Appellant v Respondent

Appellant v Respondent - [2006] VSC 266 - VSC 2006 case summary — Zoe

[21]

The order included an amount for interest on the extra charges from the date of filing of the application.[1]

20 At the hearing, the member gave brief oral reasons for the decision ("the oral reasons"). Subsequently, on 30 November 2005 she published written reasons for the decision ("the written reasons").

21 Following receipt of the written reasons, Gevah applied to this Court pursuant to s. 148(1) of the Act for leave to appeal against the decision on a question of law. On 16 February 2006, leave to appeal was granted by a Master.

GROUNDS OF APPEAL

22 The notice of appeal raises a number of grounds. In oral argument, only two grounds were relied upon. First, it was submitted on behalf of Gevah that the member did not form a belief under s. 78(1)(a) of the Act that, by failing to comply with the orders within the specified time as extended, Gevah was conducting the proceeding in a way that unnecessarily disadvantaged GRN. Accordingly, it was submitted that s. 78 did not apply and the member had no power to make orders under s. 78(2). Secondly, it was submitted that, if the member did form the requisite belief under s. 78(1)(a) of the Act, she misconceived her function under s. 78(2) of the Act. This was because the member determined the merits of the proceeding by making findings on the balance of probabilities in favour of GRN. It was submitted that this conduct by the member involved either taking irrelevant considerations into account or failing to take into account matters which she was bound to take into account in considering her discretion under s. 78(2) of the Act.

23 In answer to the first ground of appeal relied upon by Gevah, it was submitted on behalf of GRN that, when read as a whole, the transcript of the hearing and the written reasons demonstrate that the member believed that the delay caused by the failure of Gevah to comply with the orders caused unnecessary disadvantage to GRN.

24 In answer to the second ground of appeal which was relied upon, it was submitted on behalf of GRN that the member was entitled to proceed and determine the proceeding in its favour under s. 78(2)(b)(i) of the Act and that is what she did. Accordingly, no error has been shown in the manner of exercise of the discretion under s. 78(2) of the Act.

25 As to the first ground of appeal relied upon, I accept the submission on behalf of GRN that the member was of the belief that the delay caused by the failure of Gevah to comply with the orders was such as to unnecessarily disadvantage GRN. Although there is no specific finding in either the oral reasons or the written reasons to this effect, the transcript of the hearing indicates that the member was of the view that GRN was unfairly disadvantaged by the delay. For example, the member stated in response to statements made on behalf of Gevah to explain the reasons for the delay:

[27]

• The subject matter of the belief formed by the Tribunal for the purposes of sub-s. (1).

• The nature of the power conferred by sub-s. (2) in the context of the armoury of power conferred upon the Tribunal by ss. 75-77. By this I mean, particularly, that s. 78(2) operates in circumstances which at least do not require that the proceeding be frivolous, vexatious, misconceived, lacking in substance or otherwise an abuse of process; and which at least do not require that the circumstances demonstrate want of prosecution. Put another way, the sub-section contemplates the making of an order with very serious consequences in circumstances that very probably would not fit the templates set up by ss. 75 and 76. Whilst it can rightly be said that the creation of such a remedy in the situation contemplated by s. 78(1) shows that an intention that orders be made in some cases where the situation exists, it should also be firmly concluded, in statutory context, that the remedy should be of last resort and not first resort.

• The requirement imposed upon the Tribunal by s. 97. That section should be considered to import the concept that, ordinarily, the interests of case management should not be employed so as to shut a party out of litigating its case. The ultimate aim of the Tribunal, as much as of a court, must be the attainment of justice in respect of issues joined.

• The requirement imposed by s. 98(1)(a), to the extent that a party should ordinarily be given an opportunity to be heard upon the merits. That opportunity is not absolute. It may be lost without breach of the rules of natural justice. But the consequence that the making of an order under s. 78(2) will deprive a party of an opportunity to be heard upon the merits is surely relevant to exercise of the discretion whether to so order.

• The power to make costs orders conferred by ss. 109(2)(3) and 78(2)(c). The last-mentioned, it appears, might be exercised even though no order is made under s. 78(2)(a) or (b).

[29]

29 A reading of the transcript of the hearing, the oral reasons and the written reasons demonstrates that the member, in determining the proceeding in favour of GRN and ordering payment of the amount claimed, failed to take into account a number of the necessary discretionary considerations referred to by Ashley J in Bell Corp. In particular, I am of the opinion that the member failed to consider that she was exercising a discretion in a case management context. She was not engaged upon the final hearing of the proceeding. The notices of hearing unambiguously stated that the purpose of the hearing was to consider the application of s. 78 of the Act and was for no other purpose. In these circumstances, the member was obliged to consider whether the delay caused by the failure to comply with the orders, which at that time was in the order of a maximum of 10 weeks only[7], justified Gevah being shut out from defending the proceeding by being given a full opportunity to be heard on the merits after the making of all necessary interlocutory orders and directions in order to prepare for a final hearing. I find that the member failed to address these issues in any way.

30 I accept that the member was entitled to give some consideration to the merits of the proposed defence, set-off or counterclaim to be raised by Gevah. Obviously enough, if there was no evidence that Gevah may have an arguable defence, set-off or counterclaim, the interests of justice may well have been served by determining the proceeding in favour of GRN. However, as the transcript shows, there was evidence before the member of circumstances which may give rise to an arguable defence, set-off or counterclaim.[8] In these circumstances, it was not in my view open for the member to proceed and determine the merits of the proceeding under s. 78 of the Act. However, the transcript, oral reasons and written reasons demonstrate that this is what the member did.

31 In the oral reasons, the member concluded:

[32]

33 In my view, these findings by the member demonstrate that she misconceived the nature of the jurisdiction which she was exercising under s. 78 of the Act.[9] This conclusion is reinforced by a number of comments made by the member during the hearing. For example, when Mr Plotnik of Gevah referred to an intention to subpoena a particular witness as part of Gevah's defence, he was met with the response by the member that it was "too late" as parties were required to attend a hearing with all of their evidence, including on subpoena.[10] In my view, this misconception by the member of her jurisdiction amounted to an error of law.

34 Further, I am of the opinion that the member erred in law by failing to give consideration to the highly relevant fact that Gevah was clearly not prepared for a final hearing. I have already referred to the fact that Gevah indicated a wish to subpoena a material witness. In addition, the evidence indicated a reasonable basis for a request for discovery of, at least, invoices by sub-contractors to GRN.[11]

35 Finally, in my view, the member erred in law by failing to consider whether there was any alternative remedy, short of determining the proceeding in favour of GRN, as a first resort. For example, the making of a self-executing order if the defence, set-off or counterclaim was not filed within a specified time.[12] In my view, this was the appropriate course for the member to adopt in all of the circumstances. The form of the self-executing order which was in my view appropriate in the circumstances of the case is set out below.

36 For the above reasons, the appeal will be allowed. In the event that GRN is ultimately successful at any final hearing of its claim, I note that the Tribunal has the power to order, in addition to any debt found to be due, damages in the nature of interest.[13] Such an award of interest may be based upon the rates fixed from time to time under s. 2 of the Penalty Interest Rates Act 1983 (Vic).[14] I see no reason why an award of damages in the nature of interest ought not, if the circumstances indicate that it is appropriate, include interest from the date that demand was made for payment.[15]

ORDERS

37 Subject to any submissions that counsel may make, I propose to make orders in accordance with the following minutes:

(1) The appeal is allowed.

(2) The order made by the Tribunal on 10 October 2005 is set aside.

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Cases Cited (1)