.