PRACTICE AND PROCEDURE - Application for leave to appeal out of time - Application treated as hearing of appeal and allowed in part.

COSTS - Whether, despite appellant's partial success on appeal, appellant should pay respondent's costs of appeal.

1 I invite Neave JA to deliver the judgment of the Court.

2 The applicant, Councillor Milvan Muto seeks leave to appeal out of time[1] on a question of law, against orders made by the Victorian Civil and Administrative Tribunal ('VCAT') on 4 March 2011.

3 The relevant orders were made following an application to VCAT by the Secretary of the Department of Planning and Community Development ('the Secretary') under s 81E of the Local Government Act 1989 ('the LGA'), alleging gross misconduct by the applicant, a Councillor of the Greater Shepparton City Council. Fifty three allegations of misconduct, beginning one month after Councillor Muto was elected, were relied upon as the basis for the application.

4 Following mediation between the parties, they entered into a written settlement under which the Secretary agreed to withdraw the allegations of gross misconduct and Councillor Muto agreed to consent to findings being made by the Tribunal that he had engaged in 13 instances of misconduct to be set out in a further amended notice of allegations. The parties agreed to submit to the Tribunal that the orders which should be made under S 81 K(2) of the LGA were:

(b) that he make a public apology (in a form provided in the terms of settlement).

(c) that he take leave of absence from his position as Councillor for one month on a date to be determined and;

(d) that he give a formal undertaking to the Tribunal to abstain from all duties as a Councillor, save for attendance at the monthly ordinary Council meeting and the 'Shep Show Me ' meeting for a period of 5 months commencing on the day after the conclusion of his leave of absence.

5 In his reasons for decision Ross J discussed the definition of misconduct in s 81A of the LGA and noted that Councillor Muto had admitted that he had engaged in the conduct set out in particulars 1 to 13 of the Further Amended Notice Of Allegations. He said that:

On the basis of the admissions made I find that on 13 separate occasions Mr Muto has engaged in conduct that constitutes misconduct within the meaning of the Act.[2]

6 His Honour then set out the terms of the orders to which the parties had consented. He noted that ultimately it was for him to determine the appropriate penalty for the misconduct but that:

where a regulatory body and a respondent have reached a negotiated settlement and the penalty proposed is, broadly speaking, within the 'permissible range' having regard to all the circumstances) ... [the Tribunal] should not depart from the agreed sanction. [3]

7 His Honour was satisfied that the sanctions proposed were within permissible range and made the following orders.

1. Pursuant to s 81K(1)(a) of the Local Government Act 1989 ('the Act'), the Tribunal finds that the Respondent engaged in 13 instances of conduct constituting misconduct in the circumstances contained in the Further Amended Notice of Allegations dated 3 March 2011.
2. Pursuant to s 81K(2) of the Act the Tribunal makes the following determinations in respect of the totality of those 13 findings of misconduct:

(a) The Respondent is reprimanded for the misconduct in which he has engaged as a Councillor;

(b) The Respondent must make a public apology at the April 2011 public Council meeting in the terms set out in the reasons for decision in respect of these orders; and

(c) The Respondent must take leave of absence (as defined by section 66B of the Act) for a period of one month commencing on 4 March 2011 and ending on 3 April 2011.

1. Pursuant to section 81M of the Act a record of the Tribunal's decision must be tabled at the March 2011 meeting of the Greater Shepparton City Council and recorded in the minutes of that meeting.

8 The parties failed to reach agreement about the commencement date for the leave of absence of one month, to be taken by Councillor Muto. Order 2(c) provided that leave of absence should take effect immediately, that is on 4 March 2011.

9 On 13 April 2012 (well after Ross J's orders were made) the Secretary made a second application to VCAT again seeking a finding of gross misconduct against Councillor Muto under s 81E.[4] In addition, a group of Greater Shepparton councillors[5] were authorised by a Councillor Conduct Panel under s 81B(1)(c) of the LGA to apply to VCAT for a finding of serious misconduct against him, in relation to further instances of alleged misconduct. The Councillors' application was made on 5 June 2012. The Secretary was joined as a party to the serious misconduct proceeding on 12 December 2012, in order to allow the Secretary to be heard on the validity of Ross J's decision.[6]

10 The Councillors' application relies on s 81A(c) of the definition of 'serious misconduct' in the LGA which, among other things includes:

conduct by a Councillor that contravenes the Councillor conduct principles after the Councillor has had a previous finding of misconduct made against them by a Councillor Conduct Panel or VCAT in the last four years.

