Deleje Pty Ltd & Anor v Butterworth [2021] QDC 328

DISTRICT COURT OF QUEENSLAND CITATION: Deleje Pty Ltd & Anor v Butterworth [2021] QDC 328 PARTIES: DELEJE PTY LTD and DAVIN LEE JOHNSON (appellants) V SIMON BUTTERWORTH (respondent) FILE NO: 3380/2020 DIVISION: Civil PROCEEDING: Appeal ORIGINATING COURT: District Court DELIVERED ON: 10 December 2021 DELIVERED AT: Brisbane HEARING DATE: 8 September 2021 JUDGE: Richards DCJ ORDER: Appeal Dismissed CATCHWORDS: APPEAL PURSUANT TO THE JUSTICES ACT 1886 (Qld) s 222 – APPEAL BY WAY OF REHEARING – where the appellant is the sole director of the appellant company – where the appellant was convicted of breaching a condition of a development approval and non-compliance with an enforcement notice - where the appellant failed to take all reasonable steps to ensure the company complied with executive liability provisions - whether the appellant knew or ought reasonably to have known the corporation’s conduct constituted an offence against the executive liability provision – whether there was actual knowledge of the corporation’s conduct LEGISLATION: Planning Act 2016 (QLD) ss 164, 165A, 168(5), 227(1) Sustainable Planning Act 2009 (QLD) ss224, 243, 335 CASES: Steendyk v Brisbane City Council & Ors [2016] QPEC 47, followed COUNSEL: R Traves, QC with S Spottiswood for the Appellants K D Cartledge, solicitor with City Legal for the Respondent SOLICITORS: Gadens Solicitors for the Appellants -- 1 of 12 -- 2 City Legal for the Respondent Introduction [1] On 15 October 2020 the appellants were convicted of offences against the Planning Act 2016. The company was convicted of an offence of breaching a condition of a development approval1 and an offence of non – compliance with an enforcement notice in respect of that breach.2 Mr Johnson was charged as an executive officer of the company with failure to take all reasonable steps to ensure the company complied with its obligations under the Act.3 The company has appealed against the conviction for breaching the development approval and Mr Johnson has appealed both convictions. Background [2] On 3 July 2015 Deleje Pty Ltd was given a development approval pursuant to s 335 of the Sustainable Planning Act 2009 (‘the Act’). It was a preliminary approval under s 241 of the Act for a new dwelling house at 45 Bernard St Paddington under the traditional building character overlay. The nature of the application was a development permit, and the activity was for a dwelling house. Approval conditions were attached to that notice. Condition 1 was that the building/premises was to be used for the purpose of a house: (a) the lot is only to be used for one house (including secondary dwelling as defined by Brisbane City Plan 2014); (b) the main dwelling together with any secondary dwelling is used by a household group comprising: (i) one person maintaining a household, or (ii) two or more persons related by blood, marriage or adoption, or (iii) not more than five persons, not necessarily related by blood, marriage or adoption, or 1 S164 of the Planning Act 2016 2 S 168(5) of the Planning Act 2016 3 S227(1) of the Planning Act 2016 -- 2 of 12 -- 3 (iv) not more than five persons under the age of 18 and not necessarily related by blood, marriage or adoption, together with one or two adults who have care and control of them. (c) the house is to be used strictly in accordance with the dwelling house code (Brisbane City Plan 2014) and is to be strictly in accordance with the approved plans; (d) all future owners or future prospective owners or purchasers of the property are advised of this requirement. [3] The original plans attached to the development approval indicated that this was a two-storey home with a kitchen and living/dining area, an office and three bedrooms, including a master bedroom on the top floor and on the ground floor a rumpus area, a cellar, a children’s study, two more bedrooms and a guest wing. [4] The property was managed by Belle Properties. Ted Walton, the property manager for the house gave evidence in the trial that the property was managed as one property. Nonetheless, there were two separate leases on the property, the properties were in the computer system as 2/45 Bernard Street and 1/45 Bernard Street, the rent was being paid separately and inspections were done on both the top level and the bottom level of that property with separate reports generated. The Magistrate rejected his evidence that this was not indicative of it being two separate households, and given the other evidence in the trial that finding was entirely reasonable. [5] The Council received a complaint about the occupancy of the property and when they inspected the property it was clear that it was being used as a dual occupancy property. Bruce Warner, a council officer, gave evidence that on 12 March 2019 he went to the premises and noted two letterboxes for the house (although one was taped shut), two intercoms and a powerbox. He performed an internet search for the property for 45 Bernard Street Paddington on 10 June 2019 and found two results: one for an apartment at $750 per week and the other for 45A for $850 per week. [6] Charlotte Alchin, a council officer, inspected the lower level in April 2018 and gave evidence that there were four bedrooms on that level. It is evident from the inspection reports that there is a full kitchen and living area on each level. The backyard of the -- 3 of 12 -- 4 property was divided by a high fence such that each level had access to half of the yard. [7] A long-term tenant of the property, Jessica Brew, gave evidence that she and her flatmates rented the bottom of the