Land and Environment Court of New South Wales CITATION : Silkcan Pty Limited v. Woollahra Municipal Council [1998] NSWLEC 137 APPLICANT Silkcan Pty Ltd PARTIES : RESPONDENT Woollahra Municipal Council FILE NUMBER(S) : 10243; 20062 of 1996 CORAM: Pearlman J KEY ISSUES: :- LEGISLATION CITED: Environmental Planning and Assessment Act 1979 Local Government Act 1993. Young v Jackman (1986) 7 NSWLR 97; Woollahra Municipal Council v Shahani (1990) 69 LGRA 435; CASES CITED: Anor v Mushroom Composters Pty Ltd (31 May 1995 unreported); Australian Securities Commission v Macleod & Ors (Federal Court of Australia, 23 November 1994, unreported); Hadkinson, bKP Cable Investments Pty Ltd v Meltglow Pty Ltd and Ors (1995) 56 FCR 189 at p 206. DATES OF HEARING: 04/06/98 DATE OF JUDGMENT: 06/16/1998 APPLICANT Mr J B Simpkins, Barrister Ms L Byrne, Barrister Clayton Utz LEGAL REPRESENTATIVES: RESPONDENT Mr W P O'Rourke, Solicitor Deacons Graham & James JUDGMENT: The parties in these proceedings have sought the determination of a question of law in advance of all other questions in the proceedings. That question is as follows: "Whether, assuming:- (a) the facts as set out in paragraphs 2, 3, 4, 5, 6, 8, 10, 13 and 14 of the affidavit of Joseph Ernesto Cagliata sworn 4 June 1998; (b) the correctness of the opinion set out in paragraph 7 of the same affidavit; the Court should refuse to hear the applications made in proceedings numbered 10243/96 and 20062/96." That question arises in the following circumstances. The applicant seeks, in the proceedings referred to, first, a modification of development consent 96/1175 under s 102 of the Environmental Planning and Assessment Act 1979, and, secondly, a modification of building approval 208/96 under s 106 of the Local Government Act 1993. I shall refer to both proceedings as "the modification applications". When the modification applications came on for hearing, Mr O'Rourke, appearing for the council, announced to the Court the council's claim that, whilst the council had no merit concerns with the proposed modifications, the Court was bound not to hear the modification applications because the applicant was in contempt of orders made by the Court in proceedings 40139/95. Mr O'Rourke sought to read the affidavit of Mr J E Cagliata, a building surveyor employed by the council, as to the circumstances which are said by the council to constitute the applicant's contempt. Mr Simpkins, appearing for the applicant, told the Court that, although there had been some correspondence between the parties about the allegation of contempt, the applicant was not in a position at that stage to meet that allegation and that no formal proceedings for contempt of court had been instituted by the council against the applicant. After some debate, the parties framed the preliminary question for determination, which would proceed on the assumption that the matters specified in certain paragraphs of Mr Cagliata's affidavit were correct. Background The premises the subject of the modification applications are situated at No 28 Victoria Road, Bellevue Hill ("the property"). In July 1996, the Court heard and determined together four proceedings concerning the property. The principal issue in those proceedings concerned works which had been carried out on the property but which were not the subject of any approval ("the unauthorised works"). Those proceedings and their respective outcomes were as follows: * 10243/96 An appeal by the applicant against the deemed refusal of the council to grant consent to development application No 96/1175. The Court upheld the appeal and granted development consent subject to conditions; * 20062/96 An appeal by the applicant against the deemed refusal of the council to grant approval to building application No 208/96. The Court upheld the appeal and granted building approval subject to conditions; * 20031/96 An application for a building certificate which the Court dismissed; * 40139/95 An application by the council and by the second respondent, Mr Bernard Raiz, for declarations and injunctions seeking rectification and removal of the unauthorised works. The Court made declarations, granted injunctions and made consequential orders. In these current proceedings, the council alleges a breach by the applicant of the third order made in proceedings 40139/95, which was in the following terms: "3 Silkcan, by itself, its servants, agents or contractors is restrained from carrying out any work at the property otherwise than in accordance with the development consent and the permit to build or other development consent or building approval obtained prior to the carrying out of such work in respect of the property. For the purposes of this order, "other development consent" includes a modification of development consent pursuant to s 102 of the Environmental Planning and Assessment Act 1979, and "other building approval" includes an amendment of building approval pursuant to s 106 of the Local Government Act 1993." The rule The rule which gives rise to the preliminary question was stated by Hutley JA in Permewan Wright Consolidated Pty Ltd v Attorney-General ex rel Franklins' Stores Pty Ltd (1994) 35 NSWLR 365 at p 369 as being a "fundamental rule" in the following terms: "... that a party guilty of contempt should not be heard in respect of an application made on his part to a court ..." At least for the purpose of the determination of the preliminary question, the parties were in agreement that the rule may be applied in any case of a person who has disobeyed a court order, and is not restricted to cases where a person has been found guilty of contempt after a formal hearing of contempt proceedings. The issue in respect of which the parties are in disagreement arises in connection with whether the rule is an absolute bar subject only to limited exceptions, or whether