Seachange Management Pty Ltd v Bevnol Constructions & Developments Pty Ltd & Ors

Seachange Management Pty Ltd v Bevnol Constructions & Developments Pty Ltd & Ors - [2008] VCAT 1479 - VCAT 2008 case summary — Zoe

[7]

The substantive proceeding to which this application pertains concerns a dispute about the development of a retirement village at 177 Bonnyvale Road, Ocean Grove ('the site'). Seachange Management Pty Ltd ('Seachange') is the registered proprietor of the site and is in the property development business. Bevnol Constructions and Development Pty Ltd (Bevnol) is a builder. It is common ground that on or about 15 May 2006 Seachange and Bevnol entered into an agreement whereby Bevnol agreed to construct 11 units on the site for the sum of $1,809,827.80.
In its Amended Points of Claim[1] Seachange alleges, among other things, that the agreed works were not completed within the period specified in the contract and that the work undertaken by Bevnol was deficient in various respects. Seachange claims damages, interest and costs.
On 29 May 2007 Bevnol filed a counterclaim against, relevantly, Seachange and Mr Giuseppe De Simone (the second respondent to the counterclaim). The third and fourth respondents to the counterclaim are Paul Marc Custodians Pty Ltd (formerly Paul Marc Management Pty Ltd) and Martin Jurblum (a director of the third respondent). In its counterclaim Bevnol alleges, among other things:
- Seachange refused to pay in full the deposit required by the contract.
- On 18 December 2006 Bevnol served a notice of suspension on Seachange. Seachange failed to rectify the breach identified in the notice within the 7 days specified in the contract and on that basis Bevnol was entitled to suspend the contract.
- Between 8 December 2006 and 24 April 2007 Seachange breached express terms of the contract and by letter dated 24 April 2007 Bevnol accepted Seachange's repudiation and was thereby discharged from future performance of the contract.
- Bevnol claims loss and damages by reason of Seachange's wrongful termination of the contract.
Bevnol also alleges that the first (Seachange) and third respondents (Paul Marc Management Pty Ltd) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s.9 of the Fair Trading Act 1999 (the FTA). The misrepresentation is said to arise from a representation made by the first and third respondents that all necessary finance required by the contract had been obtained. It is alleged that the financial approval had not in fact been obtained and that the first and third respondents had no reasonable basis for belief in the accuracy of the representation made to Bevnol.
The claims made by Bevnol against Mr De Simone are made in the alternative and are set out at paragraphs 41 and 42 of the Counterclaim. It is alleged that Mr De Simone contravened s.9 of the Fair Trading Act pursuant to s.159 of that act by reason of:

[10]

Section 108 of the VCAT Act provides for the reconstitution of the Tribunal during the hearing of a proceeding. The substantive proceeding to which this application relates has been the subject of a number of interlocutory proceedings before a Senior Member.
On 13 May 2008 the Senior Member dismissed an application by Mr De Simone that he disqualify himself on the basis of perceived or actual bias. The Senior Member's reasons for decision were published on 19 June 2008. The background to the bias application is central to the application for reconstitution and I deal with it in more detail later.
Section 108(1) provides that at any time during the hearing of a proceeding a party may apply to the Tribunal requesting that it be reconstituted for the purposes of the proceeding. In this matter Mr De Simone's application to the Senior Member that he disqualify himself was, in effect, an application that the Tribunal be reconstituted. That application was rejected.
Section 108(4) provides that if the Tribunal rejects an application under subsection 108(1) for reconstitution a party may make a request to the President that the Tribunal be reconstituted. Mr De Simone has made such a request.
If a request is made to the President under subsection 108(4) the President may allow or reject the request for reconstitution, with or without allowing the parties to make written or oral submissions (s.108(5)).
I am determining Mr De Simone's application in the capacity of Acting President. In that capacity I have 'all the powers and must perform all the duties of the President' (s.26)(5)(a) of the VCAT Act).
I propose to make some brief observations about the nature of the discretion in s.108(5) before turning to the merits of Mr De Simone's application.
These issues have been discussed in a number of previous cases[2] and three things may be said about the nature of the power vested in the President under s.108(5):
1. It is a discretionary power.
2. The discretion is a broad discretion - the VCAT Act does not specify particular criteria to be taken into account nor does it impose limitations on the exercise of the discretion.
3. The power is designed for a wide range of circumstances.[3]
In relation to the last point Kellam J, in Metrospan Developments Pty Ltd v Whitehorse City Council[4] (Metrospan) said that the power might be used when a member of the Tribunal becomes ill or retires or their term expires. In State of Victoria v Bradto Pty Ltd (Bradto)[5] Morris J was of the view that a substantial purpose of the power is to deal with the circumstances in which the Tribunal constituted to hear and determine a proceeding is ill suited to the specialist task that actually arises in the case. His Honour gave an example in the planning field where a tribunal might be appointed consisting of a legal member and it may subsequently transpire that there are technical issues concerning traffic engineering or heritage that would be better determined by a member having that special skill.
The discretion should also be construed in its statutory context and may be exercised where necessary to ensure that the future conduct of the proceeding complies with the rules of natural justice. As Kellam J observed in Metrospan:

[17]

The above statement conflicts to some extent with the observation of Kellam J in Metrospan. In Metrospan his Honour said that in appropriate circumstances it would be a proper exercise of discretion to reconstitute a Tribunal where 'there is merely a risk that there may be a compromise of the rules of natural justice'.
The term "natural justice" in the context of administrative decision making has been essentially equated to an obligation to act fairly or to accord procedural fairness:[9] The requirements of natural justice or procedural fairness are not prescribed in a fixed body of rules. What is required in one case may be quite different from what is required in another[10].
As I have indicated the discretion is cast in broad terms and should be construed in its statutory context[11]. Section 108 appears in Division 7 of Part 4 of the VCAT Act. In the same Division sections 97, 98 and 99 speak, relevantly, of the Tribunal's obligations regarding the conduct of hearings. In particular the Tribunal:
- must act fairly and according to the substantial merits of the case in all proceedings (s 97);
- is bound by the rules of natural justice (s 98(1)(a));
- must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and a proper consideration of the matters before it permit (s 98(1)(a)); and
- must allow a party a reasonable opportunity to adduce evidence; question witnesses and to make submissions to the Tribunal (s 102(1)).
These obligations may be seen as incidents of a general duty on the Tribunal to ensure a fair hearing. The provision of a fair hearing is at the very heart of the Tribunal's obligations to the parties who appear before it. One element of that obligation which is particularly relevant in the circumstances of this case is the duty to provide assistance to litigants in person. I deal with the incidents of that duty later.
To what extent does the obligation to provide a fair hearing inform the exercise of the discretion under s 108?
In the matter before me the essence of Mr De Simone's submission in support of his application for reconstitution is based upon a concern that the future conduct of the proceeding before the Senior Member would involve a breach of natural justice. This submission is based on the proposition that the manner in which the Senior Member has conducted the proceedings to date gives rise to a reasonable apprehension of bias. The matters relied upon are matters that could be ventilated on appeal to the Supreme Court (see s 148 VCAT Act).
In his affidavit filed in support of his application Mr De Simone confirmed that he will be appealing Senior Member Young's decision of 13 May 2008 for which written reasons were given on 19 June 2008. On 17 July 2008 the notice of appeal was lodged with the Supreme Court.
In Bradto Morris J said that the discretion to reconstitute the Tribunal in a natural justice context should not be exercised unless it was 'an obvious and clear cut case that the future conduct of the proceeding would involve a breach of the principles of natural justice'. The test formulated by his Honour clearly imposes a higher threshold on applications for reconstitution which are predicated on an apprehension that the Tribunal as constituted will not provide a fair hearing. I have already referred to the apparent conflict between his Honour's view and that expressed by Kellam J in Metrospan. I am not persuaded, with respect, that the restrictive approach to the exercise of the discretion postulated by Morris J is required by the terms the section itself or the statutory context in which it appears.
The test formulated by Morris J reflected his Honour's concern to ensure that the reconstitution of the Tribunal under s 108 not undermine the appeal process under s 148. But it seems to me that the two processes are conceptually quite different. An appeal may quash or vary decisions already made, as well as affecting the future conduct of a proceeding. Unlike an appeal, a decision to reconstitute the Tribunal only has prospective effect - it has no legal effect on decisions taken by the Tribunal as previously constituted. Seen in this way the powers exercised in each context are quite different.
The manner in which a proceeding has been conducted will no doubt inform the exercise of the reconstitution discretion, but under s 108(5) the President is not concerned with providing legal redress for past wrongs.
In my view if a party has a reasonable apprehension that they will not receive a fair hearing before the Tribunal as presently constituted then that will provide a proper basis for the exercise of the discretion to reconstitute the Tribunal.
The concept of a fair hearing is fundamental to the justice system[12]. The principle is applied not only to the judicial system but also to many other kinds of decision making and decision makers, including tribunal members[13].
In this context it is relevant to note that Mr De Simone is a litigant in person. Tribunal members are required to provide litigants in person with such assistance as is necessary to ensure that the proceedings are fair. This is an incident of the requirement to provide a fair hearing. I deal with this in more detail later.
The impartiality of the Tribunal is central to a fair hearing. It is in this context that the apprehension of bias principle becomes relevant. Bias, whether actual or apprehended, connotes the absence of impartiality.
Applied to Tribunal members the governing principle is that a member is disqualified if a fair minded observer might reasonably apprehend that the member might not bring an impartial mind to the resolution of the question that the member is required to decide. The principle gives effect to the requirement that justice should both be done and be seen to be done[14].
Three things should be noted about the application of the apprehended bias principle.
First, the contemporary test - that the member might not bring an impartial mind to the resolution of a question - requires no prediction about how the member will in fact approach the matter. As observed by the joint judgment in Ebner v The Official Trustee in Bankruptcy:

[36]

A member has a responsibility to ensure that the proceedings are fair. This means that in some circumstances a member has an obligation to intervene, both for the benefit of a litigant in person and more generally.
The assistance provided by a member may, depending on the circumstances, include:
- identifying the issues which are central to the determination of the particular proceedings.
- drawing a party's attention to the relevant legislative provisions and key decision(s) on the issue being determined.
- asking a party questions designed to illicit information in relation to the issues which are central to the determination of the particular proceedings;
- assisting a party to conform to the Brown v Dunn principle and other procedural rules designed to avoid unfairness; and
- drawing a party's attention to the relative weight to be given to Bar table statements as opposed to sworn evidence.
A member may also intervene, to an appropriate extent, by asking questions of witnesses. Such a role is appropriate in the following circumstances:
- to clear up a point that has been overlooked or left obscure;
- to obtain additional evidence to better equip the member to choose between the witnesses' versions of critical matters;
- to excluded irrelevancies and discourage repetition;
- to ask admissible questions which a party is unable, for the moment to formulate; and
- to facilitate expedition in the progress of the proceedings[44]:
The role of a member in asking questions of a witness may be greater where a party is a litigant in person or ineptly represented.
But excessive intervention during the elucidation of evidence is undesirable and may lead to the appearance of bias or prejudice. And it may leave one or both parties with the feeling that the proceedings have not been fair[45].
However the assistance to be provided to a litigant in person is limited. It is plainly necessary to balance the interests of litigants who represent themselves with the need to afford procedural fairness to other parties[46].
As I have said context is important in assessing the level of assistance to be provided to a litigant in person. There are three contextual matters which are important in this case.
The first is that Mr De Simone is an intelligent and articulate litigant. He has studied law but has not been a legal practitioner. His submissions before me demonstrated an understanding of the relevant statutory provisions and the decided cases. But he lacks a competent advocate's attribute of objectivity and the facility to present a focussed and cogent argument. This is not a criticism of Mr De Simone. These are common disadvantages encountered by litigants in person.
A report prepared by the Australian Institute of Judicial Administration to assist courts and tribunals in managing litigants in person makes the following observation about the disadvantage that comes from a lack of objectivity:

[38]

