Victorian Civil and Administrative Tribunal|2012-02-20

Celona v Lillas & Loel Lawyers Pty Ltd (Legal Practice) [2012] VCAT 403 (20 February 2012)

Legal Practice List; summary determination upon failure to attend compulsory conference; application to reopen whether reasonable excuse for non-attendance

Celona v Lillas & Loel Lawyers Pty Ltd (Legal Practice) [2012] VCAT 403

For Santo Antonio Celona, Antonina Celona and Tony Celona Nominees

This proceeding seems to go back to a commercial dispute which was heard in the Supreme Court of Victoria in 2009. The clients in question were Mr & Mrs Celona and their company, Tony Celona Nominees Pty Ltd. They engaged Lillas & Loel Lawyers Pty Ltd to act for them. Why they went so far afield as to instruct a law firm in Queensland to conduct proceedings in the Supreme Court of Victoria is not obvious, however, that was the decision that was made.
The Celonas say that they became dissatisfied with the service which they were being given. A timetable was laid down by the Court for the speedy hearing of the matter in December 2009. That timetable and trial date had to be vacated at the cost, subject so far as the Celonas were concerned, to an order to pay costs on a full indemnity basis.
In January 2010 the Celonas recovered their file from Lillas & Loel Lawyers in circumstances that are the subject of some controversy. Mr Loel who gave evidence before me by telephone, said that Mr Celona and someone who he described as a 'gentleman' by which I understood him to mean a standover man, entered Lillas & Loel's office and in effect monstered an employee solicitor managing the file, obtaining delivery up of the file without payment of costs or any arrangement to pay costs. As a result there had been proceedings and cross-proceedings between the parties as to the costs in question.
Lillas & Loel say that the corporate practitioner's costs have not been paid. The Celonas say that they have suffered loss and damage as a result of Lillas & Loel's ministrations and derived no benefit from the services provided or purportedly provided. Proceedings have ranged across the Commonwealth of Australia, apparently extending not merely to this Tribunal but also to the Magistrates' Court of Queensland and the District Court of Queensland. Arising out of those proceedings a number of cost orders have been made against Lillas & Loel.
In this Tribunal orders for $3,784, $1,500 and $1,000 have been made apparently as a result of a variety of interlocutory misdemeanours. In the Magistrates' Court of Queensland an order for $2,401.50 was made against the Celonas. None of these costs has been paid. Mr Loel says that, because he believes that ultimately his firm will be victorious and will obtain an order for payment to it of costs, it would be inappropriate to make those payments. He believes that his firm's entitlements would overtop the amount of any of these costs orders. He is confident that, if the matter were brought before a Supreme Court or the Federal Court of Australia, no winding up order would be made against his company. If execution were levied he would seek orders by way of stay. Apparently, these considerations do not seem to have been urged upon the persons who made the orders unconditionally and without stay. If they were, they obviously did not weigh with those officers at all.
The present matter which brings the proceeding before me is that in July 2011 the dispute was fixed by order of Judge Jenkins for a compulsory conference before Member Butcher. An entire day was set aside for that conference. On the day of the conference there was no appearance for Lillas & Loel. As a result, Mr Butcher treated the matter as upon a default and under Section 87 of the Victorian Civil and Administrative Tribunal Act 1998, he made orders determining the matter against Lillas & Loel and ordering that company to pay $27,000 to the Celona interests.
This is an application under Section 120 of the Victorian Civil and Administrative Tribunal Act to reopen Member Butcher's order.
Section 120(1) of the Victorian Civil and Administrative Tribunal Act provides inter alia:

(1) A person in respect of whom an order is made may apply to the Tribunal for a review of the order if the person did not appear and was not represented at the hearing at which the order was made.