it is a rule which is subject to a general discretion of the court, or whether, in any event, it does not apply in proceedings of the nature of the modification applications. The council's case is that the rule applies, subject to limited exceptions which do not arise in the circumstances of this case. The applicant's case is that the application of the rule is subject to a general judicial discretion, and that, in the circumstances of this case, the Court would exercise that discretion in favour of the applicant and proceed to hear the modification applications. In the alternative, the applicant claims that the rule does not apply to the current proceedings, because they involve a separate cause of action to class 4 proceedings. Absolute bar or judicial discretion? The starting point for a consideration of the rule is its formulation in Hadkinson v Hadkinson (1952) P 285. That was a custody case, which concerned an appeal by the mother of a child against an order that she return the child to the jurisdiction of the court, she having removed the child from that jurisdiction in breach of the court's direction that he should not be so removed without the court's sanction. In his judgment at p 288-289, Romer LJ (with whom Somervell LJ agreed) stated that disobedience by a person of an order of the court carries with it the consequence that "... no application to the court by such a person will be entertained until he has purged himself of his contempt". His Lordship then went on, at p 289, to note that no attempt had been made by the mother to challenge the rule itself, but instead her counsel had sought only to bring her case "... within one of the exceptions which the rule is undoubtedly subject". His Lordship then listed the exceptions, which are limited in scope (and none of which arise in the circumstances of this present case). In the same case, Denning LJ, at p 298, provided a formulation of the rule which would give the court a discretion in its application, in the following passage: "... I am of opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the order which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed." I return now to Permewan Wright. That was a decision of the Court of Appeal given in 1978 (although not reported until 1994). In that case, the applicant applied for the dissolution or stay of an injunction which restrained it from using its land in a certain manner, upon the basis that the interim development order which the court had found to prohibit the relevant use of the land had been subsequently altered in a way which made that use permissible. The dissolution or stay was opposed by the respondent on the ground that the applicant, having used its land in contravention of the injunction, was in contempt of the order of the court and should therefore be denied the relief which it sought. Without reference to any authority, Reynolds JA at p 367 acknowledged that the court "... may properly withhold relief to which a litigant is otherwise entitled in cases where that litigant is in contempt of the court's process ..." but proceeded to hold, on discretionary grounds, that that rule "... would not be a matter which should preclude the making of the particular order sought here". Hutley JA, after stating the rule, and referring to Hadkinson, said at p 369: "I am of the opinion that the rule as stated by Romer LJ and concurred in by Somervell LJ is the correct one and it should be enforced in this Court as the fundamental rule to be observed in matters of this kind." His Honour acknowledged, at p 369, that there are exceptions to the rule, and, at p 370, he agreed with the contention that changed circumstances would as a general proposition be an exception to the rule. Furthermore, again at p 370, his Honour thought it necessary to make some remarks about the nature of the contempt, "... assuming the seriousness of the contempt may be regarded as a factor in a court deciding whether it should uphold the rule ...". The remaining judgment of the Court of Appeal was delivered by Mahoney JA. As to the issue of whether the rule should be applied, his Honour at p 374 said: "... The Court has been referred to authorities which establish the attitude which should be adopted to an application made by a party who is in contempt: see Hadkinson v Hadkinson [1952] P 285 at 288-289. The relevant principle is subject to qualifications or exceptions." Since the decision in Permewan Wright there has been a divergence of opinion as to its application as binding authority. On the one hand, there is the case of Young v Jackman (1986) 7 NSWLR 97, in which Young J in the Equity Division of the Supreme Court held that Permewan Wright was binding authority upon him for the proposition that "... there is no exception to permit a judge to hear proceedings in his discretion, notwithstanding that the applicant is in contempt" (at 102). On the other hand, there is the case of Woollahra Municipal Council v Shahani (1990) 69 LGRA 435, a decision of Bignold J in this Court. His Honour held at p 439 that "... Permewan Wright does not deny the existence of judicial discretion whether or not the Court will entertain an application made by a person who is in contempt of Court in those proceedings". For completeness, I should note that I followed Bignold J in holding that the rule admitted the exercise of discretion in The Council of the City of Hawkesbury and Anor v Mushroom Composters Pty Ltd (31 May 1995 unreported). Like Bignold J (see Shahani at p 439), I have found it difficult to discern the decisive principle in Permewan Wright, but I have come to the conclusion that it does not preclude the exercise of judicial discretion in the application of the rule. Reynolds JA recognised the possibility of the exercise of judicial discretion, but did so without reference to authority. In deciding that