The Tribunal has an obligation to assist a litigant in person to overcome these disadvantages, to the extent necessary to ensure a fair hearing.
The second matter concerns the relationship between Mr De Simone and one of the other parties in the proceedings, Seachange. Mr De Simone is a director of Seachange - indeed he is the Managing Director and sole executive[48]. In that capacity Mr De Simone instructs Mr Lustig, the solicitor acting for Seachange. During the course of the proceedings before me it was apparent that on occasion Mr Lustig provided some assistance to Mr De Simone in the conduct of his case. I also note that on one occasion the Senior Member observed that Mr Lustig appeared to be taking over Mr De Simone's case and putting a submission on his behalf[49], though this suggestion was refuted by Mr De Simone[50].
But these considerations do not absolve the Tribunal from providing such assistance to Mr De Simone as is necessary to ensure a fair hearing.
Mr De Simone is a named party to the proceedings and his alleged conduct is the subject of a counterclaim by Bevnol. As a party his interests are separate and distinct from the interests of Seachange.
The final matter to which I wish to refer is the institutional context. Informality and expedition are common features of proceedings in the Tribunal. In an endeavour to ensure that costs are kept to a minimum and that the relevant issues are identified and determined in a timely way Tribunal proceedings often take on an inquisitorial character rather than the adversarial process of a traditional court setting.
Against that background I now turn to consider Mr De Simone's apprehended bias point. In doing so I have not found it necessary to deal with each and every point advanced in support of Mr De Simone's application.
In support of his apprehended bias point Mr De Simone relied on extracts from the transcript relating to the proceedings on five separate days: 6 July 2007[51]; 28 August 2007[52]; 19 December 2007[53]; 4 March 2008[54]; and 13 May 2008[55].
I have read the totality of the transcript on each of these days in order to appreciate the context in which the extracts relied upon appear. At Mr De Simone's request the digital recording of each of the extracts was played during the course of the proceeding before me, to enable submissions to be made about the tone used by the Senior Member.
These steps were appropriate because in dealing with the suggestion of apprehended bias it is reasonable to assume that the hypothetical lay observer would base the opinion on a fair assessment of the member's conduct in the context of the whole proceeding. A judgment of the loss of impartiality and neutrality ought not be made from a short and emotional exchange taken out of context and weighed in isolation.[56]
I need only deal in detail with the proceedings on three of the days referred to by Mr De Simone, namely 28 August 2007, 4 March and 13 May 2008. Before turning to those extracts I propose to briefly deal with the proceedings on 6 July and 19 December 2007.

[155]

The proceeding recommenced after a short adjournment and when it became apparent that Mr De Simone was not in attendance it was then adjourned to 13 May 2008.
At the commencement of the hearing on 13 May 2008 the Senior Member informed the parties that he intended to deal first with Mr De Simone's explanation for leaving the hearing without notice on 4 March 2008.
Mr De Simone's explanation was, in summary terms, as follows:
- He had been excused - this was a reference to his application at the commencement of the hearing that he be excused, which the Senior Member had granted (Mr De Simone acknowledges that he later stood from the body of the hearing room to object to the approach taken by counsel for Bevnol to his affidavit and that he had submitted that he should be heard in respect of that matter).
- When the Tribunal stopped Mr De Simone's submissions and required him to address the Tribunal as to the factual matters upon which he wished to rely, Mr De Simone formed the view that the Tribunal was not listening to him impartially or fairly and on that basis he did not feel it was appropriate to continue. Further, Mr De Simone said that it was his belief that counsel for Seachange had taken over his submission.
- There was no obligation upon him to continue to make a submission in relation to the use by counsel for Bevnol of his affidavit of 24 January 2008. If he did not wish to pursue his submission and left the hearing then the Tribunal should have continued without him.
During the course of his submissions Mr De Simone informed the Senior Member that if he was going to hear any application for costs arising from the determination in relation to his explanation for leaving the hearing on 4 March 2008 then he would be making an application that the Senior Member disqualify himself from further dealing with the matter on the basis of bias.[78]
Given the foreshadowed application the Senior Member then permitted Mr De Simone to make an application that he disqualify himself on the ground of bias.
After hearing the parties the Senior Member rejected the bias application. The Senior Member also rejected the explanation proffered by Mr De Simone for the reasons set out at paragraphs 22 - 24 of his decision of 19 June 2008.
In his subsequent reasons for decision the Senior Member deals with Mr De Simone's bias application in these terms:

[157]

26 I do not accept that I refused to let him address me on such factual inaccuracies. I stopped his submission on a number of occasions in an attempt to get the Second Respondent to identify what were the factual inaccuracies rather than making generalised statements. The adjournment was to allow him to find the extracts in the transcript of the hearing of 19 December 2007 identifying such factual inaccuracies.
27 I do not consider that my approach to requiring the Second Respondent to refer to specific facts when seeking to submit that the Counsel for the Applicant was using his affidavit of 24 January 2007 for an improper purpose showed a partiality or bias. As the Second Respondent represents himself I was giving him some leeway as a non-legally trained party to put matters before me. If he had been legally trained it would be most unusual to have allowed him to interject from the body of the hearing after he had been excused from a matter on the ground that it did not concern him.
28 As I was not addressed as to any specific inaccuracies he alleged had been made by the Counsel for the First Respondent in addressing his affidavit of 24 January 2007 I could not understand the reason for his submission or its relevance to the Applicant's joinder application.
29 I attempted to stop the Second Respondent a number of times to inquire about relevance and to direct him to address facts in his submission. I accept that the language I finally used was peremptory and direct. I consider it was necessary to get the Second Respondent to stop, listen and follow the Tribunal's directives as to relevance and facts. The Second Respondent is not legally trained and does not show the normal politeness with which legal practitioners address an adjudicator. This makes it difficult to keep the Second Respondent making cogent and relevant submissions.
30 It was necessary to have the relevance and specific factual allegations of the Second Respondent's submissions made out so that the joinder application was progressed. I do not consider that to a reasonable lay observer aware of the nature of the application and the Second Respondent's lack of personal legal interest in the joinder issue would consider that I had exhibited either actual or apprehended bias in my direction to the Second Respondent during the hearing of 4 March 2008. My direct language was an indication of my exasperation with my attempts to get the Second Respondent to address specific facts and make specific allegations, such as would show how his submission was relevant to the joinder matter in issue. I dismiss his application.
31 Finally, I note that in his email to the Solicitor of the First Respondent of 5 March 2008 the Second Respondent informed the First Respondent that he would only be making this application on the basis that the First Respondent would be making an application for its costs from him if I did not accept his explanation for absenting himself from the hearing of 4 March 2008. I consider this shows that the Second Respondent's lack of faith in my impartiality towards him was not his sole reason for making this application. It was also used as a threat in an attempt to get the First Respondent to agree to not make an application for its costs from him in relation to the hearing of 4 March 2008. As such I consider the Second Respondent's application that I disqualify myself can be seen as making an application for an improper purpose."[79]
Four things may be said about the exchange between the Senior Member and Mr De Simone on 4 March 2008 and the Senior Member's decision of 19 June 2008.
First, it is apparent from an examination of the transcript and listening to the tape that the extent of the Senior Member's interventions were such that Mr De Simone was given no real opportunity to put his case. Depriving Mr De Simone of such an opportunity was a denial of procedural fairness. In an exchange lasting some six minutes the Senior Member interrupted Mr De Simone on some 11 occasions. The denial of procedural fairness is also apparent from the fact that at the outset of Mr De Simone's submission the Senior Member makes it clear that he was 'not interested' in Mr De Simone addressing Mr Reid's approach and that he was allowing Mr Reid to continue.
Second, in his decision of 19 June 2008 the Senior Member accepts that the language he used was 'peremptory and direct'. He says that he felt it necessary to adopt this course in order to get Mr De Simone to 'stop listen and follow the Tribunal's directives as to relevance and facts'.
In my view the language and tone used by the Senior Member was not merely peremptory and direct, it was unacceptable. It is completely inappropriate for a member to use the language of personal abuse towards a party appearing before the Tribunal. That is what the Senior Member did when he said:

At a glance

Court

Decision date

Before

Source

Judgment (258 paragraphs)

Seachange Management Pty Ltd v Bevnol Constructions & Developments Pty Ltd & Ors (Domestic Building) [2008] VCAT 1479 (18 July 2008)

Parties

Legislation Cited (3)

Cases Cited (25)