Plaintiff v Defendants

Plaintiff v Defendants - [2009] VSC 7 - VSC 2009 case summary — Zoe

[25]

that members participating in the Service have agreed to abide by the Adjudicator's/Panel's decisions unless the complainant has exercised other rights of review which result in a different decision or revision of a decision;
that the Chair of a Panel decides what procedures to follow, and the proceedings "are to be as informal as possible, with a minimum of legal formality and technicality, but the Panel "must apply the rules of procedural fairness";
that a Panel "may" hold a hearing to consider a complaint and if so the member must appoint a senior officer to represent it;
that the complainant is expected to represent himself/herself;
that legal representation is "discouraged" and only allowed at the discretion of the Chair;
that a Panel may inform itself in any way it thinks appropriate, including by seeking professional advice on financial services industry law or practice;
that a Panel may accept evidence in any way it thinks appropriate;
that each person on the Panel has one vote and a decision is made by simple majority;
that decisions do not create binding precedents;
that a Panel must issue reasons for its decisions in writing unless this is considered inappropriate;
that reasons will not identify the parties;
that a Panel will not normally award costs, and any (extraordinary) award of medical or legal costs is subject to a limit of $2,000;
that the Service "expects the complainants to abide by the decisions of a Panel", but "recognises that complainants may wish to pursue whatever rights they have in the courts";
that the Service may take any necessary action (including legal action) to enforce a Panel's decision, and this may include seeking specific performance of the agreement to abide by the rules;
that a member who does not comply with the decision of a Panel "may" have its membership terminated, but the Service must consult with ASIC prior to the termination process taking place;
that the Chair of a Panel may decide (after hearing the complainant) that it is inappropriate for a panel to decide a complaint before it.[16]

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18 With a view to, among other things, supporting its submission that the decisions of panels appointed by FICS are judicially reviewable pursuant to Order 56 of the Rules of the Supreme Court, Wealthcare disputed the conclusion of Finkelstein J in Deakin that the relationship between FICS and its members was purely contractual. Further, Wealthcare drew attention to the prior judgments of Shaw J of the Supreme Court of New South Wales in Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd (Nos 1 + 2)[18]. Shaw J found that the decisions of panels appointed by FICS under the constitution and rules of FICS as at the time relevant for that case[19] were judicially reviewable on administrative law grounds, including on the ground of breach of the principles of procedural fairness. There was considerable debate before me as to whether I should follow Masu in that regard, whether it is distinguishable[20] and whether it is in conflict with Deakin and/or with the decision of Ashley J[21] in D'Souza v Royal Australian and New Zealand College of Psychiatrists[22]. However, I need not rule on that debate. Senior counsel for Wealthcare acknowledged[23] that his client's challenge in this case gained nothing extra from any administrative law ground (notwithstanding references in his outline of argument to "errors of law", exceeding or failing to exercise jurisdiction, "jurisdictional error" and "errors of law on the face of the record"). Rather, he accepted, the challenge stood or fell on the proposition that the panel's decision was in breach of the FICS rules (which in turn required FICS to have regard to "any applicable legal rule") and for that reason amounted to a breach of contract. On the other hand, Wealthcare also submitted, at least initially, that if (as Masu may suggest) the decisions of FICS panels are judicially reviewable on administrative law grounds, it would be all the more appropriate to characterise such a panel as a "tribunal" within the meaning of the provisions of the Wrongs Act 1958 (Vic) relating to proportionate liability on which Wealthcare relied and to which I will come. However, as I will explain in due course, even if panel decisions are judicially reviewable on administrative law grounds, I would still not be satisfied that FICS panels are tribunals within the meaning of the relevant provisions of the Wrongs Act 1958 and in any event I would still not be satisfied that the panel was obliged to apply principles of proportionate liability in the present case. So I need not decide whether panel decisions are judicially reviewable on administrative law grounds. I need not do so even for the purpose of considering whether any grant of relief should be framed by reference to the language of judicial review as distinct from the language of the enforcement of contracts[24], because, as indicated above, I do not consider that the panel's decision was in breach of the rules and I do not intend to grant any relief at all. So the interesting and difficult question of the judicial reviewability of the decisions of FICS panels must await a case in which it needs to be decided.

