Plaintiff v Defendants

**1 On 20 October 2014, Ms Bashour filed an application under the Equal Opportunity Act 2010 in the Victorian Civil and Administrative Tribunal ('VCAT'): proceeding H245/2014. The proceeding named as respondents the ANZ Bank and three of its employees: Ms Susie Babani, Ms Jennifer Evans and Mr Philip Chronican ('the ANZ Respondents'). On 9 December 2014, the ANZ Respondents filed an application to strike out the proceeding on the ground that there was a current and related proceeding on foot in the Federal Court of Australia: proceeding VID107/2014.

2 On 20 March 2015, VCAT, constituted by Vice-President Harbison J, made an order pursuant to s 77(1) of the Victorian Civil and Administrative Tribunal Act 1998 ('the Act'), striking out the proceeding. Her Honour also ordered that the subject matter of the proceeding be referred to the Federal Court pursuant to s 77(3) of the Act.

3 On 9 June 2015, Ms Bashour's lawyers requested VCAT to re-list proceeding H245/2014 to hear an application to revoke the strike out order and/or reinstate the proceeding. On 18 June 2015, Registrar O'Connor of VCAT sent a letter to Ms Bashour's lawyers refusing the request on the ground that VCAT was functus officio and had no power to revoke the strike out order or reinstate the proceeding.

4 On 17 August 2015, Ms Bashour commenced proceedings in the Supreme Court of Victoria seeking orders pursuant to O 56 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules'), quashing the strike out order. Alternatively, Ms Bashour sought an order to quash the functus officio decision of 18 June 2015, together with an order requiring VCAT to make the decision according to law. The application for orders quashing the strike out order was filed 94 days outside of the 60 day period prescribed for an application under r 56.02(1). Accordingly, Ms Bashour was required to seek an extension of time. In order to obtain an extension it was incumbent upon her to establish special circumstances: r 56.02(3).

5 The extension of time application was heard by Mukhtar AsJ. His Honour delivered comprehensive reasons for judgment on 5 September 2016.[1] In the course of his judgment, Mukhtar AsJ rightly observed:**

Such an intensively propounded and resisted application for an extension of time ends up being in effect a running of the substantive appeal.[2]

It was necessary for His Honour to closely examine the strength of Ms Bashour's challenge to the strike out order. As to this matter, His Honour observed:

Fourthly, what prevails to my mind is the impeachability of the VCAT order made under s 77. I shall confine myself to saying that the applicants have much more than an arguable case that there was jurisdictional error in the Tribunal's order, or an error in principle in the exercise of discretion under s 77(1) or (3). It can be argued, and argued strongly in my opinion, that in making a referral under s 77(3) the Tribunal purported to confer State jurisdiction on the Federal Court ostensibly under s 32 of the Federal Court of Australia Act. It can be argued that was simply not possible. That is a Wakim type point, and is the reason for the Notices of a Constitutional Matter. I think the essential distinction between s 32 associated jurisdiction and accrued jurisdiction became muddled in a material way to misguide the exercise of discretion and misunderstand the legal basis for a referral under s 77(3). I think a strong case exists to say that the order made under s 77(3) was made on the erroneous view that s 32 gave the Federal Court jurisdiction to deal with the VCAT case because the federal matter and the non-federal matter were 'inextricably intertwined'. Section 32 does not confer associated jurisdiction over a non-federal matter.[3]

6 Mukhtar AsJ was critical of the lengthy delay by Ms Bashour in filing her application for an extension of time. He considered that Ms Bashour's explanation for inaction for the two month period between 18 June and 17 August 2015 was weak.[4] Nevertheless, he considered that:

... the procedural default ought not eclipse the greater necessity in the interests of justice for the applicant to have this Court determine the validity of the Tribunal's significant order under s 77.[5]

**7 His Honour ordered pursuant to r 56.02(3) that the date by which Ms Bashour could make her application for judicial review be extended to 17 August 2015, being the date on which the originating motion was filed.[6] His Honour ordered that the costs of the application for the extension of time be reserved to the court hearing and determining the application for review.[7]

8 When the parties appeared before me on 12 September 2016, it quickly became apparent that the primary issue in dispute concerned the costs of the proceeding before Mukhtar AsJ. Ms Doyle SC, who appeared for the second to fifth defendants, proposed that the Court make the following orders:**

1. Pursuant to Order 56 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules), an order in the nature of certiorari, quashing the orders of the Victorian Civil and Administrative Tribunal dated 20 March 2015.

2. Paragraph 2 of the Summons is dismissed.

3. No order as to costs.[8]

**9 Paragraph 1 of the orders proposed by Ms Doyle is, in effect, an acknowledgment that Mukhtar AsJ correctly concluded that it was strongly arguable that Harbison J had no power to refer the VCAT proceedings to the Federal Court under s 77(3) of the Act in conjunction with s 32 of the Federal Court of Australia Act 1976 (Cth).

