Applicant v Respondent

Supreme Court of Victoria|2017-04-21|Before: Keogh J

ADMINISTRATIVE LAW - Victorian Civil and Administrative Tribunal ('VCAT') - Leave to appeal - Order that the Respondent not be required to pay the Applicant's costs - Where application to adjourn refused - Whether denial of natural justice - Whether the VCAT reasons for decision inadequate - State of Victoria v Turner [2009] VSC 66 - Whether the VCAT properly constituted - Whether discretion as to costs order miscarried - Victorian Civil and Administrative Tribunal Act 1998 sch 1 cls 46E, 46F - Whether application validly made by Respondent - Leave refused.

2 Pursuant to cl 46F of sch 1 of the Victorian Civil and Administrative Tribunal Act 1998 (the 'VCAT Act') the Council was to bear the costs of the serious misconduct proceeding unless the VCAT otherwise ordered. On 24 November 2015 the Council applied to the VCAT for an order that it not be required to bear the costs of Mr Muto incurred in the proceeding. When the costs application came on for hearing on 8 February 2016, Mr Muto applied for an adjournment on the basis that there had been no opportunity for him to prepare. The Tribunal refused to adjourn the hearing. On 15 April 2016 the Tribunal granted the Council's costs application and ordered as follows:

Pursuant to Clause 46F of Schedule 1 of the [VCAT Act]...the Council of the City of Greater Shepparton is not required under that clause to pay or indemnify Mr Muto for his costs in relation to [the serious misconduct proceeding].

Mr Muto now applies for leave to appeal the Tribunal's order and, if leave is granted, for the appeal to be allowed.

(a) Did the Tribunal err in refusing Mr Muto's application to adjourn?

(b) Is the decision of the Tribunal infected by error because there was no delegated power enabling the Council to make the costs application?

(c) Did cl 46E of sch 1 of the VCAT Act require that on the hearing of the costs application the Tribunal be constituted by two members?

(d) Are the Tribunal's reasons for the decision inadequate?

(e) Did the Tribunal fail to properly construe and apply cl 46F of sch 1 of the VCAT Act?

4 During the VCAT hearing Mr Muto made objection to the constitution of the Tribunal on a number of grounds including bias. In the amended originating motion filed by him in this proceeding, and in oral submissions, Mr Muto withdrew bias as a ground of appeal.

5 At the hearing before me, Mr Muto provided further material upon which he sought to rely, including an audio recording supplied by the VCAT of the hearing on 8 February 2016. No objection was taken to the court receiving the documents, though the Council argued that the documents were not relevant and that many contained hearsay. I read the additional documents provided by Mr Muto and listened to the audio recording of the costs hearing.

6 Mr Muto was elected as a councillor in 2008. In 2010, proceedings were commenced in the VCAT by the Secretary to the Department of Local Government pursuant to Division 1B of Part 4 of the LGA alleging gross misconduct by Mr Muto as a councillor. Pursuant to an agreement reached between the parties in that proceeding, Mr Muto consented to findings by the VCAT that he had engaged in 13 instances of misconduct as a councillor and to various consequential orders. Despite his consent, Mr Muto later appealed the resulting orders. Save as to one order, Mr Muto's appeal was dismissed by the Court of Appeal on 12 April 2013.[3]

7 On 8 December 2011 Mr Muto's six fellow councillors made application pursuant to s 81B of the LGA (as then in force) for the appointment of a Councillor Conduct Panel and for authority from the Panel to apply to the VCAT for a finding of 'serious misconduct' against Mr Muto. The councillors relied on 10 instances of misconduct alleged to have occurred between 6 June 2011 and 29 November 2011. On 7 March 2012 the Panel authorised the councillors to commence a serious misconduct application in the VCAT. The six councillors, as applicants, then commenced the serious misconduct proceeding against Mr Muto.

8 On 13 April 2012 the Secretary of the Department of Planning and Community Development commenced a further proceeding at the VCAT applying for a finding of 'gross misconduct' against Mr Muto under s 81E of the LGA (the 'gross misconduct proceeding'). That proceeding was consolidated with the serious misconduct proceeding.