11 The applicant now seeks leave to appeal out of time against the decision of Ross J, on the sole ground that his Honour lacked jurisdiction to make the misconduct findings (this is described below as 'the jurisdictional question'). Under sch 1, cl 46E(1) of the VCAT Act as it then stood:

(1) 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 2 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.

12 If Councillor Muto is granted leave to appeal out of time and his appeal succeeds, the definition of serious misconduct set out above would not apply because the previous finding of misconduct would be invalid, although he could possibly be caught by other parts of the definition of serious misconduct.[7]

13 The factors which must be considered in deciding whether an extension of time to seek leave to appeal should be granted, include the length of delay, the reasons for the delay, and the extent of any prejudice suffered by the respondent if the extension is granted.[8] The Court will not extend time if the appeal is so devoid of merit that it would be futile to do so.

14 Under s 148(2) of the VCAT Act an application for leave to appeal must be made within 28 days of the order of VCAT (4 March 2011), but the application was not made until 28 February 2013. The delay was a lengthy one, despite the fact that Councillor Muto was legally represented.

15 Councillor Muto argues that an extension of time should be granted because he only became aware that Ross J lacked jurisdiction to make the misconduct findings in around June or July 2012. Nevertheless he did not seek leave to appeal out of time until about six or seven months later.

16 On the other hand Councillor Muto unsuccessfully applied to VCAT on 5 October 2012 for an order summarily dismissing the Councillors' proceedings. In those proceedings he argued that the proceedings should be struck out, since they relied on the orders made by Ross J which were allegedly invalid. In our view this provides some explanation for his delay in seeking leave to appeal, as soon as he became aware of the jurisdictional question. The granting of an extension of time would not be unduly prejudicial to the respondents. Further, we do not regard the argument about jurisdiction to be so devoid of merit that to grant an extension of time to seek leave to appeal would be entirely futile.

17 For these reasons we would grant an extension of time nunc pro tunc for the making of the application for leave to appeal.

18 As we have said, the applicant seeks leave to appeal on the basis that Ross J did not have jurisdiction to make the orders set out above, because the VCAT Tribunal which heard the Secretary's application was constituted solely by the President. Although cl 46E(1) of sch 1 of the VCAT Act now permits a presidential member, together with a person with at least five years experience in local government governance matters, to hear applications under the relevant sections of the LGA, there was no provision for a presidential member to sit at the time the orders were made by Ross J[9] and no person having the required local government experience was a member of the Tribunal. The applicant argues that there is a public interest in ensuring that tribunals act within jurisdiction and that this public interest justifies the granting of leave to appeal.

19 In his affidavit sworn in support of the application Councillor Muto deposes that:

If I had been aware that the tribunal lacked jurisdiction I would have instructed my solicitors to make an application at the earliest stage to ensure that the tribunal proceedings be heard by an appropriately constituted tribunal and not by the judge on his own.

In addition I would not have agreed to accept the 13 instances of misconduct. I would have had more confidence in the tribunal, if one of the members hearing the proceeding was experienced in local government governance matters, that my response to the allegations would have been understood in the environment of a local council in country areas.

20 The respondent relies on the fact that Councillor Muto did not object to VCAT's jurisdiction to hear the matter. It also submits that no injustice would arise from a refusal to grant leave to appeal, because the applicant admitted the instances of misconduct relied upon, the orders made by Ross J were made by consent, and the applicant has already complied with the sanctions imposed. Further, even if leave to appeal were granted and the appeal resulted in remission of the Secretary's first application to VCAT for rehearing, Councillor Muto would be bound by his earlier admissions of misconduct in those proceedings.