Annotations to that provision in Pizer, Victorian Administrative Law have raised the question as to precisely what should be regarded as a hearing for the purposes of sub-section (1). In my view, Lillas & Loel was clearly a party in respect of whom an order has been made and I believe that the word 'hearing' should be interpreted sufficiently widely as to encompass the process which Member Butcher undertook of considering the claim made by the Celonas and making the orders which he did. Section 120(4) provides:

(a) hear and determine the application if it is satisfied that the applicant had a reasonable excuse for not attending or being represented at the hearing; and

(b) if it thinks fit, order that the order be revoked or varied.

The time limits for making such applications are laid down in the Rules. This application seems to have been made out of time and there is a further application for an enlargement of time under Section 126 of the Victorian Civil and Administrative Tribunal Act. Nothing has been said about that either in support of the enlargement of time or in opposition to it so I believe I should grant whatever enlargement of time is necessary, if any, and consider the application upon its merits, as those merits are defined by Section 120.
A provision such as Section 120 raises two distinct issues. The first is whether a reasonable excuse for non-attendance at the relevant hearing has been demonstrated and the second is, if such reasonable excuse is demonstrated, has it been demonstrated that it is appropriate in the circumstances to set aside the order? A power to set aside the order is introduced by the word 'may', that is, apt to create a discretion. See Section 45 of the Interpretation of Legislation Act 1984. Little was said as to this second element of the application until fairly late in the hearing. Logically of course, the question whether, as a matter of discretion, the order ought to be reopened having regard, for instance, to the underlying merits of the dispute between the parties, is a question which arises logically if and only if it is demonstrated that the reasonable excuse exists.
I turn my attention therefore, first to the question whether such reasonable excuse exists. Many years ago in the Administrative Appeals Tribunal, Pagone J in the case of Pantelopoulos v Transport Accident Commission (unreported 7 September 1995 quoted Simpson v Transport Accident Commission (1996) 10 VAR 93, 98) said, as a Tribunal member in the context of a provision of the Transport Accident Act, that the word 'reasonable' imports an explanation or excuse which is in accordance with reason. It does not have to be an especially compelling explanation and so there have been occasions when parties have been successful in applications under Section 120 on what might be thought are fairly feeble grounds such as 'I just forgot, sorry'; not compelling but it accords with reason and human experience that individuals can simply forget things and a person in that unhappy situation ought not be deprived of the opportunity of having his or her dispute heard and determined on its merits. It is instructed by that approach that I now turn to the question whether a reasonable excuse has been demonstrated in this case.
For reasons that are not immediately apparent, the date for the hearing of this application was fixed at a fairly remote time from the date on which the original order was made in July. It came on for hearing before me on 21st December. Mr Lapirow, Counsel for the Celonas opposing the application by Lillas & Loel to set aside the orders made by Member Butcher indicated a desire to cross-examine the deponent, Mr Loel. He also relied on an affidavit of Mr Alderuccio, his instructor. Mr Lapirow asserts and I did not understand Mr Sandbach to deny, though I do not have any recollection of it, that Mr Sandbach representing Lillas & Loel also stated a desire to cross-examine his opponent's deponent, Mr Alderuccio.