9 On 10 July 2013 the Tribunal, constituted by Senior Member Byard and Member McNamara, found that Mr Muto had engaged in serious misconduct as alleged in the serious misconduct proceeding, and in gross misconduct as alleged in the gross misconduct proceeding. The Tribunal reserved costs in relation to each of the proceedings. Mr Muto made application to this Court for leave to appeal the VCAT decision. Williams J dismissed that application on 12 December 2014.

10 At that time the Council was not a party to either VCAT proceeding. The reasons of the Tribunal of 10 July 2013 record the following:

The council itself is not a party to either proceeding. However, solicitors acting for the council have corresponded with the tribunal stating that the council would wish to be heard in relation to any application that it should be ordered to pay the costs of any party or that it should indemnify any party as to the costs of any party.

11 On 14 November 2013 Mr Muto's former solicitors commenced proceedings in the County Court of Victoria naming Mr Muto as defendant and seeking recovery of legal costs from him. On 6 February 2014 Mr Muto joined the Council as a third party to the County Court proceeding, seeking that the Council indemnify him in relation to all costs and disbursements paid or payable by him in respect of the serious misconduct proceeding.

12 In 2015 the applicants in the serious misconduct proceeding applied to the VCAT for an order that the Council bear their costs of that proceeding. That application was heard by Senior Member Byard sitting alone. Though it was not a party to the proceeding, the Council appeared at that hearing and opposed the application. Mr Muto was present for much of the hearing. On 18 September 2015 the Tribunal ordered the Council be joined as a party to the serious misconduct proceeding and that the Council bear the costs of the applicants of that proceeding.

13 On 18 November 2015, following a preliminary hearing held in the County Court proceeding in relation to Mr Muto's third party claim, Judge Anderson struck out the third party claim insofar as it relied upon s 76 of the LGA, and ordered that:

On or before 2 December 2015, the lawyers for the defendant and the third party must consult about the future conduct of the proceeding limited to the claim under clause 46F of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998. In particular, the parties should consider:

(a) the appropriateness of the third party seeking that VCAT make an order other than it bearing Mr Muto's costs of the second and third VCAT proceedings;

(b) whether, if such an application is made by the council to VCAT, the defendant will submit that the court in this proceeding is the more appropriate forum for the resolution of that matter;

(c) whether the defendant's foreshadowed application for leave to further amend his amended statement of claim dated 19 June 2015 against the third party in relation to his claim under clause 46F of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998 and the third party's foreshadowed application to dismiss or strike out the defendant's third party claim should be deferred until the parties have determined whether an application by council to VCAT should first be made.

14 The Council then applied to the VCAT for an order, pursuant to cl 46F of sch 1 of the VCAT Act, that it not be required to bear the costs of Mr Muto incurred in the serious misconduct proceeding. That application was heard by Senior Member Byard on 8 February 2016, and orders were made granting the application on 15 April 2016.

15 Mr Muto gave evidence that on 7 February 2016 he sent the following text message to Council Mayor, Mr Adem:

Good morning Mr Mayor, Just a quick question, did you or the Council authorise Dawes Vary Riordan to commence proceedings against me in VCAT tomorrow morning the 8th of February? MM

Did the Tribunal err in refusing Mr Muto's application to adjourn?

16 Shortly after the costs application hearing commenced at the Tribunal on 8 February 2016, Mr Muto applied for an adjournment to allow him the opportunity to properly prepare. Mr Muto said the notice of hearing he received from the VCAT did not specify the subject of the hearing and did not name the Council as a party interested in the hearing. He argued that as a consequence he did not know the purpose of the hearing on 8 February until after it commenced, and therefore had no opportunity to prepare for the hearing. Mr Muto argued that the issues relevant to the application by the Council were complex and by failing to allow the time he required to properly prepare, the Tribunal had denied him procedural fairness. Mr Muto submitted that the refusal of the Senior Member to allow him to rely on the text exchange with Mr Adem as proof of Mr Muto's lack of understanding of what the hearing on 8 February concerned amounted to a denial of natural justice.

17 Mr Muto relies on ss 97, 98, 99 and 108 of the VCAT Act. The Tribunal is required by s 97 to act fairly and according to the substantial merits of the case, and by s 98 is bound by the rules of natural justice. Section 99 of the VCAT Act requires that notice of the time and place of a hearing must be given to each party. During the costs hearing Mr Muto made application for reconstitution of the Tribunal pursuant to s 108 of the VCAT Act on the ground of bias. He submits that such an application is to be dealt with by a Presidential Member before the hearing continues, and that the failure of the Senior Member to follow the required course resulted in Mr Muto being forced to proceed with the costs hearing on 8 February. The reconstitution application was refused following a hearing before a Presidential Member on 24 February 2016.