property and they were told by the real estate agent that only two people should sign the lease for downstairs and only two people for upstairs so it would look like there were only four people at the property. There were stairs between the top and the bottom level, but in May 2020 a tradesman came over to the house and did additional works to the staircase so that there was essentially no access. Upstairs there was a locked hatch door that they could open up and he installed moveable steps that could be pulled out on wheels so that people could use it as a staircase, but the access was locked off with no key to open. The two households lived separately. [8] It was conceded on this appeal that the Magistrate was correct in his findings that this was a dual occupancy. The appellant concedes that the Magistrate was right to find against the company in relation to non-compliance with an enforcement notice that was served on 6 July 2018. Deleje Pty Ltd [9] At the hearing of this matter the appellant abandoned grounds 1, 3, 4 and 6 of the appeal. The argument put forward by the appellant is that the company was charged under the wrong section of the Planning Act 2016. The appellant argues that the company had a development approval for use of the premises for a dwelling house. That was a permit under s 243 of the Sustainable Planning Act 2009 which states: “243 Development Permits A development permit authorises assessable development to take place – (a) to the extent stated in the permit; and (b) subject to – (i) the conditions of the permit; and (ii) any preliminary approval relating to the development the permit authorises, including any conditions of the preliminary approval.” -- 4 of 12 -- 5 [10] The submission is that this is a permissive section of the Act that allows the use of the land to be a dwelling house, and it imposes conditions on the way in which the dwelling house can be used, but it does not prohibit use as a dual occupancy. Use as a dual occupancy, it is submitted, would be an unlawful use, but it is not a contravention of a development approval. Therefore, an unlawful use of the premises could lead to a prosecution under s 165A of the Planning Act 2016, but not a prosecution under s 164 of the Act. [11] I accept the submission that the development approval is permissive in nature, in that a development approval does not require the development of the land in a particular way. It simply authorises the land to be developed. That proposition is confirmed in the decision of Steendyk v Brisbane City Council & Ors [2016] QPEC 47 where her Honour Judge Bowskill (as she then was) accepted that as a matter of general principle the nature of planning permits is a permission that certain rights of ownership may be exercised but not a requirement that they must be (citing other decisions of that court). 4 The argument follows from that the development approval does not render other uses unlawful. Instead, it renders something that is unlawful, lawful. [12] In Steendyk v Brisbane City Council & Ors her Honour further examined the nature of development approvalsin the context of subsequent owners of the land: “A subsequent owner is ‘bound’ by the development approval, in the sense of being able to take advantage of it – in this case to take advantage of the protection it confers on the lawfulness of the development authorised by it – and being bound by such correlative obligations as are part and parcel of the rights created under it. The only correlative obligation which could be pointed to, once the works authorised by the development approval have been completed, is an obligation to maintain them. But as I have already said, an obligation to maintain those works is not an obligation to retain them indefinitely.” 5 [13] I accept the argument that a development approval does not mandate the development of the block but rather permits the development of the block in a way approved by the decision notice. However, in this case, the development approval was taken up 4 At p 19 [72] 5 At p20 [76] -- 5 of 12 -- 6 with the construction of a two-storey dwelling on the premises. Once those rights under the development approval were exercised the company was required to exercise those rights in compliance with the development approval. There was no evidence led as to whether the building was modified after inspection or whether the house was not constructed according to the plans submitted, but what is clear is that once the property was constructed the owner of the premises was required to maintain the building according to the approval and that required the lot to be used for a dwelling house not a dual occupancy. It is my view that in this situation either of the charges could have been preferred but there is ample evidence that the company contravened the development approval by using the premises in a way that was not authorised under the development approval. Davin Johnson [14] Mr Johnson was the sole director and principal of the appellant company. He faced two charges: Charge 1: [15] Between 22 April 2018 and 22 January 2020 Davin Lee Johnson, being an executive officer of a company, namely Deleje Pty Ltd (ACN 105 903 482), being a company duly incorporated according to Corporations Law, at premises situated at 45 Bernard Street, Paddington, 4064 more particularly described as Lot 10 on RP19635 (“the premises”) being within the Magistrates Court district constituted by the Richlands Division of Brisbane District Court appointed under and for the purpose of the Justices Act 1886, as amended and within the area of the City of Brisbane as constituted by the City of