AKA Stavrou Builders (Theo Stavrou & Paula Stavrou),

Bere Nominees Pty Ltd (ACN 050 198 582) (released 12/11/2003)

[2004] VCAT 1193

1. The application by Vero Insurance Ltd to be joined as a party to this proceeding, and for an extension of time in which to make application for review is dismissed.

2. Liberty to the parties to the original proceeding to apply for costs of this application until 21 July 2004. Any costs hearing to be listed before Deputy President Aird.

For the Second Respondent: Mr D. Calabro, Solicitor

1. By application made on 21 May 2004, Vero Insurance Limited and the co-insurers (the insurers) as the relevant warranty insurers have applied:

(i) To be joined as parties to this proceeding under s60 of the Victorian Civil and Administrative Tribunal Act 1998

(ii) An extension of time in accordance with section 126 of the VCAT Act be granted to enable the applicant to appeal the VCAT orders dated 12 November 2003 and or the orders of 1 October 2003

(iii) That the orders dated 12 November 2003 and or the orders of 1 October 2003 be set aside or revoke (sic) under section 120 of the VCAT Act 1998 and or Sections 97 and 98 of the VCAT Act 1998.

2. Towards the end of the hearing of this application Mr Cawthorn of Counsel, on behalf of the insurers, also indicated that his clients were applying for the proceeding to be reinstated, as a first step, before the application was otherwise considered and determined. The application was opposed by Mr Bolton of Counsel who appeared on behalf of the Applicants in the proceeding, and Mr Calabro, solicitor, who appeared on behalf of the Second Respondent. There was no appearance by or on behalf of the First Named or Second Named First Respondents (the builders).

3. On 12 November 2003, following the non-appearance at a Compulsory Conference by or on behalf of the builders, the Tribunal made orders determining the proceeding in accordance with the provisions of s87 of the Victorian Civil and Administrative Tribunal Act 1998 which provides:

If a party does not attend a properly convened compulsory conference--

(a) the conference may proceed at the appointed time in the party's absence; and

(b) if a member of the Tribunal is presiding and all the parties present agree, the Tribunal, constituted by that member, may--

(i) determine the proceeding adversely to the absent party and make any appropriate orders; or

(ii) direct that the absent party be struck out of the proceeding.

The Tribunal ordered, inter alia, that the builders pay to the Applicants the sum of $2,553,100.

4. The Applicants subsequently made claim on the insurers for payment of the sum ordered under the Policy of Warranty Insurance which provides for payment by the insurers of any loss or damage suffered by the building owners on account of defective building works, upon default in payment by the builders. The insurers have failed to make payment, and I understand the Applicants have commenced enforcement proceedings in the Supreme Court.

5. The insurers now make this application on the grounds that they should properly be joined as parties to this proceeding under s60 of the Act as they are persons "whose interests are affected by the proceeding". It was submitted by Mr Cawthorn that it would be appropriate to first reinstate the proceeding, then consider the application for joinder and an extension of time in which to make the application that the orders of 12 November 2003 and/or the orders of 1 October 2003 be set aside or revoked.

6. As indicated at the hearing, it is my view that it is premature to make any order for reinstatement prior to otherwise determining the application. To reinstate the proceeding would, in my view, be a determination of any application under s120 of the Act. The difficulty faced by the insurers in successfully pursuing this application for joinder is that the proceeding has been determined. The wording of s60 is quite clear - "the Tribunal may order that a person be joined as a party to a proceeding if .............". In other words, the section contemplates a current proceeding, not yet determined, to which a person can be joined. In this case, the proceeding has been disposed of. A final determination has been made and the Tribunal is functus officio. The only persons who have standing to make an application under s120 are the builders as they were a party to the original proceeding.

7. None of this is to say that the insurers should not have been parties to the proceeding. However, I understand from the chronology submitted on behalf of the insurers that they were advised by letter dated 13 March 2003 that an application had been made to the Tribunal in respect of the incomplete and defective works. The insurers say that notwithstanding that the letter of 13 March 2003 purported to enclose a copy of the VCAT application, that a copy was, in fact, not enclosed, and that in any event that application was only seeking damages of no more than $100,000. Upon receipt of that letter, there is no evidence that the insurers sought a copy of the application or asked that they be kept informed of any developments. They simply wrote to the Applicants' solicitors by facsimile dated 8 April 2003 which omitting the formal parts provides::

We acknowledge receipt of your correspondence dated 13/03/03.

In response to your request contained therein, the insurer submits the following information.

Proceedings are on foot in VCAT between the owner and the builder. While such proceedings remain unresolved it is neither pertinent nor appropriate for the insurer to entertain a claim for indemnity.

We advise that we will immediately create a notification file of your complaints against the builder. Upon receiving information of the results of the VCAT proceedings incorporating advice of the determinations received by the parties, the insurer will be in a position to issue a claim form to the owners. This contemplated action will be reliant upon the event there exists a loss, suffered by the owners.

If you have any further queries, please do not hesitate to contact the undersigned."

It is now too late for them to seek to be joined. As noted above, the proceeding has been determined and the Tribunal, in my view, is functus officio.

8. The insurers further submit that they are entitled to make application under s120 of the Act that the orders be set aside or revoked. Section 120 provides:

(1) A person in respect of whom an order is made may apply to the Tribunal for a review of the order if the person did not appear and was not represented at the hearing at which the order was made.

(2) An application under sub-section (1) is to be made in accordance with, and within the time limits specified by, the rules.

(3) The rules may limit the number of times a person may apply under this section in respect of the same matter without obtaining the leave of the Tribunal.

(a) hear and determine the application if it is satisfied that the applicant had a reasonable excuse for not attending or being represented at the hearing; and

(b) if it thinks fit, order that the order be revoked or varied.

(5) Nothing in Division 3 of Part 3 applies to a review under this section.

9. The insurers submit that they are persons 'in respect of whom an order is made' as evidenced by the Supreme Court proceedings. I reject this submission. It is clear that the orders were made against the builders. Any liability the insurers may have arises under the Insurance Policy because of the default of the builder. In any event, this is of little import in this application which must fail for the reasons already discussed.

10. This finding is reinforced by the decision of the High Court in Bailey v Marinoff [1971] HCA 49; [1971] 125 CLR 529 to which I was referred by Mr Cawthorn although it cannot be said to assist his clients' position. At page 530 Barwick CJ observes:

"...Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision, is at an end in that court and is in is substance, in my opinion, beyond recall by that court..."

This is clearly relevant here, and for the reasons set out above I reject Mr Cawthorn's submission that s120 of the Act operates to allow his clients to make an application for review.

11. The grounds for the application for reinstatement of the proceeding/joinder and review are set out in the application filed on 21 May 2004. However, I do not propose to consider those grounds here - they are all matters which might very well have been grounds to support an application under s120 of the Act by the builder, but cannot support this application in circumstances where I have determined the insurers do not have standing to bring it. Nor do I intend to consider the submissions made in respect to whether the Tribunal erred in making the determination under s87 or in relation to Mr Calabro's conduct in this proceeding. None of these are relevant to the application before me.

12. Further, whilst I accept that ss97 and 98 of the Act require the Tribunal to act fairly and ensure that all parties are afforded natural justice, there is nothing in those sections which, in my view, would enable me to otherwise make the orders sought. These provisions can only apply to the Tribunal's conduct of a proceeding, and thereby the parties to the proceeding. Again, they may all be matters which might properly be taken into account in determining any application under s120 that might be made by the builder, but do not assist the insurers.

10. The application by the insurers must therefore be dismissed. I will reserve the question of costs and grant liberty to the parties to the original proceeding to apply.