18 The essence of all of Mr Muto's complaints is that the failure to adjourn on 8 February deprived him of the opportunity to properly prepare for the costs argument.

19 Similar arguments have been raised by Mr Muto throughout this proceeding, including before Williams J on the application for leave to appeal the substantive decision of the Tribunal.[4] Her Honour there stated:

The content of the rules of natural justice may vary according to the circumstances of the particular case. As the Secretary submits, the Court must consider the realities of the situation when determining what fairness requires in those circumstances.
In this case, the content of the rules of natural justice and the requirements of fairness must be considered in light of:

(a) the long procedural history of the VCAT proceedings;

(b) the numerous previous adjournment applications by Mr Muto;

(c) the three previous adjournments of the hearing; and

(d) the fact that Mr Muto had been unrepresented at times.[5]

Williams J observed that a decision on an application to adjourn is discretionary[6], and continued:

In Aon Risk Services Australia Ltd v Australian National University, the High Court held that:

there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.

In Macdiggers Pty Ltd v Maria Dickinson & Peter Dickinson, Warren CJ said this in a case where a litigant in person had been denied an adjournment:

Justice is the paramount consideration. Various factors will weigh in the determination of what is just in the circumstances, including of course 'the litigation strain' to all involved, the prejudice to the applicant if refused, the prejudice to the respondent if granted, and the appropriateness of a costs order. The decision whether to exercise the discretion to grant and [sic] adjournment is not a situation to punish an applicant for any mistake or otherwise but to ensure a fair and reasonable hearing.[7]

20 For the following reasons I conclude that the Tribunal did not err in refusing to adjourn the costs application. First, Mr Muto was aware well prior to 8 February 2016 that the Council had applied to the VCAT pursuant to cl 46F of sch 1 of the VCAT Act for an order that it not be required to bear the costs of Mr Muto of the serious misconduct proceeding. It is clear from listening to the audio tape of the hearing before Senior Member Byard that Mr Muto was aware of the application by the Council prior to 8 February. During the hearing before me, Mr Muto confirmed that the Council's application was sent to him by the solicitors representing him in the County Court proceeding. After the application was made a Notice of Hearing was sent by the VCAT to Mr Muto listing the serious misconduct proceeding for a hearing on 8 February 2016 with an estimated duration of three hours. There was no other issue then outstanding in the serious misconduct proceeding requiring such a hearing. The text message sent by Mr Muto to the Mayor of the Council on 7 February demonstrates that Mr Muto was alive to the fact that an application had been made by the Council in the serious misconduct proceeding. If he was in any doubt as to the purpose of the hearing on 8 February, Mr Muto was in a position to contact the VCAT or the solicitors for the Council well prior to that date to clarify the situation. It is more likely Mr Muto's purpose for the text exchange was to establish that the costs application was being pursued absent the authority of the Council, and was therefore beyond power. Second, Mr Muto was familiar with the cl 46F issue. The possible obligation of the Council pursuant to cl 46F was discussed in correspondence passing between Mr Muto's solicitors and the Council's solicitors as early as mid-2012. Mr Muto knew from the substantive decision in the serious misconduct proceeding that the Council wished to be heard in relation to any application that it should pay his costs of that proceeding. In July 2015 the Tribunal heard an application by the applicant councillors, pursuant to cl 46F, that their costs of the serious misconduct proceeding be paid by the Council. Mr Muto appeared and was present for most of that hearing. An exchange of correspondence between Mr Muto's solicitors and the Council's solicitors in October 2015, copied to Mr Muto, dealt with the July 2015 costs decision and the application of cl 46F to Mr Muto's costs of the serious misconduct proceeding. Mr Muto responded to his solicitors as follows:

Well James at least they have confirmed there will be no appeal of VCAT's decision that should help.

