Posted on November 5, 2023 by Anna Sinclair, Stuart Simington and Fayette Vermeer 10

Taking enforcement action? Make sure you have identified the correct perpetrator

Before taking enforcement action, it is critical for the enforcement agency to identify the correct perpetrator. A failure to do so may result in the validity of the enforcement action being successfully challenged or defeated.

This issue regularly arises in the context of an enforcement agency (such as a local council) seeking to take action for unlawful development in contravention of ss4.2 and 4.3 of the Environmental Planning and Assessment Act 1979 (EPA Act).

This blog addresses some of the common issues that arise in identifying the correct perpetrator in this context and provides guidance on overcoming those issues.

General

It is not uncommon that when an enforcement agency identifies unauthorised development in contravention of ss4.2 and 4.3 of the EPA Act, that it seeks to take enforcement action (such as issuing a penalty notice, or commencing civil enforcement or criminal prosecution proceedings) against the owner of the land or the developer, on the assumption that they are likely responsible because they ultimately benefit from the unauthorised development.

Where the alleged offender is a corporation, an enforcement agency may also seek to take action against the director, particularly where the corporation is a sole director company.

However, ss4.2(1)(a) and (1)(b) and 4.3 relevantly provide that “a person must not carry out” development without development consent, development not in accordance with a development consent, or prohibited development, respectively. The person that carries out the unauthorised development is the person who positively participates in the carrying out of the development, which in a particular case may not include the landowner but may be the contractor or subcontractor of the landowner or developer.

Another person, such as the landowner or developer, will only be held to have contravened ss4.2 or 4.3 of the EPA Act if they are found to be vicariously liable for the acts of the person whom carried out the unauthorised development.

Alternatively, they may also commit an offence if it can be established that they aided, abetted, counseled or procured another person to carry out the unauthorised development pursuant to s9.50(3A) of the EPA Act.

Specific legal principles apply in respect of the liability of a director of a corporation.

When will a landowner or developer be vicariously liable?

An individual landowner or developer will generally be vicariously liable for the acts of its employees or agents: Council v Geitonia Pty Ltd (No 6) [2015] NSWLEC 51.

In the case of a corporation, it will only be liable for unlawful development if there is evidence that the corporation’s “directing mind” (which is generally a director or person in a position of management of the corporation), or an employee or agent of the corporation, carried out the unauthorised development.

Where the unlawful development was carried out by an independent contractor, then the owner or developer (whether an individual or corporation) will only be vicariously liable for the contractor’s conduct where it can be established that:

• the owner or developer directly authorised the work done by the independent contractor, or
• the work was done subject to the control or direction of the owner or developer in the actual execution of the work (see Environment Protection Authority v Multiplex Constructions Pty Ltd (2000) 112 LGERA 1 at 59).

It can be difficult for an enforcement agency to establish these matters as it often requires evidence in respect of the contractual arrangements between the landowner or developer and the independent contractor, as well as evidence of the instructions that were given to the independent contractor, and evidence that the landowner or developer was on-site directing the contractors in doing their work.

For example, in North Sydney Council v Moline; North Sydney Council v Tomkinson (No 2) [2008] NSWLEC 169, Preston CJ found that the defendants, who were part owners of the land on which unlawful development was carried out, were not vicariously liable for the actions of the contractors working on site. His Honour held that there was no evidence establishing that the defendants directly engaged, provided instructions or directions to, or paid the persons that carried out the unauthorised building works.

In Manly Council v Leech [2015] NSWLEC 149, Biscoe J found that the architect, Mr Leech, was not vicariously liable for the builder’s unlawful development as there was no evidence to demonstrate that Mr Leech instructed or directed the builder to construct the unauthorised building works.

When will a director of a corporation be liable? 

Where an enforcement agency has evidence that a director or person in a position of management of a corporation has carried out unauthorised development, or aided or abetted the carrying out of the unauthorised development, the enforcement action should usually be taken against the corporation, rather than the director.

This is because a company acts through the agency of its directors, and the fact that a director is the primary actor on behalf of the company does not mean that the act becomes that of the director in his or her personal capacity, as distinct from that of the company (Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308 at [114]).

A director is generally only personally liable for the acts of their company where they ordered or procured those acts, or where the legislation extends personal liability to a director (see for example ss169 or 169A of the Protection of the Environment Operations Act 1987). The EPA Act does not extend personal liability to a director.

A director (and not the company) may be personally liable where it can be established that they were acting in their personal capacity in carrying out, or directing the unauthorised development be carried out. This would require evidence that the director was acting outside the scope of their functions as the director of the relevant corporation.

What steps can be taken to correctly identify the perpetrator/s?

There are a number of steps that enforcement agencies can take to seek to overcome these issues and obtain sufficient evidence to correctly identify the perpetrator/s, including:

• confirming the names and contact details (i.e. by photo I.D.) of all persons carrying out works on a site, and confirming by whom they are employed and whom has instructed them to carry out the works;
• taking photographs of any company signage at the site;
• searching Council’s records (e.g. development consent or construction certificate) to confirm the person or entity identified as responsible for carrying out the works;
• searching ASIC/ABN registers to confirm the correct name of the company to confirm it has not been deregistered and that any entity is a company rather than a trading name; and
• issuing notices for information and/or records and interviewing relevant persons (including the landowner, the developer and the persons carrying out the works) to obtain evidence that establishes who instructed the unauthorised development be carried out, and whether the landowner or developer exercised control and direction over the carrying out of the unauthorised development, including relevant contracts, site diaries, and invoices.

If you have any questions regarding this post, please leave a comment below or contact Stuart Simington on (02) 8235 9704 or Anna Sinclair on (02) 8235 9713.