10 Paragraph 2 of the summons referred to in the proposed orders relates to the functus officio decision of 18 June 2015. The relief sought by Ms Bashour in respect of that decision was in the alternative to a primary claim in respect of the quashing of the strike out decision. Paragraph 2 of the summons has no utility given the quashing of the strike out decision. Nevertheless, it is to be noted, as stated by Mukhtar AsJ, that it is unlikely that the functus officio decision is amenable to relief by way of certiorari.[9]

11 The second to fifth defendants propose that there should be no order for costs. The starting point for this submission is r 63.14 of the Rules which provides:**

Where a party applies for an extension or abridgment of any time fixed by these Rules or by any order fixing, extending or abridging time, that party shall, unless the Court otherwise orders, pay the costs of and occasioned by the application.[10]

**12 Prima facie, a successful applicant for an extension of time will be required to pay the costs of, and occasioned by, the application. This reflects the fact that an applicant for an extension of time has not complied with a prescribed time limit and seeks an indulgence from the court. The prima facie position is, however, subject to the court's discretion to 'otherwise order'. That discretion is unfettered. Each case turns upon its own particular facts. I accept that the principle which generally applies in respect of an application for extension of time is that it is only where the defendant is unreasonable in resisting the application that the court will not make a costs order in favour of the defendant.[11] Ultimately, authorities which involve the application of the 'principle which generally applies' are of limited assistance. Such cases establish a starting point for the inquiry. However, the end point must be determined by reference to the particular facts of the case at hand.

13 The second to fifth defendants accept that the circumstances of the present case warrant a departure from the usual rule that a successful applicant for an extension of time should pay the costs occasioned by that application. The second to fifth defendants do not seek a costs order in their favour. Rather, they propose that there be no order as to costs.

14 The second to fifth defendants correctly submit that there were unmeritorious aspects of Ms Bashour's application for an extension of time.[12] The O 56 application was filed 94 days out of time. Mukhtar AsJ was satisfied that there was a legitimate explanation for delay between 20 March 2015 and mid-June 2015.[13] His Honour was satisfied that Ms Bashour and her lawyers 'were preoccupied with the question and the quandary of how to replicate, federally, the basis of her claim in VCAT'.[14] Between 21 May 2015 and the functus officio decision of 18 June 2015, 'there was still deliberation in her camp on the question whether federal replication by recourse to federal statutes could or could not occur, and if not, the means to reinstate the VCAT proceedings'.[15] However, Mukhtar AsJ considered that the delay of a further two months between 18 June 2015 and 17 August 2015 'takes on a different character'.[16] His Honour concluded that it was not clear why it took a further two months for the originating motion to be filed.[17] Whilst his Honour considered that although:**

a more convincing explanation to the Court for this last segment of the delay was called for, so much of the build up to this application is out of the ordinary and chaotic that allowances may be made to the shortcomings in that evidence in deference to the interests of justice having regard to the merits of the case on review concerning the order under s 77.[18]

**15 The circumstances relating to Ms Bashour's application for an extension of time are unusual. Part of the factual matrix requires consideration of what occurred when the VCAT proceedings were referred to the Federal Court. It is clear that the docket judge, Tracey J, had significant concerns regarding the validity of the referral order made by Harbison J. At the first directions hearing post the referral on 2 April 2015, Tracey J stated: 'I am not at all sure, for the moment, that state legislation can empower a state tribunal to refer a matter to a Federal Court'.[19] On 1 June 2015, Tracey J stated 'the more I look at it, the more I doubt that there was any power to refer it here'.[20]

16 The defendants point to their legitimate desire to have the plaintiff's claim heard in one forum.[21] The defendants contend that their application to VCAT was directed to 'avoiding a multiplicity of proceedings'.[22] The defendants' legitimate objective of avoiding a multiplicity of proceedings cannot obscure the fact that the submissions advanced to Harbison J that the Federal Court had jurisdiction to deal with an Equal Opportunity Act claim pursuant to s 32 of the Federal Court Act, led her Honour into error. The referral order should not have been made.

17 I put to one side the ill-conceived submission advanced on behalf of Ms Bashour that the defendants' legal representatives engaged in wilfully improper conduct in making the referral application.[23] I proceed on the basis that the referral application was underpinned by an erroneous conflation of principles governing the Federal Court's accrued and associated jurisdiction. The erroneous submission provides the wellspring for the application under O 56 to set aside the strike out order. Put simply, if the submission had not been advanced, it would not have been necessary to make any application pursuant to O 56. It is true that the application under O 56 was out of time and that Ms Bashour was seeking an indulgence from the Court. Nevertheless, the overriding consideration in the present case is the fact that the ANZ Respondents' legal representatives led Harbison J into error. The consequences of that error have been significant for Ms Bashour. The proceeding in VCAT was struck out. An unnecessary complication was created in respect of the Federal Court proceedings.