Brisbane Act 2010 as amended, failed to take all reasonable steps to ensure Deleje Pty Ltd (ACN 105 903 482) complied with an executive liability provision of the Planning Act 2016, contrary to s 227(1) of the Planning Act 2016. “1. Deleje Pty Ltd (ACN 105 903 482) (the corporation) committed an offence against an executive liability provision of the Planning Act 2016, namely 164 of the Planning Act 2016 for contravening a development approval, in that: (a) by decision notice (A004123459), dated 3 July 2015, a development (planning) approval was given for the -- 6 of 12 -- 7 construction of a two-storey dwelling on the premises (the DA); (b) at all material times, the corporation was the owner of the premises; (c) as the owner of the premises, the corporation was required to comply with the requirements of the DA; (d) the DA contained a number of conditions and approved drawings and plans; (e) Condition 1 of the DA states: (1) The building/premises to be used for the purpose of a HOUSE; (a) the lot is only to be used for one house (including secondary dwelling) as defined by the City Plan 2014; (b) the main dwelling, together with any secondary dwelling, is used by a household group comprising: (i) one person maintaining a household, or (ii) two or more persons related by blood, by marriage or adopted, or (iii) not more than five persons, not necessarily related by blood, marriage or adoption, or (iv) not more than five persons under the age of 18 and not necessarily related by blood, marriage or adoption, together with one or two adult persons who have care and control of them. (c) the house is to be used strictly in accordance with the Dwelling House Code (Brisbane City Plan 2014) and is to be strictly in accordance with the approved plans; (d) all future owners or prospective owners or purchasers of the property are advised of this requirement. (f) the corporation contravened Condition 1 of the DA in that there were two dwellings constructed on the premises and each dwelling was being used by a separate household group; -- 7 of 12 -- 8 (g) between 22 April 2018 and 22 January 2020, the corporation did cause and permit each dwelling to be leased to a separate household group; (h) the use of the dwelling to accommodate two separate household groups contravened condition 1 of the DA. 2. Davin Lee Johnson as an executive officer of the corporation failed to take all reasonable steps to ensure that the corporation complied with the DA or ensured all necessary development approvals were in effect prior to any use that was not approved by the DA commencing and continuing. Charge 2 [16] Between 4 October 2018 and 21 January 2020 Davin Lee Johnson being an executive officer of a company duly incorporated according to the corporations law namely Deleje Pty Ltd (ACN 105 903 482), being a company duly incorporated according to corporations law, at the premises situated at 45 Bernard Street, Paddington 4064. More particularly described as Lot 10 on RP 19635 (the premises) being within the Magistrates Court district constituted by the Richlands Division of the Brisbane District Court appointed under and for the purposes of the Justices Act 1886, as amended and within the area of the City of Brisbane as constituted by the City of Brisbane Act 2010 as amended, failed to take all reasonable steps to ensure Deleje Pty Ltd (ABN 105 903 482) complied with an executive liability provision of the Planning Act 2016, contrary to s 227(1) of the Planning Act 2016. Particulars 1. Deleje Pty Ltd (ACN 10593482) (Corporation) committed an offence against an executive liability provision of the Planning Act 2016, namely s 168(5) of the Planning Act 2016 for contravening an enforcement notice, in that: (a) on 6 July 2018 Brisbane City Council (Council) issued an enforcement notice (the EN) to Delege Pty Ltd (CAN 105903482) (The Corporation); (b) no appeal against the EN was started; (c) the EN included the following requirements: (i) cease the use of the premises as dual occupancy; (ii) Compliance date: 5 October 2018 (d) the corporation contravened the EN in that: (a) On 5 October 2018, the use of the premises for dual occupancy had not ceased; -- 8 of 12 -- 9 (b) as at 21 January 2020, the use of premises for dual occupancy continued. 2. Davin Lee Johnson, as an executive officer of the corporation, failed to take all reasonable steps to ensure the corporation did not contravene the EN” [17] It is accepted that for the purposes of this argument that the premises were being used as dual occupancy rather than a dwelling house during the period of the charge. [18] There was evidence that the appellant was the sole director and shareholder of the company in question. Section 227(1) of the Planning Act 2016 provides: “(1) An executive officer of the corporation commits an offence if – (a) the corporation commits an offence against an executive liability provision; and (b) The officer did not take all reasonable steps to ensure the corporation did not engage in the conduct constituting the offence. Maximum penalty – the maximum penalty for contravention of the executive liability provisions by an individual (2) When deciding whether things done or admitted to be done by the executive officer constitute reasonable steps for subsection (1)(b), of course must consider – (a) whether the officer knew, or ought reasonably to have known of the corporations conduct constituting the offence against the executive liability provision; and (b) whether the officer was in a position to influence the corporations conduct in relation to the offence against the executive liability provision; and (c) any other