As I have already told you the current council has no idea of what is going on, they have not been briefed and YES I can be at the County Court at 9.15 next Monday

mm

On 18 November 2015 in the County Court proceeding Judge Anderson heard preliminary argument in relation to Mr Muto's third party claim against the Council. Part of the claim was struck out. The orders made by Judge Anderson contemplated the Council making application to the VCAT pursuant to cl 46F. Mr Muto was represented by solicitors in the County Court proceeding and by counsel at the preliminary hearing before Judge Anderson. After orders were made there was further correspondence between solicitors which in part related to the cl 46F issue.

21 Third, it is evident from listening to the audio recording of the VCAT proceeding that Mr Muto was aware of the issues relevant to the Council's application. The VCAT hearing commenced shortly after 10.00 am and concluded at about 3.30 pm. Submissions by Mr Muto occupied most of that time. Mr Muto made similar arguments at the hearing at first instance as those raised by him on appeal. Mr Muto had documents available which he presented to the Tribunal. After listening to the audio recording of proceedings I did not come to the conclusion that Mr Muto was ill prepared for the hearing on 8 February 2016.

22 Fourth, prejudice to the Council in allowing the adjournment was unlikely to be ameliorated by an order that Mr Muto pay the costs thrown away. At the hearing on 8 February Mr Muto stated that he had not paid costs ordered against him in the three misconduct proceedings, and had no intention of doing so. Adjourning the costs application would have added to the burden the litigation placed on the Council.

23 Mr Muto has not established denial of procedural fairness by the Tribunal to him in the conduct of the costs application on 8 February 2016. Nor has he established that the rules of natural justice were not applied, or that the exercise by the Tribunal of the discretion to refuse to adjourn the hearing was otherwise infected by error.

Was there a lack of delegated power from the Council to make the costs application?

24 Mr Muto submitted that the cl 46F application filed with VCAT on 24 November 2015 was not made pursuant to a decision of the Council or any delegated power of the Council. Mr Muto argued it was the CEO of the Council and the Council's solicitor Mr Robert Crow who decided, without delegated authority, to make the application. Mr Muto submitted the application was therefore made ultra vires and was an abuse of process and as a consequence the orders made by the Tribunal were invalidated and should not be allowed to stand.

25 Mr Muto relied on his text exchange of 7 February 2016 with the Council Mayor to establish that it was not a decision of the Council to make the cl 46F application.

26 In an affidavit sworn on 29 July 2016, Mr Crow said that he received instructions in relation to the serious misconduct proceeding from the CEO of the Council, who had delegated authority to make such decisions and to provide instructions in relation to the proceeding. Mr Crow produced copies of the Instruments of Delegation from the Council to the CEO which cover the relevant period. Each instrument is a delegation of power by the Council to the CEO pursuant to s 98(1) of the LGA. The power delegated by each instrument includes:

The power to

1. determine any issue;

2. take any action; or

3. do any act or thing

arising out of or connected with any duty imposed, or function or power conferred on Council by or under any Act.

27 One of the additional documents provided by Mr Muto during the hearing before me was a Council policy called 'Exercise of Delegation'. That policy document confirms that most decision-making power of the Council is exercised by formal delegation to members of staff or special committees.

28 There is no reason to doubt the evidence of Mr Crow. I accept that it was the Chief Executive Officer of the Council who decided that the Council should apply to the VCAT for the cl 46F order, and instructed Mr Crow accordingly. I accept that the CEO made that decision within power pursuant to delegated authority from the Council.

Was the Tribunal required to be constituted by two members in accordance with cl 46E?

29 The serious misconduct application to the VCAT was made pursuant to s 81J(1)(b) of the LGA. At the time the application was made in 2012, that provision read:

(1) After a Councillor Conduct Panel has conducted a hearing, the Panel may-

...

(b) authorise an applicant to make an application to VCAT if the Panel considers that there are reasonable grounds on which VCAT may make a finding of serious misconduct against a Councillor;...

30 The general procedure of the VCAT is governed by Part 4 of the VCAT Act. Pursuant to s 64 of the VCAT Act the Tribunal is to be constituted by between one and five members and the President determines the constitution of the Tribunal for each proceeding. One purpose of sch 1 of the VCAT Act is to set out variations from the Part 4 procedure for certain proceedings. Part 13B of sch 1 makes provision for proceedings under the LGA. At the time the serious misconduct proceeding commenced, cl 46E(1) in part 13B of sch 1 read:

The Tribunal is to be constituted for the purposes of proceedings under sections 30, 81D, 81E and 81J(1)(b) of the Local Government Act 1989 by at least two members-

(a) one of whom is a senior member and has been admitted to legal practice;

(b) one of whom is a person who has at least 5 years experience in local government governance matters.