21 The question whether the Tribunal had jurisdiction to make the relevant orders is a question of law. Further, the applicant's failure to raise that issue below does not prevent Councillor Muto arguing on appeal that the Tribunal lacked jurisdiction to make the orders and that as a consequence the orders made are of no effect. As Nettle and Redlich JJA observed in Morris v Riverwild Management Pty Ltd (ACN 070 089 860)[10] leave to appeal on a point not taken below should seldom be granted[11] but:

[w]here it involves a point of jurisdiction, and it appears from the face of the proceedings that the court or tribunal from which the appeal is brought lacked jurisdiction, it is appropriate to grant leave so that the position may be regularised.[12]

22 Although at the time the orders were made cl 46E(1) of the VCAT Act referred only to a senior member, we do not consider it arguable that the Tribunal was improperly constituted because the President, rather than a senior member, sat as a member. Under s 10 of the VCAT Act, the President must be a Supreme Court judge. By contrast a senior member must have been admitted to legal practice for not less than five years and must have 'extensive knowledge or experience in relation to any class of matter' in respect of which the Tribunal has functions.[13] In our view the expression 'senior member' must be taken to include the President. The specification of a person with lower qualifications must also include a person with higher qualifications. A literal interpretation of the provision would result in absurdity.

23 The question whether the President, sitting alone, had jurisdiction to make orders by consent is more difficult. Although cl 46E(1) of sch 1 of the VCAT Act required an additional member with local government experience matters, of 'General Procedure' are dealt with in pt 4 of the VCAT Act. Section 58, which explains the structure of the Part, provides that:

(1) This Part sets out the general structure of the Tribunal

(2) Schedule 1 sets out variations from the general procedure for certain types of proceedings.

24 Division 5 of pt 4 has the title Compulsory Conferences, Mediation and Settlement. Section 93, which is in that Division, provides as follows:

(1) If the parties agree to settle a proceeding at any time, the Tribunal may make any orders necessary to give effect to the settlement.

(2) The Tribunal's power to make an order under subsection (1) is exercisable by any member including, if the settlement is achieved through mediation conducted by a member, that member.

25 The question raised by this application is whether the requirement that applications under ss 30, 81D, 81E and 81J(1)(b) of the LGA be heard by two persons, one of whom has local government governance experience, applies where the Tribunal makes orders 'necessary to give effect to the settlement' under s 93. If that is the case, Ross J sitting alone, did not have jurisdiction to make orders giving effect to the settlement between the Secretary and Councillor Muto.

26 In our opinion that question is attended by sufficient doubt to justify the grant of leave. Generally speaking, an applicant for leave to appeal must also demonstrate that allowing the error to go uncorrected would impose injustice on the applicant,[14] although this requirement would almost invariably be satisfied where the application for leave to appeal is based on an alleged lack of jurisdiction to make the orders which are the subject of the proposed appeal. Assuming that requirement applies we are prepared to hold that it is satisfied in this case.[15]

27 In view of the nature of the appeal, it is appropriate to determine it forthwith.

28 Counsel for Councillor Muto submitted that it was in the public interest to require that a person with experience of the realities of local government practice was a member of any Tribunal which made a finding that a Councillor was guilty of misconduct, serious misconduct or gross misconduct, even in cases where the parties had reached an agreement on the Orders which should be made. Parliament could not have intended that s 93 should apply to cases where sch 1 of the VCAT Act required the Tribunal to include members with particular characteristics or experience.[16] It followed that s 93 had no application to situations where the Tribunal's composition was specified under sch 1.

29 Counsel for the applicant submitted that the settlement reached between parties in this case could not be equated with a settlement between private individuals. As the judge had recognised, he was required to decide whether the penalties to which the parties had agreed were appropriate. Section 93 was intended to apply only to settlements between private individuals. Counsel contended that this meant that both his Honour's finding based on Councillor Muto's admission that he had committed misconduct ( Order 1) and the other Orders were invalid, because the findings of misconduct could not be separated from the imposition of penalties under s 81K of the LGA.

30 Counsel for the respondent submitted that the conclusion that s 93 did not apply to Tribunals covered by sch 1 would substantially inhibit the operations of the Tribunal. The reasoning on which the applicant sought to rely would also mean that Tribunals would have to be constituted under sch 1 in order to hold directions hearings.[17]

31 In counsel's submission, s 93 applied where the parties had agreed to settle the dispute and the orders were 'necessary to give effect to the settlement.' In this case the orders made by his Honour were based entirely on the terms of the settlement, and were necessary to give effect to its terms. This was the case even with respect to Order 2(c) because the settlement had contemplated that the judge would determine the starting date for the leave of absence which Councillor Muto had agreed to take.