matter that the court considers relevant.” Section 164 of the Planning Act 2016 is defined as an executive liability provision. [19] The appellant conceded that it was within the remit of the evidence to find that the second appellant was in a position to influence the corporation’s conduct. However it was submitted that there was no evidence whereby the court could find that he knew or ought reasonably to have known of the corporation’s conduct constituting the offence against the executive liability provision. -- 9 of 12 -- 10 [20] It was submitted that the property was being managed by an experienced agent under an agency agreement that covered 9 or 10 properties. It was reasonable for Mr Johnson to leave the management of the properties to the agent without further enquiry. However, the agreement between the agent and Mr Johnson6 defines their relationship. Mr Johnson had final approval of the tenants7 and any repairs or maintenance above $250 had to be approved by Mr Johnson.8 The Magistrate was also entitled to consider the alterations to the original plans submitted to council which must have been made with Mr Johnson’s knowledge. Those alterations included installing a full kitchen and dining area downstairs as well as the constructing the dividing fence in the backyard. Mr Johnson did not give or call evidence to suggest that any of these alterations were made without his consent and in my view the Magistrate was entitled to infer that the construction was done in a way that lent itself to dual rather than exclusive occupancy. [21] Section 227(2)(a) requires the court to consider whether there was actual knowledge of the corporation’s conduct or whether the officer ought reasonably to have known of the corporation’s conduct. The court is required to consider whether, subjectively, there was actual knowledge or alternatively whether objectively there should have been knowledge. Circumstantially, in my view, there was ample evidence from which it could be inferred that there was actual knowledge and similarly there was evidence from which it could be reasonably inferred that he ought to have known. [22] This appellant was sole shareholder and office holder of the corporation. It can therefore be inferred that he had access to the accounts of the business, and it is clear that the rents were being paid separately on the property - $850 for the downstairs section and $750 for the upstairs section. The property was owned for a significant period of time and, although there were 9 or 10 properties, tax returns had to be submitted on behalf of the company. The modifications that were made to the plan had to be authorised by someone and it is reasonable to infer that the sole person who ran the company would have authorised the modifications to the original plan namely the full kitchens in the downstairs area, the dividing fence down the middle of the property and the installation of the separate intercoms. The terms of the tenancy 6 Exhibit 3 7 Exhibit 3 terms of appointment 9.8 8 Exhibit 3 terms of appointment 10.2 -- 10 of 12 -- 11 dictated that he would have been informed of the modifications to the staircase that were made in May of 2019 as outlined in Ms Brew’s evidence:9 “I was made aware of the internal staircase not long after I moved in and a period of time after I moved in – I think it was approximately May last year – there was a tradesman that came over to the house for a few days in a row to do additional works to that staircase so that they – bottom – so that about three or four steps could be pulled down on wheels so that people would be able to use that as a staircase. And I believe that the upstairs had a hutch door so that they could open that up. I didn’t have access to any keys that would open it as she moved out in January of 2020 and that access to the upstairs section remained barred.” [23] On 26 June 2018, Ms Alchin, an officer of the Brisbane City Council, sent an email to Mr Johnson advising that a show cause notice had been sent to the company regarding the use of the premises and that there had been no response. He replied that he had been in contact with the real estate agency, and they advised that all tenants were on one lease and that they do share common provisions (electricity and water) and this information was incorrect. He made some comment about the eating arrangements however said no more. By reply of 6 July 2018, Ms Alchin indicated that the information provided directly contradicts the advice received from tenants and that the tenants were in fact on separate leases. [24] At the very least, from that point in time Mr Johnson was on notice that; (a) the tenants were on separate leases; and (b) that the tenants were saying that it was a dual occupancy and that there were at least six people living in the house that were not related by blood. He was aware from that time that there was a prima facie case of a dual occupancy and that the Council was going to issue an enforcement notice. Thereafter in my view he was obliged to investigate whether in fact the property was being used in a way that was outside the requirements of the development approval. An investigation required more than a simple call to the real estate agent at that stage. [25] On any view of the evidence, he was, at least by that date, aware of the breach of the development approval and obliged to make steps to remedy that breach. Instead of 9 Transcript of hearing p 170, ll22 -- 11 of 12 -- 12 acting on that advice, he did nothing. It follows that the Magistrate was correct in convicting him of both offences. ORDER [26] The appeals are dismissed. -- 12 of 12 --