The clause has since been amended to remove reference to ss 81D and 81J(1)(b).

31 Mr Muto submitted that cl 46E as in force at the time that the serious misconduct proceeding commenced applied to the costs application made by the Council in November 2015. He argued that it was therefore a requirement that the Tribunal be constituted by two members, and a single member lacked jurisdiction to hear and determine the costs application.

32 For the Council it was submitted that the cl 46E(1) requirement as to constitution of the panel related to the hearing and determination by VCAT of the substantive issue of serious misconduct and the imposition of penalties pursuant to s 81K(3) of the LGA, but not to an ancillary application in relation to costs made pursuant to cl 46F of the VCAT Act. Council argued that cl 46E did not refer to proceedings under cl 46F and therefore did not apply to those proceedings. Because cl 46F itself was silent as to how the Tribunal was to be constituted, the general provision applied, and constitution of the Tribunal was to be determined by the President.[8]

33 'Proceeding' is defined in the VCAT Act to mean a proceeding in the Tribunal. A proceeding is generally understood to be the vehicle by which the jurisdiction of a court or tribunal is invoked,[9] and commences with the initiating application and continues until all issues are finally dealt with.[10] All steps taken are part of the proceeding. There is no distinction between 'proceeding' and 'proceedings'.[11]

34 When the serious misconduct proceeding was commenced in 2012 there was a requirement imposed by cl 46E(1) that the Tribunal be constituted by at least two members 'for the purposes of' the proceeding. There were limited exceptions to this requirement. Orders necessary to give effect to a settlement could be made by any member.[12] Similarly the power to give directions was exercisable by any member.[13] Those exceptions created by the VCAT Act were not excluded by Part 13B of sch 1 of the Act, and therefore applied in respect of the serious misconduct proceeding. No similar exception existed in respect of a costs application made pursuant to cl 46F of sch 1. The costs application made pursuant to cl 46F was made as part of the serious misconduct proceeding.

35 However, that is not the end of the matter. Both s 81J(1)(b) of the LGA and cl 46E(1) of sch 1 of the VCAT Act were amended by the Local Government Amendment (Improved Governance) Act 2015. The provisions of the amending Act were in operation at the time the cl 46F application was made to the VCAT by the Council and when the application was determined. For the Council it was submitted that the relevant provisions were procedural in nature and that therefore it was the provisions in force at the time the application was heard and determined which applied.

After a Councillor Conduct Panel has conducted a hearing, the Panel may -

...

(b) make a finding of serious misconduct against a Councillor; ...

Following the amendment, applications alleging serious misconduct were to be heard and determined by the Councillor Conduct Panel and not by the VCAT. From the date of commencement of the amending Act only applications by the Chief Municipal Inspector pursuant to s 81E alleging gross misconduct may be heard by the VCAT. Clause 46E(1) of sch 1 of the of the VCAT Act as amended reads:

(1) The Tribunal is to be constituted for the purposes of proceedings under sections 30 and 81E of the Local Government Act 1989 by at least 2 members -

(a) one of whom is a senior member or presidential member and has been admitted to legal practice;

(b) one of whom is a person who has at least 5 years experience in local government governance matters.

37 For the following reasons I conclude that by the time the cl 46F application by the Council was heard and determined the requirement that the Tribunal be constituted by at least two members no longer applied. First, there was no longer a provision of the VCAT Act which imposed that requirement. The text of cl 46E(1) as amended did not refer to proceedings under s 81J(1)(b) of the LGA. The constitution of the Tribunal was therefore determined in accordance with s 64 of the VCAT Act.