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However the provisions of Part IVAA are by no means of universal application. For example, they apply only in a "proceeding[40] involving an apportionable claim". "Apportionable claim" is defined to mean a claim to which Part IVAA applies. By virtue of s 24AF(1), the limits on that concept include that the claim must either be a claim for economic loss or damage to property in an action for damages[41] arising from a failure to take reasonable care, or be a claim for damages for a contravention of s 9 of the Fair Trading Act 1999. Immediately one sees a contrast between Part IVAA and provisions such as s 9 of the Fair Trading Act 1999 itself. That section directly regulates the conduct of persons and other entities. It prohibits misleading and deceptive conduct; and it does so in respect of a vast field of activity, namely trade or commerce. It may truly be said to be a legislative reflection of a norm of conduct.[42] Part IVAA of the Wrongs Act is different. It makes no change to the law or to the rights or obligations of individuals outside the context of a "claim" within a "proceeding". A "concurrent wrongdoer" is only defined "in relation to a claim": s 24H. The central provision - s 24AI - is expressly directed towards the position of a "defendant", as defined. At least insofar as Part IVAA relates to a claim arising from a failure to take reasonable care[43], the claim must be made in an "action": s 24AF(1)(a). In its context in Part IVAA, the word "action" does not bear its popular meaning of a proceeding commenced by writ, but it does, I think, mean, in substance, a legal proceeding.[44] It will extend to a legal proceeding conducted in a tribunal (because of the definition of "court") but the whole tenor of Part IVAA suggests confinement to proceedings in court and closely comparable proceedings. The central provision - s 24AI - is expressed to operate by reference to "the court". "Court" may be defined to include "tribunal" and, in relation to a claim for damages (as defined), to mean "any court or tribunal by or before which the claim falls to be determined", but, as Bennion says in relation to statutory definitions in general[45], it is "impossible to cancel the ingrained emotion of a word merely by an announcement". Moreover, the very subject matter of Part IVAA is the distribution of liability, meaning, I think, legal liability. Part IVAA hardly seems to be directed towards the proceedings of a domestic tribunal with an essentially discretionary jurisdiction. Writing extra-judicially, Byrne J has said that the regime of Part IVAA "does not appear to apply to arbitrations ..."[46]. I think that his Honour was referring there to commercial arbitrations, as distinct from industrial arbitration and like processes. I need not and do not decide the very important question whether Part IVAA applies to formal commercial arbitrations,[47] but his Honour's comment is entirely consistent with the proposition that Part IVAA is inapplicable to a matter before a FICS panel.

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41 Nor should Part IVAA readily be construed to purport to operate in a way that would be inconsistent with any Commonwealth statutory provision[53]. In the present case, as I have mentioned, the FICS panel found that Wealthcare was initially in breach of s 851(2) of the Corporations Act 2001. It also found that Wealthcare was later in breach of the successor provision, s 945A of the Corporations Act 2001 (Cth). In the course of its reasons it had also quoted s 953B of that Act (the provision creating a right to bring a civil action for damages for breach of s 945A). I infer that the panel relied on both provisions (as well as on s 851(2) of the Corporations Act 2001 in respect of the earlier conduct). Had the Norrises brought a claim against Wealthcare in the Federal Court under s 851(2) of the Corporations Act 2001 and/or under ss 945A and 953B of that Act, that claim could not have been met by any valid plea under the Part IVAA of the Wrongs Act. So much follows from the reasoning of Middleton J on certain points raised in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd[54]. I am in respectful general agreement with his Honour's reasoning. The applicant in Dartberg relied on four sets of Commonwealth statutory provisions (referred to in the judgment as "the Commonwealth Legislation"), including s 851(2) of the Corporations Act 2001. Middleton J found that the "express purpose"[55] of the Commonwealth Legislation was to make each alleged transgressor, if found liable, legally responsible for the whole of the loss. His Honour noted[56] that the Commonwealth had introduced proportionate liability provisions into the Corporations Act 2001 in 2004, but had made them applicable only to conduct done in contravention of s 1041H (which prohibits misleading and deceptive conduct in relation to a financial product or a financial service). They were not made applicable to s 945A (or (retrospectively) to its predecessor, s 851). Certain other Commonwealth proportionate liability provisions were identified, but they likewise had no application to the causes of action relied on by the applicant in Dartberg. Therefore the respondents had sought to rely on Part IVAA of the Wrongs Act (Vic).

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