Victorian Civil and Administrative Tribunal|1999-08-31

Clifton Properties Corporation Pty Ltd v Litewaite Constructions [1999] VCAT 49 (31 August 1999)

Media Neutral Citation: [1999] VCAT 49

Domestic building - Insurer - Claim: whether made -extension of time -

RESPONDENT 3: HIH Winterthur Casulty & General Insurance Ltd

2. The proceedings as far as they concern the Third Respondent are dismissed as sought in the Summons for Directions filed on 4 May 1999.

3. Order in consequence that the Applicant pay the costs of the Third Respondent in an amount to be agreed. In the event of a failure to reach agreement, I direct that this matter (of costs) be listed before me on a convenient date after 12 October 1999.

4. The proceedings as they concern the Applicant and the First and Second Respondents are to be listed for further directions on a date after 12 October 1999.

1. On 19 May 1999 I set aside for separate hearing by me the following questions:

c) Whether if so such claim was rejected or as the case may be the insurer on or about 13 January 1999 declined to indemnify under the policy it is necessary for the Applicant to apply for an extension of time under s126 of the Act in order to review the insurer's decision; and

d) Whether if that be necessary there should be an exercise of discretion under s.126 in favour of the Applicant extending time accordingly."

2. I heard arguments and submissions from the parties in this matter on 5 August 1999. At the hearing the First Respondent was represented by the Second Respondent.

3. The first question concerns whether a 'claim' has been made. One contention advanced was that no claim at all had as yet been made under the policy. Under the policy, however, a 'claim' is defined, not in the usual way, but as meaning:

"a) any writ, statement of claim, summons, application or other originating legal or arbitral process, cross-claim, counterclaim or third or similar party notice issued against or served upon the Insured; or

b) the receipt by the Insured of any written or verbal notice of demand for compensation made by a third party against the Insured."

Considering this definition of 'claim' I cannot agree that no claim at all has been made under the policy. In my view a 'claim' as defined was made. Considering paragraph (a) of the definition in my view it was made on or about 16 October 1998. The insured under this policy is the First Respondent and it was then or about then that the Insurer was provided with copy of Points of Claim by the Applicant against the First Respondent filed on 12 October 1998. It is possible, though, that a claim was made even earlier if I consider the terms of the letter of 15 September 1998 seen in the light of paragraph (b) of the definition.

4. Therefore either under paragraph (a)(as seems more likely) or under paragraph (b) of the definition of 'claim' in the policy, in my view, a claim was made. In my view also it is clear that the claim, so made, has been rejected. On 13 January 1999 a letter was sent by the insurer's solicitors referring to previous correspondence advising that indemnity under the policy would not be granted. The terms of that letter support the view, objectively, that a claim had been made as defined. And, as it happens, that letter falls within a 90-day period if one goes on 16 October 1998 as the claim date. A more exacting analysis perhaps would be to say that within that period a decision was made to decline to indemnify.

5. Either as a rejection of a claim or as a declination of indemnity it is, in my view, necessary for the Applicant to seek an extension of time under s.126 of the Victorian Civil and Administrative Tribunal Act 1998 ('the VCAT Act') in order to review the insurer's decision. This arises because under s61 of the Domestic Building Contracts Act 1995 (the 'DB Act') there is a requirement (s.61(3)) that to review an insurer's decision: "the application must be made within 28 days of the date the person received notice of the decision." It was argued on behalf of the Applicant that the position was one governed in fact by s59A of the DB Act. That provides as follows:

"(1) The Tribunal has jurisdiction to hear and determine any dispute concerning an insurance claim concerning domestic building work or an insurer's decision on such a claim.

(2) The Tribunal may make any order it considers fair to resolve a dispute referred to in sub-section (1).

(3) The Tribunal may hear and determine a dispute under this section on the application of -

(b) the Director acting on behalf of one or more building owners who are parties to the dispute."

However, I cannot agree. I regard s59A as a "jurisdictional provision" as it was termed. It is foundational to the Tribunal's jurisdiction in insurance disputes but it is not, itself, an avenue for or of review. A sure indication that this is so lies in the circumstance that s59A sets no time limits. The contrast is with s61(3). If Parliament had intended s59A to be a further avenue for or of review, it would have set a time limit as it did with s61(3) on a party referring a dispute to the Tribunal. But no time limit was set and this is the plainest of indications that Parliament did not intend that s59A should be a further review avenue.

6. Section 126 of the VCAT Act provides as follows:

"(1) The Tribunal, on application by any person or on its own initiative, may extend any time limit fixed by or under an enabling enactment for the commencement of a proceeding.

(2) If the rules permit, the Tribunal, on application by a party or on its own initiative, may-

(a) extend or abridge any time limit fixed by or under this Act, the regulations, the rules or a relevant enactment for the doing of any act in a proceeding; or

(b) waive compliance with any procedural requirement, other than a time limit that the Tribunal does not have power to extend or abridge.

(3) The Tribunal may extend time or waive compliance under this section even if the time or period for compliance had expired before an application for extension or waiver was made.

(4) The Tribunal may not extend or abridge time or waive compliance if to do so would cause any prejudice or detriment to a party or potential party that cannot be remedied by an appropriate order for costs or damages.

(5) In this section - "relevant enactment" means enactment specified in the rules to be a relevant enactment for the purposes of this section."