38 Second, there was no transitional provision in the amending Act which provided for the continued application of the unamended cl 46E(1) of sch 1 of the VCAT Act to every VCAT proceeding issued pursuant to ss 81D and 81J(1)(b) of the LGA prior to the amending Act coming into operation. Absent such a transitional provision, it is not possible to conclude that it was the intention of Parliament that the requirements as to the constitution of the Tribunal imposed by the unamended cl 46E(1) continue to apply to every proceeding issued but not completed at the time the amending Act came into operation. Third, the amending Act, by removing the requirement that the Tribunal be constituted by at least two members, does not alter any rights or obligations of the parties existing prior to commencement. The amendment to cl 46E(1) does not create, modify or abolish substantive rights. The rights and obligations of the parties remained to be determined by the Tribunal in accordance with cl 46F of sch 1 of the VCAT Act. The fact that the Tribunal was now to be constituted in accordance with s 64 of the VCAT Act and not as required by the unamended cl 46E(1) of sch 1 did not retrospectively alter any rights or obligations of the parties.

39 I conclude that a single member of the Tribunal had jurisdiction to hear the cl 46F application on 8 February 2016 and to make orders determining that application on 15 April 2016.

40 The requirement that the Tribunal provide reasons is contained in s 117 of the VCAT Act. Kyrou J, as his Honour then was, considered the requirements of s 117 in State of Victoria v Turner.[14] After referring to the Court of Appeal decision in Franklin v Ubaldi Foods Pty Ltd,[15] his Honour said:

On the basis of the above decisions and the terms of s 117 of the VCAT Act itself, the position in relation to s 117 is that where the Tribunal fails to give reasons or gives reasons which omit a finding on a material question of fact or otherwise fail to disclose its path of reasoning for reaching its decision, it commits a vitiating error of law.

Failure by the Tribunal to address substantial points or significant issues, or to give consideration to evidence or material which is relevant and cogent may be a vitiating error.[16]

41 Mr Muto submits that the Tribunal's reasons are inadequate as follows: first, they do not refer to or deal with the submissions of the parties, or the evidence tendered by Mr Muto; second, necessary conclusions of fact and law are not set out; and third, there is no path of reasoning from conclusions of fact and law to the outcome the Tribunal reached.

42 The reasons commence with a brief history of the serious misconduct and gross misconduct proceedings. Reference is made by the Senior Member to his earlier costs decision in which he ordered that the Council pay the applicant councillors' costs of the serious misconduct proceeding. Contrary to Mr Muto's submission, in the two costs decisions the Senior Member took a consistent approach to the construction and application of cl 46F of sch 1 of the VCAT Act. In each decision the Senior Member concluded that it was cl 46F as in force when the serious misconduct proceeding commenced which applied, and that the clause had a beneficial purpose. In the current decision, discussing the purpose and operation of cl 46F, the Senior Member said:

It was clearly a policy of the original Clause 46F that the Council should bear the costs of councillor conduct proceeding except where such proceedings were commenced by the Secretary. Other parties were free to pursue their rights without having the threat of their costs, or other parties' costs, hanging over them.

However, this benefit was always subject to the safeguard that VCAT could 'otherwise' order in appropriate circumstances.

There followed in the reasons a general discussion of circumstances which might justify an 'otherwise' order. The Senior Member confirmed that it was not merely a matter of 'costs following the event'. He noted that the Council had agreed to pay Mr Muto's costs of the serious misconduct proceeding until 4 June 2012, and there was then an exchange of correspondence in which the Council communicated that it would not pay the costs of that proceeding unless ordered to do so.

43 The reasons next contain an analysis of the three misconduct proceedings against Mr Muto. Having analysed the history of the proceedings and Mr Muto's conduct the Senior Member reached the following conclusions of fact:

(a) Mr Muto's conduct of the three proceedings was unsatisfactory and caused the proceedings to be delayed and prolonged, to the unnecessary disadvantage of other parties.

(b) Mr Muto's defence of the three misconduct proceedings lacked substance or merit, and involved taking technical points which also lacked merit but resulted in the need for lengthy hearings. Despite receiving warnings in various rulings, Mr Muto continued to pursue unmeritorious arguments.

(c) Mr Muto's misconduct as a councillor continued, despite the consent findings of misconduct in the first proceeding and subsequent attempts at conciliation and counselling. In those circumstances the need to bring the serious misconduct proceeding was effectively forced on the applicant councillors.

The Senior Member relied on these findings to justify his conclusion that the Council should not be required to bear Mr Muto's costs of the serious misconduct proceeding. In my view the path of reasoning to that conclusion is clear, intelligible and logical.

