Plaintiff v Defendants

Supreme Court of Victoria|2008-10-23|Before: BYRNE J

PRACTICE and PROCEDURE - Victorian Civil and Administrative Tribunal - whether party may be joined otherwise than upon notice - whether proper to join defendant - whether order for compulsory conference within power - whether tribunal must provide reasons for making the joinder order and the compulsory conference order

Victorian Civil and Administrative Tribunal Act ss. 60, 84, 117.

**1 This matter comes before the Practice Court by a rather convoluted path. It arises out of the construction of a residential development at 346-350 Toorak Road, South Yarra. The construction work was carried out by the appellant Dura (Australia) Constructions Pty Ltd, ("the builder"), pursuant to a contract dated 22 May 1998 entered with Cromwell Developments Pty Ltd. Work was carried out in approximately 1998-2000.

2 The owners of the units in the development and the owner's corporation, whom I shall collectively call the claimants, allege that the work was defective. They say too there was in existence a policy of insurance number 1804116760 issued under the Building Act 1993 section 138. The policy was issued by FAI General Insurance Company Limited. Following the collapse of FAI Insurance and the enactment of the House Contracts Guarantee (HIH) Act 2001, the claimants in or about 2005 and 2006, lodged their claims with the firstnamed defendant, the Victorian Managed Insurance Authority, ("VMIA"), pursuant to section 40 of the House Contracts Guarantee Act 1987.

3 It seems that the claimants have made no claim against the builder in respect of the defective work.

4 On 9 October 2006 VMIA advised the claimants that it accepted their claims except for one, and thereupon it became obliged to pay to them the amount to be assessed as payable under the HIH indemnity.

5 By application made on 13 May 2008, the claimants applied to VCAT to determine the amount of their entitlement.

6 On 24 June 2008 the application was mentioned before VCAT. On that occasion counsel for VMIA informed the tribunal that the builder should be joined as a party pursuant to section 60 of the VCAT Act because, in due course, his client would be seeking indemnity from the builder under the terms of the insurance policy. Counsel said that it was not intended to make a claim against the builder in the claimant's proceeding in VCAT. The purpose of this joinder was to have the builder bound by the determinations as to quantum and thereby to avoid the cost of two hearings on that issue, and the risk of inconsistent findings.

7 The transcript shows that there was some discussion as to whether the builder should be given notice of the VMIA joinder application. Mention was made of the Domestic Building List Practice Note PNDB1 (2007), paragraph 9, with particular reference to paragraph 9.4 and paragraph 9.6. The tribunal acceded to the submissions put on behalf of VMIA, and joined the builder as a party.

8 At the mention hearing, the tribunal made also made an order for a compulsory conference pursuant to section 83. The terms of this order were as follows:**

All parties must attend a compulsory conference personally or be represented by a duly authorised person with personal knowledge of the issues in dispute, and who has, for all practical purposes, unlimited authority to settle.

**9 Following a request in writing made on behalf of the builder, the tribunal declined to provide reasons for these orders on the ground that a party was entitled under section 117 of the VCAT Act, only to reasons for an order other than an interim order. The orders in question here, it was said, were interim orders.

10 By originating motion filed on 17 July 2008, the builder sought leave in this court to appeal pursuant to section 148 of the VCAT Act against the joinder order and the compulsory conference order.

11 In the proposed notice of appeal, five questions of law are identified:**

Did the Tribunal, in hearing and determining the First Respondent's application to join the Appellant without according the Appellant any opportunity to be heard, err in law by failing to comply with the rules of natural justice?
Did the Tribunal, in deciding to exercise the discretion conferred under section 60 of the Victorian Civil and Administrative Tribunal Act 1998 to order that the Appellant be joined as a party to the proceeding, err in law in failing to consider and weigh, fairly and rationally, the relevant considerations for and against joinder, including whether there was any or any proper basis for the joinder?
Did the Tribunal, in deciding to exercise the discretion conferred under section 60 of the Victorian Civil and Administrative Tribunal Act 1998 to order that the Appellant be joined as a party to the proceeding, err in law in failing to satisfy itself that at least one of the conditions set out in section 60(1)(a) to (c) had been met?
Did the Tribunal, in requiring the parties to attend a compulsory mediation conference either personally or by a representative with personal knowledge of the issues in dispute and who has unlimited authority to settle, err in law by acting ultra vires?
Did the Tribunal err in law by failing to provide any or any adequate reasons for making orders 2 and 7?

