The Land & Environment Court has again pierced the corporate veil to find a director of a developer company guilty of carrying out a development without consent and fined the director $150,000. The Court has also rejected the somewhat creative defence of ‘necessity’ raised by both the developer company and its director, which can be traced back to cannibalism on the high seas in 1884. These developments eventuated in a case that has attracted broader press due to the demolition of the Edwardian façade of a building located next to the iconic Annandale Hotel in inner Sydney.

Background

On 2 April 2015, in Leichhardt Council v Geitonia Pty Ltd (No 6) [2015] NSWLEC 51, Justice Biscoe found that each of Geitonia Pty Ltd (the owner and developer of the land), GRC Project Pty Ltd (GRC) (Geitonia’s project manager) and Bill Gertos (the sole shareholder and director and alter ego of Geitonia) guilty of demolishing the façade of a building in a heritage conservation area in breach of section 76A of Environmental Planning & Assessment Act 1979. Both Geitonia and GRC were fined $50,000 for the offence. Mr Gertos was personally fined $150,000.

The development consent granted by Leichhardt Council required retention of part of the existing building, including the majority of the front (southern) façade, and permitted construction of a multi-story mixed commercial and residential development over a basement car park. Remarkably, prior to the façade being demolished, Geitonia had on two occasions sought to obtain Council modification approval for the demolition of the façade, both of which were unsuccessful.

Direct and vicarious liability

After considering the evidence presented by the Council, Justice Biscoe concluded that:

  • Geitonia, through Mr Gertos, had directly authorised Global Demolitions Group Pty Ltd (Global) to demolish the façade of the building
  • the overwhelming inference was that Geitonia, through Mr Gertos, authorised GRC to contract with Global to demolish the façade of the building
  • consequently, GRC was authorised by Geitonia, through Mr Gertos, to give detailed instructions to Global as to what to do to the façade, and how to carry out the demolition of the façade.

The Court found Geitonia directly liable for carrying out the demolition without development consent in breach of section 76A of the Environmental Planning & Assessment Act 1979 because it directed that the demolition take place, and commercially benefited from the demolition.

The Court found that GRC was vicariously responsible for the demolition carried out by Global because the company carried out the demolition under a contract with GRC. The evidence established that Global Demolitions Group Pty Limited carried out the development on instructions from GRC.

The Court found Mr Gertos separately liable for his own conduct in carrying out development on the land contrary to the development consent. His liability was vicarious for the conduct of Global because at a coffee shop meeting, he negotiated and orally agreed to the demolition by Global. The Court found that Mr Gertos had directly instructed both GRC and Global to demolish the façade of the building, and he couldn’t hide behind the developer company of which he was the sole director and shareholder.

The Defence of ‘necessity’

One curious aspect to this case is the defence of necessity raised by Getonia and Mr Gertos, which has not been successfully raised as a defence to criminal proceedings in the Land & Environment Court. Getonia and Mr Gertos submitted that the southern façade was so unsafe that it had to be pulled down immediately.

Justice Biscoe helpfully gave a brief history of the defence of necessity in his decision:

A high bar was set for the defence of necessity in a case of cannibalism on the high seas, The Queen v Dudley and Stephens (1884) 14 QBD 273. Four shipwrecked sailors were adrift in an open boat on the high seas more than one thousand miles from land. One of their number, the cabin boy, was the youngest and eventually became the weakest. After 20 days adrift they had been without food for seven days and without water for five. Dudley and Stephens killed the cabin boy and (with the fourth sailor) ate his flesh and drank his blood. Four days later, a passing ship rescued them in the lowest state of prostration. The two killers were tried for murder. Their defence of necessity was that if they did not kill and feed on one of their number, they would all die of starvation. Delivering the judgment of a court consisting of five judges, Lord Coleridge CJ rejected the defence of necessity, convicted them of murder and sentenced them to death. Acknowledging that the prisoners were subject to “sufferings which might break down the bodily powers of the strongest man, and try the conscience of the best” (at 278), Lord Coleridge intimated that the Crown might exercise the prerogative power of mercy (at 288). This the Crown later did, by commuting the death sentence to six months in prison.

Justice Biscoe articulated the three elements that must be established to successfully rely upon the defence of necessity:

  1. the criminal act must be done in order to avoid the infliction of irreparable evil on the accused, or others that he or she was bound to protect
  2. the accused honestly believed on reasonable grounds that he or she was placed in a situation of imminent peril
  3. a reasonable person in the position of the accused would have considered that he or she had no alternative but to take the action that he took, which involved breaking the law, in order to avoid the peril.

In this case, the Court did not find that any of the elements of the defence of necessity had been established by Geitonia or Mr Gertos. This was largely because the Council had adduced engineering evidence, aspects of which the defendant’s own expert could not deny in cross-examination, the front façade was stable and not in imminent danger and that there were ways to temporarily brace the front façade which would prevent the façade from being impacted by, for example, a high wind event.