44 Mr Muto submits that the reasons are inadequate because they fail to deal with a number of significant arguments raised by him. First, Mr Muto argued that there was a failure to deal with his argument, that the purpose of cl 46F was to protect a councillor from attack by the Council or a group of councillors, and the clause should therefore be given a beneficial construction. I disagree. The excerpt from the reasons in paragraph 42 above shows that Senior Member Byard considered the beneficial nature of cl 46F and the limits on the benefit it bestowed.

45 Second, Mr Muto submitted that the Tribunal failed to deal with his argument that there was an onus on the Council to apply for an 'otherwise' order at the commencement of the serious misconduct proceeding. Mr Muto argued that this was necessary to enable the parties to a serious misconduct proceeding to be clear about their potential costs exposure from the start so as to determine what steps to take in the proceeding without costs getting out of hand. There is nothing in the text of cl 46F, or in the context of the VCAT Act as a whole, which supports this submission. In my view there is no substance or merit in the submission, and no need for the Senior Member to have explained in the reasons why he rejected it. Third, Mr Muto submitted that he had been denied natural justice and procedural fairness throughout the course of the serious misconduct proceeding. This was an attempt by Mr Muto to effectively re-litigate the substantive aspect of the proceeding which had been finally determined by Senior Member Byard and Member McNamara in the decision of 10 July 2013 and the refusal of Mr Muto's application for leave to appeal by Williams J on 12 December 2014. The Senior Member dealt with this argument concluding correctly that it was not 'open or relevant for Mr Muto to attempt to reopen questions of natural justice dating back to June 2012'.

46 Fourth, Mr Muto submitted there was a failure by the Senior Member to deal with the evidence upon which he relied. I have reviewed all of the documents on which Mr Muto relies. The reasons adequately deal with evidence which was relevant and cogent to the issue which was before the Tribunal, that is, the question of what order should be made on the Council's application pursuant to cl 46F of the VCAT Act. In my view there was no issue of substance or significance raised by the evidence relied on by Mr Muto which required, but did not receive, attention in the Senior Member's reasons.

47 Mr Muto has failed to demonstrate an arguable case that the reasons of the Tribunal for the costs decision were inadequate.

Did the Tribunal fail to properly construe and apply cl 46F?

48 When the serious misconduct proceeding commenced, cl 46F of sch 1 of the VCAT Act read:

Despite section 109, the Council is to bear the costs of the proceedings unless -

(a) the Secretary is the applicant; or

(b) VCAT otherwise orders.

Clause 46F has since been amended on two occasions. However, there is no dispute that the clause in original form applies to the Council's application.

49 Mr Muto submitted, first, that the Tribunal failed when construing cl 46F to take into account the beneficial purpose for which it was enacted. Second, relying on the decision of the High Court in Oshlack v Richmond River Council,[17] in particular the judgment of McHugh J, Mr Muto submitted that his conduct as the unsuccessful party in the serious misconduct proceeding was not relevant to the exercise by the Tribunal of the discretion as to costs.

50 As I stated above, there is no merit in the first of Mr Muto's submissions. In the reasons, the Senior Member identified as the starting point for construction of cl 46F that the Council is to bear the costs of serious misconduct proceedings in VCAT; this enables parties to the proceeding to be '... free to pursue their rights without having the threat of their costs, or other parties' costs, hanging over them'. However, this benefit might be lost subject to the circumstances of the particular proceeding. The Senior Member's construction of cl 46F accords with the text of the provision.

51 The Tribunal's task on the costs application by the Council was to exercise a discretion in accordance with cl 46F. The Senior Member recognised, correctly in my view, the starting point that the Council was to bear the costs of the serious misconduct proceedings, but that the discretion of the Tribunal was otherwise unfettered. Such a discretion is designed to enable the Tribunal to take into account the great variety of circumstances which might arise in serious misconduct proceedings. The Senior Member gave careful consideration to the factors he considered relevant to the exercise of the discretion. In doing so, he acted judicially and not arbitrarily. The facts and circumstances upon which the Senior Member placed most reliance in reaching his conclusion were in my view relevant to the exercise of the cl 46F discretion.[18]

52 The second point made by Mr Muto relied on the following statement of McHugh J in Oshlack:[19]

Mason CJ, Toohey J and I were all of the view that one starts with the proposition that a successful party to litigation ... can usually expect to receive a costs award in its favour unless its own conduct disentitles it from the benefit of the discretion. It is the conduct of the successful party, and not the conduct or motives of the unsuccessful party, which is relevant to the exercise of the costs discretion. ...