Last week Mr Lillas made contact with the Tribunal Registry stating that he desired if he were to be cross-examined, to be able to be cross-examined by telephone. I directed the Registry that in light of opposition to this course by the Celonas that I would rule on whether this procedure could be adopted having heard arguments from both parties today. I have heard that argument including arguments from Mr Sandbach that no cross-examination at all should be allowed in the circumstances. For reasons which I gave earlier today, I ruled that cross-examination should be permitted but that in the circumstances it should take place by telephone as proposed by Mr Sandbach on behalf of Lillas & Loel. Mr Sandbach's case as initially postulated was a fairly straightforward one. He referred to affidavit material sworn by Mr Loel on 20th December 2010 and earlier this month to the effect that there was a listing in the Supreme Court of Queensland at Brisbane which distracted Mr Loel from his attendance at the compulsory conference in this Tribunal, as a result of which he simply forgot and, said Mr Sandbach, in accordance with the principles described earlier in these reasons as to what constitutes a reasonable excuse, this excuse should be accepted as such and a reopening order should be made accordingly.
The February affidavit elaborated on this, saying that the matter in the Supreme Court of Queensland was a scheduling hearing, in effect a call over before Bodice J. It could have been dealt with in a fairly straightforward manner, but Mr Loel's clients were voluble non-English speaking persons who required the filing of affidavits which, in Mr Loel's view, were simply unnecessary. The result was that the entire morning was taken up dealing with these matters and the matter at VCAT was forgotten altogether. In cross-examination by telephone, Mr Loel agreed that he was well aware of the listing and that he had planned to make himself available by telephone in the breaks and interstices of his attendance at the Supreme Court. He said that he had previously participated in matters at VCAT by telephone and he was confident that this procedure would have been adequate.
Mr Lapirow invited me to reject the account given by Mr Loel. He drew attention to a number of matters. The first affidavit that was filed on 20th December referred not to the proceeding in the Supreme Court of Queensland but rather to a lengthy trial in the Supreme Court of Victoria in March 2011. The affidavit explained that this was why the defence and counterclaim for Lillas & Loel had not been filed in accordance with the orders which had been made by the Tribunal. A second affidavit filed on behalf of Mr Loel said that the clashing commitment in July was a trial in the Supreme Court of Queensland. On 21st December Mr Lapirow said that his instructors had conducted an elaborate electronic search which they said demonstrated that no such trial as alleged had taken place in the Supreme Court of Queensland, therefore what was said in the second affidavit must have been a lie.
When he was cross-examined about the two affidavits of 20th December, Mr Loel appeared generally unaware of the first affidavit, the one making the erroneous reference to the delays caused by the trial in the Supreme Court of Victoria in March. He accepted that, if a document bearing his signature was to be found on the Tribunal file and served on the Celonas, that he had sworn that affidavit. He was willing to accept responsibility for not giving proper attention to the affidavit and not establishing that it was germane to the application with respect to which it was filed but generally attributed the misfire, if you will, to the incompetence of an employed solicitor. Mr Lapirow said that this was the same sort of excuse that was made with respect to what his clients regarded as the unsatisfactory service in 2009. At any rate, it is worth noting that, as to all questions relative to the more remote progress or a lack of progress of the parties' dispute in this Tribunal and in the Courts in Queensland, Mr Loel professed an entire lack of knowledge, a detachment. He said, perhaps reasonably, that these were not matters that he expected to be cross-examined on and he had not refreshed his memory but his detachment was even more extreme, he initially said he was unaware if his firm had commenced proceedings in the District Court of Queensland with respect to the amounts that it says it is owed by the Celonas. I understood him somehow to take a bit of a step back from that.
Mr Lapirow also put into evidence a letter dated 15th March 2011 from the Victorian firm which at that stage was acting for Lillas & Loel. It offered an explanation for the non-compliance with the direction relative to the defence and counterclaim and included, inter alia:

From the affidavit and the exhibits attached you will note that our client has specified the reasons as to why he is unable to attend a trial that has been scheduled to commence before the District Court on 17th March 2011. Our client is instructed that the reasons deposed in the attached affidavit apply in this matter and are the reasons why it is now unable to comply with the orders of the Tribunal made 18th February 2011.

Mr Lapirow said that I should simply disbelieve the evidence of Mr Loel, he was making it up as he went along and that I should decline to find that there was any reasonable excuse for his company's non-appearance at the compulsory conference. He went further, submitting that Mr Loel was well aware that there was a distinction between the costs that might be ordered against a defaulting party for procedural missteps or non-steps and the actual cost to the non-defaulting party, and that it was a deliberate tactic on the part of Lillas & Loel to continue to run up costs for the Celonas in the knowledge that those costs could not be 100% recovered even if the costs orders made in their favour were paid. Further, he obtained admissions from Mr Loel which Mr Loel for reasons which were explained earlier in these reasons, did not intend to pay any costs which were ordered on an interlocutory basis and felt confident that there would be no affective enforcement against his company. Ultimately, Mr Loel was however willing to concede that it might be proper to order that the costs thrown away so far as the July compulsory conference was concerned should be paid, and that payment should be made a condition precedent to any reopening of the order made against his company. As to the costs of today's hearing, he said that he made no concession without the opportunity to confer with his company's counsel, Mr Sandbach, which in the circumstances he did not have.
What am I to make of this? I should say that I do not accept the characterisation put on matters by Mr Lapirow. I do not reject Mr Loel as a witness of truth. I do not believe that he has adopted the strategy attributed to him by Mr Lapirow. On the other hand, given that the persons who made the various costs orders in question here did not see fit to stay them, it is high handed to say the least, for Mr Loel to take the attitude which he has taken and that is, simply to defy the orders. The orders are that the costs be paid, that they be paid unconditionally and that they be paid forthwith. All of this is being ignored by Mr Loel and it is in my view symptomatic of an entirely inappropriate attitude on his part and an attitude which, for a practitioner, is appalling.
The willingness to swear affidavits which seem to have nothing to do with the subject matter in relation to which they are sworn, to in effect take so little interest in a proceeding in which he is engaged as instructing solicitor, whether for the benefit of his company or for a client, as we have seen here, is entirely unsatisfactory.
I will not elaborate further on these matters. In my view, the narrative which I have given already is a sufficient condemnation of the manner in which Mr Loel has approached these matters without further commentary from me.
I turn finally to the ultimate question, namely, whether there is a reasonable excuse shown or not. I have accepted that 'I forgot', 'I was overwhelmed by distraction' can be a reasonable excuse for Section 120 purposes but the premise here is that 'if I hadn't forgotten, if I hadn't been distracted, I would have taken appropriate action, I would have attended'. Mr Loel did not suggest that he ever had any intention of being at the compulsory conference in the flesh, nor did he suggest that he ever had any intention of appearing there by an agent solicitor or by counsel. There is power in the Tribunal to order particular forms of representation at compulsory conferences to ensure that the matter gets down to tin tacs and is not a mere formal and pointless encounter attended by representatives without authority to settle or the knowledge to make meaningful contributions to discussions. As it is, no particular orders of that type were made by the judge who set down the compulsory conference, however it is worth having a look at the notice of compulsory conference which I must assume Mr Loel received because he knew about the compulsory conference before he forgot about it. It states:

All parties to this application are notified that a Compulsory Conference has been listed in this matter to be conduced by the Victorian Civil & Administrative Tribunal, Legal Practice List on 7 July 2011 at 10:00 am.

The Compulsory Conference will be held at 55 King Street, Melbourne. Please check the ground floor list, Age Law List or VCAT Web site for your room number. The matter has been given an estimated duration of 1 day(s).

This is not just a brief mention. The notice continues:

Under Section 83 of the Victorian Civil and Administrative Tribunal Act 1998, the functions of a compulsory conference are:

to identify and clarify the nature of the issues in dispute in the proceeding;
to promote a settlement of the proceeding;
to identify the questions of fact and law to be decided by VCAT;
to allow directions to be given concerning the conduct of the proceeding.

Parties should bring all documents, plans, photographs and other material relating to the matter that have not previously been filed.
All parties to the application are required to attend the Compulsory Conference on the date and time specified above unless previously excused.

What all of that indicates is that this is a serious exchange, not just some sort of perfunctory mention like a call over which is obviously the light in which Mr Loel viewed the compulsory conference. He felt he might be able to fit it in by mobile phone in the interstices of a call over in the Supreme Court of Queensland. Had Mr Loel not on his story been overwhelmed by his voluble clients, he would have dealt with the compulsory conference in a manner which would have rendered it a farce. The level of knowledge that he has about the underlying issues and the progress of the proceedings, at least as at today's date, is painfully inadequate. That was demonstrated by his responses in cross-examination. I am prepared to draw the inference that his acquaintanceship with the matter and his general detachment from it would have been at the same level in July 2011 if he had remembered to check in by mobile phone as he intended. To approach a compulsory conference which has a Tribunal member's time set aside for a whole day in this way, is entirely unacceptable and vexatious. In my view what Mr Loel intended was no attendance at the compulsory conference at all. That leads me to the finding therefore, that his absence in a substantive sense was entirely deliberate. There is no reasonable excuse and this application is dismissed.

