Blacktown City Council v The Penatrators Pty Limited (No 4) [2015] NSWLEC 8

Land and Environment Court New South Wales

Medium Neutral Citation: Blacktown City Council v The Penatrators Pty Limited (No 4) [2015] NSWLEC 8 Hearing dates: 3 February 2015 Date of orders: 03 February 2015 Decision date: 03 February 2015 Jurisdiction: Class 4 Before: Biscoe J Decision: In each proceeding, each respondent is guilty of contempt of court as charged Catchwords: CONTEMPT – failing to comply with Court orders in two proceedings to remove waste materials stored on two properties and transport to a place lawfully authorised to receive that material within the time specified in the orders or at all. Cases Cited: Blacktown City Council v The Penatrators Pty Ltd (No 3) [2014] NSWLEC 4 Liverpool City Council v Palerma Pty Ltd and Parilo [2008] NSWLEC 311 Category: Principal judgment Parties: Blacktown City Council (Applicant) The Penatrators Pty Limited (First Respondent) Michael Galainy (Second Respondent) Representation: COUNSEL: A M Pickles (Applicant) Michael Galainy in person (Second Respondent and for First Respondent)

SOLICITORS: Lindsay Taylor (Applicant) N/A (First and second Respondents) File Number(s): 40699/13, 40700/13

EX TEMPORE Judgment 1. These are two contempt of court motions brought by Blacktown City Council against The Penatrators Pty Ltd and Mr Michael Galainy. The motions are brought in, and following judgment in, two Class 4 proceedings against them seeking to restrain the company from depositing waste building materials as well as orders requiring the removal of waste materials placed on two parcels of land in Council's local government area at Hamilton Street, Vineyard and 74 Melbourne Road, Riverstone. 2. Almost a year ago to the day, on 4 February 2014, I made a number of orders in both proceedings against the company only: Blacktown City Council v The Penatrators Pty Ltd (No 3) [2014] NSWLEC 4 at [34]. Council, for reasons explained at [31]–[32], sought orders only against the company even though Mr Galainy was implicated in much of the unlawful work of bringing the waste onto both properties in his capacity as the director of the company. In the Hamilton Street proceeding, order 3 was in the following terms: Order that the first respondent remove from the Property all waste materials stored on the Property and transport to a place lawfully authorised to receive that material within 60 days of the date of this order. 1. In the Melbourne Street proceeding, order 3 was in the same terms except that the time for compliance was 30 days: Order that the first respondent remove from the Property all waste materials stored on the Property and transport to a place lawfully authorised to receive that material within 30 days of the date of this order. 1. Service of the orders on the respondents was effected in accordance with orders for substituted service, and there was also personal service of the orders on Mr Galainy. 2. Council's solicitors wrote separately to each respondent on 29 May 2014. The letter to the company stated that there had been failure to comply with order 3 in both proceedings and advised that Council gave seven days from the date of the letter to commence the clean-up of both properties as required by the orders of the Court or to make satisfactory arrangements with Council for the same or otherwise to show cause why contempt proceedings ought not to be brought. Otherwise it was expected that instructions would be received to commence proceedings charging contempt. In Council's letter to Mr Galainy it was said that a person who has frustrated or prevented the company from complying with the Court's orders may be held in contempt of those orders; that as he was the sole director and secretary of the company he was invited to show cause why any such contempt proceedings ought not also be brought against him personally; that if he were to be found guilty of contempt the Court may impose a fine or sentence of imprisonment; and that Council provided him seven days from the date of the letter to respond or otherwise to make satisfactory arrangement with Council. There was no response to either letter. 3. Order 3 relating to each property has not been complied with except for the removal of a small stockpile of construction material, waste and the like from the centre of the Melbourne Road land. 4. By notices of motion filed in August 2014 these contempt proceedings were commenced. In each proceeding the charge against the company is that it failed to comply with order 3. In each proceeding the charge against Mr Galainy is that in breach of the orders made by the Court he, being aware of the orders, knowingly caused, aided or abetted the contempt by the company in failing to comply with order 3. 5. The motions for contempt were before the Court for pre-trial directions on several occasions. On one early occasion, 3 October 2014, Mr Galainy appeared on behalf of himself and the company and the motions were stood over for directions to 17 October 2014 to give him the opportunity to seek legal advice and to indicate a plea. However, there was no appearance by or for the respondents on 17 October 2014 or at any other directions hearing, and they have not pleaded to the contempt charges. 6. On 17 October 2014 directions were made for the filing and service of evidence by both parties, today's hearing date was fixed, and Council was directed to notify the respondents of the timetable and hearing date – which Council duly did. No evidence was filed or served by the respondents. 7. At the hearing today Mr Galainy appeared. He did not give evidence and indicated that he did not wish to put any evidence before the Court. He made some assertions from the bar table that he had made an attempt in April 2014 to clean up one of the properties but equipment was stolen, and that he had experienced opposition from the owner of the Hamilton Street land to cleaning up that land but hoped to be able to sort that out with the owner in the future. 8. Mr Galainy told me that he owned the company. Other evidence establishes that at all material times he has been the sole director and shareholder of the company and that it has a significant number of employees. 9. Disobedience of a court order is a contempt of court and, like all proceedings for contempt of court, must be proved beyond reasonable doubt. I am satisfied beyond reasonable doubt that the company is in contempt of Court in failing to comply with order 3 in each proceeding. It has failed to remove from the properties all waste materials stored on the properties, let alone transport to a place lawfully authorised to receive that material, within the time specified in the orders or at all. There is a relatively minor qualification in relation to the Melbourne Road land referred to above at [6]. 10. The position of Mr Galainy is different because the orders were not made against him. He is a third party to the orders even though that may seem artificial given that he was and is the sole director and shareholder of the company and the evidence indicates that he is the alter ego of the company. He cannot be guilty of contempt in the same sense as the company because the orders are not directed to him. He is subject to a different species of contempt, namely, knowingly impeding the administration of justice. A third party knowingly impedes the administration of justice if, knowing of the order, the third party wilfully assists the person to whom it is directed to disobey the order or independently does an act that frustrates or obstructs the purpose of the order. The principles and authorities were canvassed by me in Liverpool City Council v Palerma Pty Ltd and Parilo [2008] NSWLEC 311 at [9] – [15]. I there cited authorities where directors of companies who caused their company to disobey a court order made against the company have been found guilty of contempt: at [14]. I am satisfied beyond reasonable doubt that Mr Galainy, with knowledge of order 3 in each proceeding, wilfully caused the company to fail to comply with that order. 11. The order of the Court in each proceeding is that each respondent is guilty of contempt of court as charged. The exhibits may be returned. I will hear the parties forthwith on pre-sentencing hearing directions.