**12 On 3 October 2008, the application for leave to appeal was dismissed by the Master. The builder appeals against the Master's decision. The matter before me is therefore an application for leave to appeal the tribunal's orders. Since the orders appealed from are interlocutory in nature, I am mindful of the principle that leave should not readily be given and then only where clear error is shown and consequent injustice demonstrated. I turn to the suggested errors of law.

13 (1) The right to be heard. It is true that the builder was not given notice of the joinder application and therefore had no right to present argument against the making of the joinder order. It is true that paragraph 9.4 of the Practice Note provides for notice to be given. I refer also to section 99(1) of the VCAT Act.

14 Nevertheless, I find here no error of law and no denial of natural justice. It is not inconsistent with natural justice that the applicant for joinder should seek to persuade the tribunal and the tribunal agree that the joinder is appropriate. The joined party may later argue that no claim lay against it or that for some other reason, it be released from the proceeding whether pursuant to section 120 or section 75 of the VCAT Act or otherwise.

15 Notwithstanding the terms of the practice note, it is competent for the tribunal to make an order under section 60 without notice if the circumstances warrant. Moreover, no injustice to the builder has been demonstrated.

16 (2) Failure to consider and weigh the considerations relevant to the joinder application. It is clear from an examination of the transcript that attention was given to the entitlement of VMIA to subrogation against the builder. No decision was made by the tribunal as to this entitlement at that stage.

17 I am not prepared to find that the brevity of the discussion as to the appropriateness of the order makes out the ground here alleged. The tribunal is, of course, an expert tribunal dealing with legislation and contracts with which it and counsel were doubtless very familiar. Moreover, no injustice has been demonstrated. If the right of subrogation is said to be unarguable, this is a matter which might be raised by the added party before the tribunal.

18 (3) The preconditions to section 60(1). There is no substance in this proposed ground. The desirability of joining a builder in order to avoid duplication and inconsistency was pointed out, as was the reason for the builder to be bound by the findings which the tribunal might make in the proceeding. The discretion under section 60 has not been shown to have miscarried. Again, no prejudice has been demonstrated.

19 (4) Compulsory conference order. Section 84 of the VCAT Act permits the tribunal to order the attendance at a compulsory conference of a party "personally or by a representative who has authority to settle" on its behalf. The complaint made here is that the order made was beyond power because it required the party, a corporation, to attend "personally" or be represented "by a duly authorised person with personal knowledge of the issues in dispute, and who has, for all practical purposes, unlimited authority to settle". I will not dignify the point by any elaborate analysis. It is clearly without substance.

20 (5) Reasons. Section 117 requires the tribunal to give reasons for making any order other than interim order. This is not to say that the tribunal should never give reasons. This will often be a desirable course, but this is a matter for the good judgment of the tribunal itself.

21 The tribunal was of the opinion that the orders made on 24 June 2008 in this proceeding, including the joinder order and the compulsory conference order were interim, that is interlocutory in nature. It would seem the tribunal was in good company in taking this view.[1]

22 I do not consider that in this case failure to give reasons amounts to a breach of section 117 or of any duty of the tribunal to give natural justice.

23 I therefore agree with the Master's decision that leave to appeal to this Court should be refused. The appeal before me should be dismissed. I will order that the appeal be dismissed with costs, including reserved costs, if any.**

[1] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 336 [14] per Phillips JA (Tadgell and Batt JJA concurring).

House Contracts Guarantee (HIH) Act 2001

Contracts Guarantee Act 1987

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