Potential disaster with an historic building - Owners Corporation fined $350,000 for failing to comply with emergency orders

Charges

1. An owners corporation was charged with three breaches of section 118(1) of the Act for failing to comply with three emergency orders.
   
   
2. Section 118(1) of the Act provides that:
   
   (1) A person to whom an emergency order or building order is directed must comply with that order
   
   
3. A contravention of section 118(1) of the Act is a criminal offence which carries a maximum penalty of 500 penalty units (currently $92,460.00) in the case of a natural person and 2500 penalty units (currently $462,300.00) in the case of a body corporate. At the time of the relevant offending the maximum fine per charge was $413,050.00 for a body corporate.

Background Facts

4. The Accused owners corporation is the owner of the common property at 141-149 Ryrie Street Geelong and 150-154 Moorabool Street Geelong, which is known as the Belchers Corner Building. The building is within the municipal district of Council.
   
   
5. Belchers Corner Building was an historical building of significant vintage, comprising three storeys and one basement storey. Belchers Corner Building was of mixed-use, with parts used as offices and other parts used for retail purposes. Belchers Corner Building was situated within the same title boundary as two adjoining buildings; namely Belchers Building facing Moorabool Street and Hopetoun Chambers Building, which faces Ryrie Street.
   
   
6. All three buildings and the individual lots within each building are located in the same building envelope identified in the plan of subdivision. All individual lots are affected by the same owners corporation.

7. The common property, which is owned by the Accused, includes the external walls of all three buildings and the boundary walls separating the individual lots.

8. The Belchers Corner Building was inspected by Council late in 2017 and it was found that columns in the basement were showing varying degrees of damage from concrete spalling (concrete cancer).

9. Subsequent inspections revealed the issue worsening.
   
   
10. There was a series of emergency orders and building notices issued by the Municipal Building Surveyor (MBS) of Council in relation to the Belchers Corner Building starting on 13 December 2017.
    
    
11. The facts and circumstances and serious structural issues regarding the Belchers Corner Building were progressively revealed to the Accused prior to the issue of the emergency orders.
    
    
12. The building was vacant since the first emergency order issued which prohibited occupation. However, the building posed a significant risk to the life of any person who may have entered the building arising from the condition of the building as well as the public along Ryrie and Moorabool Streets, in the event of the building collapsing.
    
    
13. For an emergency order to be issued the MBS of Council must form the opinion that an emergency order is necessary because of danger to life and property. On each occasion, the MBS formed that view arising out of the condition of the Belchers Corner Building.
    
    
14. The emergency orders which were the subject of the charges were issued on 4 September 2018, 7 September 2018 and 6 November 2018.
    
    
15. The 4 September 2018 and 6 November 2018 emergency orders required the Accused to carry out a number of immediate measures to stabilise the building including pouring cement mix in the basement as well as activating public protection measures.
    
    
16. The most serious of the three emergency orders being the 7 September 2018 emergency order required amongst other things the demolition of the Belchers Corner Building by 31 December 2018 and a number of other items by 12 October 2018, including providing a demolition methodology.
    
    
17. It was submitted to the court that in November 2018, Russell Kennedy Lawyers wrote to the Accused, advising that the failure to comply with the 7 September 2018 and 6 November 2018 emergency orders was of particular concern to Council including that no substantive action appeared to have been taken by the Accused towards compliance with those emergency orders.
    
    
18. The court was further advised that the lawyer for the Accused responded outlining in relation to the 6 November 2018 emergency order that the Accused:

18.1 accepts the urgency of the action required;

18.2 confirmed it cannot meet the requirements of the emergency order;

18.3 noted that it is a matter of public safety;

18.4 requested the MBS to proceed with the works required by the emergency order; and

18.5 acknowledged that the Council may seek to recover the costs of carrying out the works from the Accused and lot owners.

19. The court was also told that the lawyer for the Accused responded outlining in relation to the 6 November 2018 emergency order that the Accused:

19.1 intends to comply;

19.2 reports will be submitted by 9 November 2018;

19.3 will seek the approval of the MBS for the demolition methodology;

19.4 will seek quotes from demolition contractors; and

19.5 it will comply with the demolition requirement of the emergency order

20. The building was ultimately demolished in or around July 2020 by the MBS using the powers under section 121 of the Act and the site remains vacant.

Magistrates’ Court Submissions

21. Prior to the plea the parties agreed to a summary of facts and material including written submissions and the financial situation of the Owners Corporation were filed with the court.
    
    
22. The accused entered a guilty plea to the three charges and Counsel for the Accused made oral submissions in mitigation of penalty which focused on the Accused’s financial situation and that the court should not take into account specific deterrence, with only limited weight to be given to general deterrence, stating that it was a unique situation.
    
    
23. On behalf of the Council, Russell Kennedy Lawyers made written sentencing submissions which focused on the purpose of the Act; relevant sentencing principles, including the application of specific and general deterrence; the maximum penalty; the ongoing nature of the breaches, including the multiple opportunities and time that the Accused had to comply. The submissions also focussed on the public interest in prosecuting such a matter, where a danger was posed to the public; the Accused’s obligations under the Act; the offending being at the higher end of the scale; and the amount of the Council’s resources that were tied up with the matter.

Magistrate Sentencing Remarks

24. His Honour Magistrate Guthrie made the following remarks in sentencing:

24.1 the matter proceeded as a plea of guilty to three charges, the summary was accepted, charges proven and the Accused had no prior offending;

24.2 in sentencing regard had been made to the Sentencing Act and its purposes;

24.3 he had the benefit of the summary, photos, prosecution written sentencing submissions, defence correspondence, attachments and oral submissions;

24.4 the charges are very serious charges and any sentence must be no more severe than required to meet the purposes of the Sentencing Act;

24.5 the offending was at the serious end of the scale;

24.6 public and community safety was at risk and it was not difficult to consider in the circumstances that maintenance of these types of buildings would be carried out regularly to comply with all Acts and Regulations;

24.7 the situation would not simply happen overnight;

24.8 any sentence should punish the offender to the extent that is just and proportionate in the circumstances;

24.9 the Accused was entitled to the utilitarian benefit of a plea having regard to court resources;

24.10 there was evidence of remorse;

24.11 there were clear indications that the offender did try and address the issues, spending in excess of $100,000.00 in early 2018 and used its resources to raise a special levy to meet the demands of the orders imposed by Council;

24.12 the Accused engaged lawyers who corresponded with the Council;

24.13 the sheer scale of the issues became overwhelming, the offender was stretched financially to their limits but did acknowledge there would be very serious consequences;

24.14 Council incurred considerable expenses in remedying this ‘potential disaster’;

24.15 the building was in Central Geelong fronting major streets, a major traffic thoroughfare and Geelong is the second largest city in the State;

24.16 demolition finalised in July 2020;

24.17 any sentence must consider the maximum penalty for the offending and deterrence to others must be emphasised; and

24.18 denunciation was a primary sentencing factor, in that this building was in central Geelong.

Outcome

25. His Honour Magistrate Guthrie imposed an aggregate fine with conviction of $350,000.00. His Honour noted that if it was not for the early guilty plea he would have imposed an aggregate fine of $475,000.00.
    
    
26. Costs were agreed between the parties and also ordered.
    
    
27. This matter demonstrates the importance of owners maintaining and keeping safe buildings especially historical buildings before the issue become too large to resolve.

Further information

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