18 The application for an extension of time before Mukhtar AsJ had all the hallmarks of a substantive application for judicial review. So characterised, Ms Bashour has succeeded in establishing that the interests of justice warrant the granting of an extension of time. Further, Ms Bashour has established that Harbison J had no jurisdiction to make the strike out order. This second aspect of the proceeding before Mukhtar AsJ is significant. The nature of the proceeding before his Honour necessitated consideration of whether Harbison J had jurisdiction to make the strike out order. His Honour determined that question adversely to the second to fifth defendants. His Honour's findings obviated the need for a further hearing on the question of jurisdiction.

19 His Honour's judgment focused on the interaction between s 32 of the Federal Court Act and s 77(3) of the Act. It was not necessary for his Honour to express a concluded view in respect of the second to fifth defendants' submission that Harbison J's referral order would have been sound had her Honour relied upon the Federal Court's accrued jurisdiction as the basis for such an order. Nevertheless, Mukhtar AsJ did observe that:**

accrued jurisdiction is something to be pursued not at the behest of a Court or Tribunal but is sought to be invoked at the instance of a party in the Federal Court who seeks to bring a non-federal matter into a federal matter by showing it to be part of a single justiciable controversy. There are certainly authorities which say that there is little point in striking out a proceeding under s 77(1) and then referring it to another court or body that lacks the jurisdiction to deal with the proceeding, and that such a course should not be taken if there is a risk that the body in question may lack the necessary jurisdiction.[24]

**20 State legislation cannot empower a state tribunal to refer a matter to a federal court. Whether Ms Bashour's claims under the Equal Opportunity Act are matters which enliven the Federal Court's accrued jurisdiction is a question which can only be determined by the Federal Court. Neither the Federal Court's accrued, nor its associated jurisdiction in conjunction with s 77(3) of the Act, confers power upon VCAT to refer a proceeding under the Equal Opportunity Act to the Federal Court of Australia. The second to fifth defendants' reliance upon the existence of a single justiciable controversy as enlivening the Federal Court's accrued jurisdiction is misconceived.

21 The wellspring of the O 56 application was the erroneous submission advanced before Harbison J by the ANZ Respondents' legal representatives. The proceeding before Mukhtar AsJ had all the hallmarks of a substantive judicial review proceeding. A central issue in those proceedings involved the jurisdiction of Harbison J to make the referral order under s 77(3). That issue has been determined in Ms Bashour's favour and has effectively obviated the need for any further hearing on the question of jurisdiction. In these circumstances, a departure from the usual rule that an applicant for an extension of time pay the costs of the application is warranted. The second to fifth defendants should pay Ms Bashour's costs of the application before Mukhtar AsJ.

22 Ms Bashour seeks an order that the costs of the proceeding before Mukhtar AsJ be paid on an indemnity basis. I am not satisfied that special circumstances exist which justify an order for indemnity costs.[25] The defendants were entitled to resist the application for an extension of time. No criticism can be made of the defendants for the manner in which they conducted the proceedings before Mukhtar AsJ. I have concluded that Harbison J was led into error by the submissions advanced on behalf of the second to fifth defendants. Her Honour's order is to be quashed with the effect that the VCAT proceeding will be reinstated. Ms Bashour will be entitled to make submissions in VCAT as to whether any costs orders should be made in her favour related to the strike out order. Similarly, there may be costs consequences in the Federal Court proceeding flowing from the quashing of the strike out order. The potential costs consequences, if any, in VCAT and the Federal Court are matters to be determined by the Tribunal and that Court.

23 I reject the submission advanced on behalf of Ms Bashour that the conduct of the defendants in resisting the extension of time application was unreasonable.[26] Further, there is no foundation for the submission that 'a reasonable inference of wilfully improper conduct is available from the defendants' pursuit of their application to VCAT in disregard of clearly established law'.[27] There is a significant difference between a party making an erroneous submission and making a wilfully misleading submission.

24 The Court shall make an order in the nature of certiorari, quashing the orders of the Victorian Civil and Administrative Tribunal in proceeding H245/2014 dated 20 March 2015. The Court shall order that the second to fifth defendants pay the costs of the extension of time application on a standard basis, to be taxed in default of agreement. The second to fifth defendants shall also be ordered to pay the costs of the current proceedings on a standard basis, to be taxed in default of agreement.**

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[1] Bashour v VCAT [2016] VSC 527 (revised 3 November 2016).

[8] Second to Fifth Defendants' 'Minutes of Proposed Orders' dated 12 September 2016.

[9] Bashour v VCAT [2016] VSC 527, [33].

[10] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.14.

[11] Michelotti v Roads Corporation (2009) 26 VR 609, [38].

[12] 'Second to Fifth Defendants' Outline of Submissions' dated 26 September 2016, [1](d).

[13] Bashour v VCAT [2016] VSC 527, [25]-[27].

[21] 'Second to Fifth Defendants' Outline of Submissions' dated 26 September 2016, [13].

[23] See 'Plaintiff's Submissions in Reply on Costs' dated 10 October 2016, [5.5].

[24] Bashour v VCAT [2016] VSC 527, [65].

[25] See Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7].

[26] 'Plaintiff's Submissions in Reply on Costs' dated 10 October 2016, [4.2]-[4.3].