the contempt should not preclude the making of the order which the contemnor sought, his Honour at p 367, took into account that "[T]he contempt ... is not of a serious order, and the order now sought is designed to avoid an undesirable conflict between the present state of the law and a subsisting order of this Court". Hutley JA expressly adopted the formulation of the rule by Romer LJ, but, as I have said, his Honour recognised changed circumstances as a possible exception to the rule, and assumed, but did not decide, that the nature of the contempt was a factor to be taken into account in the application of the rule. Hutley JA was, however, not prepared to make the order sought until the contempt had been purged by means of an apology to the court. In the judgment of Mahoney JA, the reference to specific pages in Hadkinson is a reference to pages in the judgment of Romer LJ, but that falls far short of being an express adoption of Romer LJ's formulation of the rule. On the contrary, the opening words of the passage from the judgment of Mahoney JA which I have quoted indicate that his Honour was considering submissions by counsel as to the attitude that the court in that case should adopt, and that counsel was asserting that the rule was as stated by Romer LJ in those pages. In any event, his Honour went on to decide that the rule did not restrict the court from making the order that the contemnor sought. His Honour took into account that the spirit and intendment of the order which was breached was that it should not bind the defendant's conduct after the interim development order upon which it was based had ceased to be operative. At p 374, his Honour said: "I do not think that the (rule) should be seen as restricting what the court can or should do to make clear that its order, after the new interim development order came into force, did not continue to restrict what the defendant might do thereafter on the land." The further reflection which has now been afforded me (since my decision in Mushroom Composters) has confirmed the view that I then held. I think that all three judges of appeal in Permewan Wright recognised that the class of exceptions to the rule are not closed and that other exceptions might be "... engrafted on the rule"... (to adopt the words of Hutley JA at p 370). Each judge looked at the circumstances of the case to determine whether or not the rule should operate to prevent an order being made in the applicant's favour. In the light of this analysis of the judgments, I think that the decision in Permewan Wright does not support, as binding principle, the application of the rule as an absolute bar subject to limited exceptions. With respect, I think that Young J's view of that decision in Young v Jackman is too narrow. More recent authority favours the judicial discretion approach. In X Ltd and Anor v Morgan-Grampian (Publishers) Ltd and Ors (1990) 2 All ER 1, the House of Lords expressly favoured the approach of Denning LJ in Hadkinson. In that case, Lord Bridge said, at p 11: "I cannot help thinking that the more flexible treatment of the jurisdiction as one of discretion to be exercised in accordance with the principle stated by Denning LJ better accords with contemporary judicial attitudes to the importance of ensuring procedural justice than confining its exercise within the limits of a strict rule subject to exceptions." Lord Oliver, at p 14, expressly agreed, and said that he would not be in favour of laying down any rules for the exercise of discretion. In Australian Securities Commission v Macleod & Ors (Federal Court of Australia, 23 November 1994, unreported), Drummond J favoured the approach of Denning LJ in Hadkinson, but expressly refrained from a final decision on the matter. In KP Cable Investments Pty Ltd v Meltglow Pty Ltd and Ors (1995) 56 FCR 189 at p 206, Beazley J (as she then was) expressed the opinion that the court has a discretion as to whether to hear a party in contempt. It follows from this analysis that the Court should have regard to the facts and circumstances of the case in order to determine whether or not, in the exercise of its discretion, it should hear the modification applications. Accordingly, I turn to consider the facts and circumstances in this case. The facts and circumstances The Court is asked to assume, for the purpose of determining the preliminary question, that the facts and opinion set out in Mr Cagliata's affidavit are correct. I wish to make it quite clear (because the earlier proceedings had some notoriety) that I do not make any formal finding of contempt of the Court's order on the part of the applicant. For that reason, I prefer to refer to Mr Cagliata's observations as "discrepancies" rather than "breaches". This is not simply a pedantic point. The applicant has not had an opportunity to rebut the allegation of contempt, and the allegation may or may not be sustained against it if it had that opportunity. I should also add that the modification applications are not concerned with those structures on the property in respect of which Mr Cagliata has observed discrepancies. The s 102 application seeks a modification of condition 2 of the development consent by providing, in short, that the fence on the northern frontage of the property to Victoria Road is to be constructed in fibre cement lined steel framing instead of rendered brick. The s 106 application seeks a similar modification as well as two other modifications. The first of those other modifications involves condition 14 which deals with balustrades/handrails, and seeks deletion of the requirement that they be designed so as not to be capable of being climbed. The second seeks the deletion of condition 1 which provides for an internal wheelchair ramp. I turn now to Mr Cagliata's evidence. He visited the property on three occasions, and compared