32 In the alternative, counsel said, the judge had jurisdiction to make all the Orders except for the provision for a starting date in Order 2(c ). Leave to appeal should not be granted in relation to Order 2 (c) because the applicant had already taken the required leave of absence and would suffer no injustice if that order were permitted to stand.

33 In our opinion the appeal should be dismissed, except in relation to Order 2(c).

34 The purpose of div 5 (particularly s 93) of the VCAT Act is to facilitate settlement of proceedings, including settlements reached as the result of mediation. The Act attempts to encourage a variety of forms of dispute resolution, including compulsory conferences and mediation. In this case the Orders made by his Honour were 'necessary to give effect to' the settlement to which the parties had agreed. Section 93 would have been expressed more restrictively if it were intended to confine its operation to the settlement of disputes between private individuals. The purpose of div 5 would be undermined if s 93 (and other procedural provisions including those dealing with the giving of directions) were read down to exclude their application in cases where sch 1 requires the Tribunal to be constituted in a specific manner.

35 Schedule 1 of the VCAT contains provisions relating to the constitution of the Tribunal, when hearing matters arising under a large number of Acts, many of which involve matters of public interest. Section 58(2) provides that sch 1 sets out variations from the general procedure for certain types of proceedings, but sch 1 contains only one provision excluding the application of s 93. Clause 66D of sch 1 specifically excludes div 5 of pt 4 of the VCAT Act from applying to proceedings under s 122 of the Public Health and Well-Being Act 2008. There is no similar exclusion in the provisions relating to proceedings under the LGA. In our view it follows that the President had jurisdiction under s 93 to make orders giving effect to the parties' agreement.

36 On the other hand, we consider that if the Tribunal decided to impose a different penalty under s 81K from that agreed by the parties, it would have to be constituted in the manner required by sch 1. In such a case the penalty would not be based on the settlement, but rather on a determination by the member.

37 In this case the orders made by his Honour, other than Order 2(c), were based solely on the settlement reached by the parties. It does not detract from that conclusion that his Honour was required to exercise his judgment in order to determine whether the settlement was appropriate and, therefore, whether to make the orders suggested to give it effect

38 There was a hint in the applicant's written submissions, and more than a hint of it in counsel's argument that, because the issues in this case involved more than mere private rights and interests, and consequently, because orders could not be made in the proceeding unless the Tribunal were first satisfied of the propriety and efficacy of the orders as a matter of public interest, Parliament should be taken to have intended that the restrictions which apply to the constitution of the Tribunal for the purposes of determination of a contested proceeding apply equally to the making orders to give effect to any settlement of the proceeding.

39 In our view, that distinction is illusory. For, inevitably, whenever a judge or other tribunal is asked to give effect to a settlement, even in proceedings which are wholly to do with private rights and interests, the judge or other tribunal must first determine whether as a matter of justice it is appropriate to give effect to the settlement. Possibly this is a more than commonly graphic instance of that phenomenon, but essentially it is no different. Contrary, therefore, to the applicant's submissions, although Parliament plainly intended that orders should not be imposed on parties by a tribunal constituted otherwise than in accordance with the schedule, there is no reason to suppose that Parliament did not intend by the enactment of s 93 to authorise the Tribunal, howsoever constituted, to give effect to settlement upon being satisfied of its efficacy.

40 In our view, it follows that the President had jurisdiction to make orders reflecting both the admissions of Councillor Muto and the penalties to which the parties agreed. We therefore consider that, except in relation to Order 2(c), the appeal should be dismissed.

41 Finally, we note for the sake of completeness, that even if, contrary to the view expressed, the President lacked jurisdiction under s 93 to make orders giving effect to a penalty agreed upon by the parties, we would reject the argument that Order 1, which was based on the admissions made as part of the settlement was invalid, because that order could not be separated from the penalty imposed under s 81K (1).

(b) grant leave to appeal against the orders made by Ross J on 4 March 2011.

(c ) set aside Order 2 (c), but otherwise dismiss the appeal.

1. The time in which the applicant may apply for leave to appeal from the orders of Ross J of 4 March 2011 is extended nunc pro tunc to the date of application.
2. The application for leave to appeal is allowed.
3. The appeal is treated as instituted and heard instanter and is allowed in part.
4. Order 2(c) of the orders of Ross J of 4 March 2011 is quashed.
5. Otherwise the appeal is dismissed.