I have given my reasons for dismissing an application by Lillas & Loel under Section 120 of the Victorian Civil and Administrative Tribunal Act. As a result of that determination, Mr Lapirow, Counsel for the victorious Celonas, seeks an order that Lillas & Loel pay the Celonas' costs of the Section 120 application.
Mr Sandbach on behalf of Lillas & Loel opposes the making of such order. He notes that Section 109 of the Victorian Civil and Administrative Tribunal Act which is the Tribunal's general costs power and the one which governs this situation creates a presumption that costs lie where they fall. Mr Sandbach concedes that reference to Section 109(2) and (3) show that vexatious conduct by a party may enliven discretion to award costs. Acknowledging that this application has been unsuccessful, he says it was a good, arguable application and it was neither vexatious in itself nor was it vexatious for his clients to bring the application forward, therefore in accordance with the presumption that costs should lie where they fall.
Mr Lapirow says that his clients have been the victim of vexatious conduct on the part of the practitioner, namely failing to attend the compulsory conference. This failure led to the default determination which was under attack today. It was an outgrowth of that process that led his clients to be here today to defend the default determination and state it obtained.
Mr Sandbach was critical of the matter not having proceeded on 21st December 2011 because of insistence on the part of Mr Lapirow to cross-examine Lillas & Loel's opponent, Mr Loel. Mr Sandbach said that what was put to Mr Loel and which Mr Sandbach characterised as a conspiracy theory was rejected by Mr Loel and rejected by me in my findings by way of determination. Therefore, no costs order should be made.
Section 109(1) creates the presumption that costs lie where they fall. Sub-section (2) entitles the Tribunal to order costs where it is fair to do so and sub-section (3) sets out various matters which may enliven the discretion to award costs. The last of those matters is 'any other matter which the Tribunal considers relevant'. The discretion is a very broad one indeed. In my view, there is force in what Mr Lapirow has said that all of this flows from a failure on the part of Lillas & Loel to attend a compulsory conference last year, a failure which I have found was not the subject of any reasonable excuse. Moreover, the fact that this matter proceeded over two days was ultimately caused by incorrectness of the explanation given by Lillas & Loel for non-attendance at the compulsory conference. The apparent commitment which the principal of Lillas & Loel had was for a call over in the Supreme Court of Queensland, not a trial as the second of the affidavits sworn on 20th December previously indicated. It was ultimately necessary, in my view, to clarify exactly what it was Mr Loel was saying because his affidavit appeared to suggest that he was prevented from attending a conference in Melbourne by events that occurred on the same morning in Brisbane, when, as a matter of practical and geographical reality, Mr Loel had already lost the opportunity to attend the conference in Melbourne. He did clarify that and I found it of great significance to my determination that I recited what his evidence was on the point. Therefore, in my view, it was worthwhile and appropriate that Mr Loel be cross-examined in the absence of a more elaborate affidavit which described in full the matters which he explained at cross-examination.
In the circumstances therefore, I believe it is appropriate that the costs of today's hearing and of course the 21st December as well, should be borne by Lillas & Loel and I will order that Lillas & Loel must pay the Celonas' costs of this application to be taxed in accordance with County Court Scale. Given that the policy of the County Court now is that the Costs Court should, in the interests of uniformity, fix counsel's fees rather than the presiding judge should certify, I refrain from taking up Mr Lapirow's invitation either to fix or certify.

Celona v Lillas & Loel Lawyers Pty Ltd

At a glance

Court

Decision date

Source

Judgment (21 paragraphs)

Celona v Lillas & Loel Lawyers Pty Ltd (Legal Practice) [2012] VCAT 403 (20 February 2012)

Parties