structures built on the property with the structures delineated on the approved plans (which were exs "J" and "K" in the previous proceedings). His observations were described in considerable detail, but it is sufficient for present purposes if I summarise them as follows: * all the discrepancies relate to the courtyard and southern passageway area; * timber cross beams have been erected across the pergola in the courtyard area; * a planter box has been erected to the southern side of the southern passageway; * the timber cross beams linking the courtyard pergola columns have increased in number from 3 to 6; * there are approximately 14 differences (calculated in millimetres) between measurements noted on or scaled off the approved plans and measurements of structures built on the property. The dimensions of some of the structures exceed the approved dimensions, and some of them are less than the approved dimensions. Taking into account the discrepancies observed by Mr Cagliata, I have concluded that I should exercise my discretion in the applicant's favour, and allow the modification applications to proceed to hearing. My reasons for so concluding are as follows. First, although there may be good reasons why the discrepancies, or at least some of them, should be rectified (such as the security of Mr Raiz' premises next door, which was a major element in the previous proceedings), they are minimal. Compared to the whole extent of the works taking place upon the property, they are minor matters, and the discrepancies which relate to measurements are noted in millimetres not metres. Secondly, the discrepancies are confined to the courtyard and the southern passageway to that courtyard. The approved plans disclose structural works upon the whole of the property, and I can assume, at least on the evidence presently before me, that no discrepancies have been revealed elsewhere. Thirdly, the contempt is not, on the evidence before me, of a gross or flagrant kind. What has happened is that various elements of the structures in a confined area of the property have not been built precisely in accordance with the approved plans and further plans containing more detail have not been lodged. The discrepancies are minor and technical only, and I have no evidence before me of the cavalier attitude on the part of the applicant which I discerned in the previous proceedings. For those reasons, the Court should exercise its discretion to hear the modification applications. Whether the rule applies to these proceedings The conclusion that I have reached makes it unnecessary for me to deal with the question of whether, in any event, the rule does not apply to the modification applications. It is appropriate, however, that I express an opinion on that question, because it was raised and argued. That question derives from the fact that the modification applications arise in the class 1 and class 2 proceedings, but the alleged contempt is of an order made by the Court in the class 4 proceedings. As I have earlier said, I heard and determined these proceedings (and another class 2 proceeding) together. As Denning LJ explained in Hadkinson at p 295, the rule arose in Chancery out of an ordinance of Lord Bacon of 1618 which laid down that "... they that are in contempt are not to be heard neither in that suit, nor in any other, except the court of special grace suspend the contempt". It is to be noted that, in formulating the rule, Romer LJ at p 288-289 stated that "... no application ... will be entertained ...". However, the weight of authority since Hadkinson establishes, in my opinion, that the rule is confined to the same proceedings in which the contempt occurs. It was so held in 1964 in Bettinson v Bettinson (1965 1 Ch 465). In Short v Short (1973) 22 FLR 320, the Full Court of South Australia said, at p 330, (but without citing authority), that the ordinance of Lord Bacon had been relaxed, and "[I]t has been restricted to the same proceedings in which the contempt occurs". In Australian Securities Commission v Macleod, Drummond J at p 4 expressed the same view, citing Short v Short as authority for the proposition. In Woollahra v Shahani, Bignold J at p 441 came to the tentative conclusion, but did not finally decide, that the rule has been confined to proceedings in the same cause, and his Honour in so concluding referred to Bettinson v Bettinson. Bignold J had been concerned in Woollahra v Shahani with contempt of the Court's orders in class 4 proceedings, but the applicant had commenced class 1 proceedings, and a question was raised as to whether the rule would apply in the latter proceedings. His Honour expressed the tentative conclusion I have referred to, stating, at p 441, that the pending class 1 proceedings were "... properly to be regarded as a separate cause from the proceedings in which the respondent has been held to be in contempt of court, even though those separate proceedings involve the same parties and the same premises". In this case, I would regard the class 1 and class 2 proceedings each as a separate cause from the class 4 proceedings, despite the fact that all three proceedings involve the same parties and the same premises. In my opinion, the fact that all three were heard and determined together does not disturb a conclusion that the class 1 and class 2 proceedings are a separate cause. Accordingly, my view is that the rule does not apply to the modification applications. Conclusion For the foregoing reasons, I determine the preliminary question by holding that the Court should not refuse to hear the modification applications. The modification applications (made in proceedings nos 10243/96 and 20062/96 respectively) should proceed to hearing. I grant leave to the parties to approach the Registrar to obtain a date for that hearing. 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.