45 Having succeeded on all but one issue in the appeal, the respondent seeks an order that the applicant pay its costs. The applicant opposes the application upon the basis, it submits, that the issues which fell for determination in this case were issues of public interest and because, as recently as December 2012, in the course of the strike out proceeding which has been referred to in the reasons for judgment of the Court, the Secretary of the Department wrote to the solicitors for the applicant offering to support an application to refer the point of law the subject of appeal to this Court for consideration.

46 As against that, counsel for the respondent submits, the fact remains that the applicant has failed on all but one issue; he has failed on those issues upon which it needed to succeed in order to found its strike out application; and he has succeeded only to the extent of setting aside the order as to the time at which his suspension was to begin.

47 In our view the ordinary rule as to costs should follow the event. We are not unmindful of the fact that the respondent is the Crown and that the issues which have fallen for determination in this proceeding are issues which might be said to be of some public importance. We are also aware that it was assumed at first instance before Ross J that his Honour had jurisdiction to make the orders which he did and that, to the extent that the applicant has now succeeded, it is because his Honour lacked the extent of jurisdiction so assumed.

48 Nevertheless, the reality of this proceeding is that it was brought for the purposes of establishing a legal basis from which to contend that the most recent set of proceedings is without foundation and, in that sense, the applicant wholly failed.

49 Looking at the matter in substance, rather than by reference to the individual elements of which it is comprised, it is apparent that the applicant set out to achieve a situation which would have resulted in him avoiding the consequences of the most recent proceedings, and he has failed to achieve that objective.

50 For these reasons, we consider that it is appropriate that the applicant should pay the respondent's costs of the application for leave to appeal and of the appeal.

[1] Under s 148(5) of the Victorian Civil and Administrative Tribunal Act 1998 ('VCAT Act').

[2] VCAT Reference no G 518/2010 reasons of Ross J, [3}-[5].

[3] VCAT Reference no G 518/2010 reasons of Ross J, [16]. See also Australian Competition and Consumer Commission v Real Estate Institute of Western Australia [1999] FCA 1387; (1999) 161 ALR 79; Australian Competition and Consumer Commission v Colgate Palmolive Pty Ltd [2002] FCA 619; Australian Securities and investments Commission v Vizard [2005] FCA 1037.

[5] Councillors Dobson, Polan, Crawford, Hazelman, Houlihan and Ryan. (Not all of these are still counsellors)

[6] Secretary to the Department of Planning and Community Development v Muto (No 2) VCAT reference No B 87/2012 & B 82/2012 This was an application for summary dismissal of the Councillors' claim.

[7] S 81A(d) of the definition is conduct which contravenes Councillor conduct principles and s 76E or 77. Section 76E prohibits a Councillor directing or seeking to direct Council staff in the performance of various duties. It is alleged that Muto did have direct interactions with Council staff, but it is not clear whether this was in relation to the exercise of powers falling within s 76E(2) .

[8] Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 (Brennan CJ, McHugh J), 519-521.

[9] VCAT Act sch 1, cl 46E(1), Authorised Version 070.

[10] [2011] VSCA 283, ('Riverwild').

[11] Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 438; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, 8; Geelong Permanent Building Society (in Liq) v Encel [1996] VicRp 44; [1996] VR 44; [1996] 1 VR 594, 604-7.

[12] Riverwild [2011] VSCA 283, [21]. See also Sobania v Nitsche (1969) 16 FLR 329, 334.

[14] Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331,[16] ( Phillips JA); Niemann v Electronic Industries Limited [1978] VicRp 44; [1978] VR 431, 441-442 (Gillard, McInerney and Murphy JJ).

[15] Although it is arguable that refusing leave to appeal against Order 1, which made findings of misconduct based on Councillor Muto's omissions would not cause the applicant any injustice and that it would be futile to require a rehearing relating to that Order, because the admissions made by Councillor Muto for the purposes of the decision against which he appeals, would be admissible in any future proceedings

[16] In addition to cl 46A counsel referred to pt 1A, cl 2A of sch 1 which requires a member with knowledge of Aboriginal cultural heritage to sit on a Tribunal hearing proceedings under pt 8 of the Aboriginal Heritage Act 2006 and pt 2B, cl 4B which requires one female member on a Tribunal reviewing a decision under the Assisted Reproductive Treatment Act 2008