Applying that rationale to the serious misconduct proceeding, Mr Muto argued that, as he was the unsuccessful party, his conduct was irrelevant to the exercise of discretion in cl 46F. Mr Muto's reliance on the reasons of McHugh J is misplaced. Properly understood, and applied to the circumstances of this case, the reasoning of McHugh J in Oshlack supports the conclusion as to costs which the Tribunal reached on the application by the Council. The Senior Member recognised, as the starting point to the exercise of the cl 46F discretion, that ordinarily the Council is to pay the councillor's costs of the proceeding. The question then becomes whether there are circumstances which justify or require a departure from that position. The reasoning of McHugh J supports the proposition that a party to litigation who can ordinarily expect to receive the benefit of a costs order might become disentitled to that benefit because of the conduct of that party in relation to the proceeding. In my view the approach taken and reasoning adopted by the Senior Member in concluding that Mr Muto, by reason of his conduct, was no longer entitled to the benefit of a costs order under cl 46F, is consistent with the approach enunciated by McHugh J in Oshlack.[20]

53 Mr Muto has applied for leave to appeal pursuant to s 148(2) of the VCAT Act. The relevant principles in relation to such an application were succinctly stated by Williams J in Muto v Secretary to the Department of Transport, Planning and Local Infrastructure & Ors[21] as follows:

Every application for leave depends on the justice of the particular case and the decision is discretionary. Whilst the discretion cannot be fettered, the following principles nevertheless apply to applications under s 148:

(1) the applicant must identify a question of law arising out of the decision;

(2) the question must be such that if VCAT erred in respect of it, the applicant's claim would be advanced;

(3) the applicant must show that the VCAT decision is attended by sufficient doubt to justify the grant of leave or that there is a real or significant argument to be put on the question of law; and

(4) it must be just to all parties to grant leave.

54 I have concluded that there is little merit in Mr Muto's proposed grounds of appeal. In my view Mr Muto has not demonstrated that the decision of Senior Member Byard is attended by sufficient doubt to justify the grant of leave. It would not be just to grant Mr Muto leave to appeal on any of his proposed grounds. I will dismiss Mr Muto's application for leave to appeal, and will hear from the parties as to the question of costs.

[2] Muto v Secretary to the Department of Transport, Planning and Local Infrastructure & Ors [2014] VSC 619 (12 December 2014).

[3] Muto v Department of Planning and Community Development [2013] VSCA 85 (12 April 2013).

[4] Muto v Secretary to the Department of Transport, Planning and Local Infrastructure & Ors [2014] VSC 619 (12 December 2014).

[5] Ibid [130]-[131] (citations omitted).

[7] Ibid [134]-[135] (citations omitted).

[9] Braeside Bearings Pty Ltd v H J Brignell & Associates (Boronia) [1996] Victorian Reports 3; Lillas & Loel Lawyers Pty Ltd v Celona & Ors [2014] VSCA 19 (25 February 2014) [32] (Priest JA) ('Lillas').

[10] Buttigieg v Melton SC No. 2 [2004] VCAT 868 (14 May 2004) [50] (Morris J).

[11] Lillas [2014] VSCA 19 (25 February 2014) [32].

[12] VCAT Act, s 93(1); Muto v Department of Planning and Community Development [2013] VSCA 85 (12 April 2013) [35]-[37].

[14] [2009] VSC 66 (4 March 2009) [237]-[241].

[15] [2005] VSCA 317 (21 December 2005) [38].

[16] Hunter v Transport Accident Commission [2005] VSCA 1 (10 February 2005) 21; XYZ v State Trustees Limited [2006] VSC 444 (22 November 2006) [42].

[18] Ibid [22], [31], [35], [40]-[41], [45].

[20] Ibid [80]-[81] (citations omitted).

[21] [2014] VSC 619 (12 December 2014) [124] (citations omitted).

Civil and Administrative Tribunal Act 1998

Local Government Amendment (Improved Governance) Act 2015

At a glance

Court

Decision date

Before

Source

Judgment (116 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (1)