7. The guiding light to the exercise of discretion in s126(1) of the VCAT Act is to be found in the judgement of Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. The factors he listed (at 348-9) as relevant in the exercise of discretion to extend time include: (a) the explanation for the delay; (b) the actions of the applicant in contesting the decision otherwise than by appeal; (c) prejudice, (d) the merits. Although there is no rule that an acceptable explanation is an essential pre-condition to the exercise of the discretion (see Peczalaki v Comcare [1999] FCA 366) "it is to be expected that such an explanation will normally be given": Comcare v A'Hearn [1993] FCA 498; (1993) 45 FCR 441 at 444.

8. As I have noted, a contention advanced by the Applicant was that no claim at all had been made under the policy. In light of this contention, it was contended also that it was not necessary to seek an extension of time to review the insurer's decision. This may have deflected focus away from the requirements of s126. Contributing also to this deflection may have been the belief that s59A governs the situation and specifies no time limit.

9. I have addressed each of these points. I have said that in my view a claim was made and that it is necessary to seek an extension of time under s126. I have said also that s59A in my view specifies no actual time limit because it is not intended to provide an avenue for or of review.

10. If I am to exercise discretion to extend time under s126 then, in my view, I should be provided with evidence in a formal sense in support of the application. The reason for this is plain. Without an extension of time under s126, a party is free from the possibility of an appeal once the time in which to seek review has expired. This, in my view, is a vested right (see Gionaka Pty Ltd v HGFL, DBT, 30 July 1996) which is not lightly to be disturbed. In order for a right of this nature to be disturbed the Tribunal must be, in my view, strongly of the opinion that time should be extended. In my view also the Tribunal can only have the requisite strength of opinion if, in the light of the criteria set out by Wilcox J in the Hunter Valley case, there is evidence in the case, in the formal sense, which is forthcoming.

11. No evidence was given by or on behalf of the Applicant in support of its application and no Affidavit was sworn directly addressing any of those criteria. It was submitted that it should not be necessary to require an Affidavit. I would agree that this may be so if evidence is called. But if evidence is not called then, for the reasons I have given, it is necessary, in my view, to have an affidavit or affidavits sworn in support. As I have said an existing substantive right of a party should not lightly be disturbed. I should add it matters not that the right is that of an insurer: it could be a right of any party.

12. For one reason or another, as I have said, the Applicant has not focused on this. No evidence having been called, and no Affidavit having been sworn in support of the Application, I am not of the opinion at all that time should be extended under s126. However even if I take account of the submissions made, and of the other Affidavits which appear on file, I am still not of the opinion strongly or at all that time should be extended. It is not to the point to say, in my view, that the Applicant and its solicitors were not 'mindful' of the claims definition in the policy. And during the critical period of 28 days leading up to 10 March 1999 there is evidence of nothing at all being done to apply to extend time. On that date the insurer's solicitors wrote to the Applicant's solicitors saying that the 28 days appeal period had expired and that the insurer was not consenting to an extension of time. Before this time, however, and significantly, there was a conversation between solicitors in which they actually discussed s61 of the DB Act. This was in fact on 4 March 1999 (see the Affidavit of Naomi Joy Pavlakis sworn 8 June 1999) nearly a week before time was due to expire. Even in the other critical period, that after 10 March 1999, nothing of any moment at all appears to have been done to take steps immediately to seek an extension of time. It is recorded though that in March 1999 (on an unspecified date), in the light of the insurer's refusal to indemnify, counsel was briefed to draw points of claim against the insurer and that these were drafted by counsel on 1 April 1999. See again the Affidavit of Naomi Joy Pavlakis.

13. From all of this it must follow, I think, that no grounds whatever for an exercise of discretion to extend time under s126 have been made out. But even if all of this was wrong, and apart from s126(4), there otherwise were grounds to extend time as a matter of discretion, I would still need to consider the effect of prejudice. It is true that the Applicant will suffer a prejudice by my not extending time but if I was to extend time, if there were the grounds in existence which justified me doing so, there would be a prejudice, so I am told, to the insurer considering the terms of s126(4). That prejudice, so it was put, now lies in the incapacity of the insurer to take steps, for example, to have the builder return. In view of the conclusions I have reached, however, it is unnecessary to rule distinctly on this point. But if there was a prejudice of this nature arising, it is hard to see how it is one which could be remedied by an "appropriate order for costs or damages" within the terms of the subsection.

14. I am of the view, for the reasons, I have given, that I should not exercise discretion to extend time under s126.

15. Accordingly it must follow, I think, that I should dismiss the proceeding as regards the insurer under s75 of the VCAT Act as being misconceived or lacking in substance as sought in para 3 of the Summons for Directions filed on 4 May 1999.

16. It must follow, also, that the insurer has an entitlement to costs considering s75(2) of the VCAT Act or considering s109. In the event that the parties are unable to agree on the costs payable to the insurer I direct the Registrar to list this matter before me (on the issue of costs only) on some convenient date after 12 October 1999.

17. My reasons do not prevent the proceeding continuing against the First and Second Respondents. Nothing was said to me by those parties which would give me any opinion that the proceedings against them should be struck out or dismissed. Accordingly I direct that the proceedings involving the Applicants and those parties be listed for directions hearing on some convenient date also after 12 October.

Civil and Administrative Tribunal Act 1998

Building Contracts Act 1995

Clifton Properties Corporation Pty Ltd v Litewaite Constructions [1999] VCAT 49

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Judgment (42 paragraphs)

Clifton Properties Corporation Pty Ltd v Litewaite Constructions [1999] VCAT 49 (31 August 1999)

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Legislation Cited (2)

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