The Trustee for ASLZ Trust ABN: 98 354 457 615 t/as A&S Advisory

Virtually Made Pty Ltd v Rigby Cooke (Civil Claims) [2018] VCAT 579

1. Mr Wood is the solicitor for the applicant in this proceeding, Virtually Made Pty Ltd. His client has been the victim of the complexities of the legal system and perhaps also a lack of integrity on the part of some of the people with whom it has dealt. Virtually Made was a supplier of joinery. One of its customers was a company called Maxtra which became indebted to Virtually Made for goods sold and delivered.
2. Virtually Made took all obvious steps to seek to recover the amounts which it said were owed to it. By late December 2013, Virtually Made was represented by Mr Wood of EC Legal. Maxtra was represented by Mr Johnson of Rigby Cooke which is the respondent to this proceeding. Mr Wood sent an email to Mr Johnson headed 'Without Prejudice' and offering to settle the proceeding between the two companies on the basis that an amount would be placed in the trust account of the respondent firm and that the respondent firm would be regarded as stakeholder. The offer included some nine paragraphs. By an email dated 17 December at 4.16 pm, Mr Johnson responded to Mr Wood stating, 'my instructions are to agree to your proposal sent at 3.54 pm today'.
3. The dispute nevertheless rumbled on and eventually Maxtra was placed in liquidation. Virtually Made took a number of steps including obtaining adjudications and bringing the matter to the Supreme Court. According to Mr Wood's affidavit, the situation has concluded, or at least reached the situation where some $34,000 was held in the Rigby Cooke Trust Account but was used by that firm to pay legal costs which it had incurred in acting for Maxtra. In those circumstances Rigby Cooke has refused to release any of that fund to Virtually Made. Virtually Made contends that having taken those moneys as stakeholder, Rigby Cooke breached its duty to Virtually Made.
4. Acting for itself, Virtually Made commenced proceedings in the Tribunal against Rigby Cooke and against the trustee of a trust which is said to be the trading vehicle of the liquidator who has since been appointed to wind up the affairs of Maxtra which by that time had changed its name to Hicom Pty Ltd.
5. At an initial directions hearing on 20 November 2017, this second respondent, described as the trustee for the ASLZ Trust, disappeared from the proceeding with leave being granted to Virtually Made to withdraw its claim against it. Mr Wood, acting for Virtually Made at a subsequent directions hearing, indicated that his client wished to raise s 77 of the Victorian Civil and Administrative Tribunal Act 1998. This section gives the Tribunal power in certain circumstances to strike out a proceeding where there is a more appropriate venue for the dispute between the parties to be determined. The powers under s 77 are exercisable only by judicial members of the Tribunal. Accordingly, the member presiding at the directions hearing was unable to exercise any of those powers and so the matter has come before me as a judicial member and Vice President of the Tribunal.
6. When the proceeding was called on, Mr Wood, who represents Virtually Made again today, told me that he was not definitively seeking an order under s 77 of the Victorian Civil and Administrative Tribunal Act striking the proceeding out with a view to its being heard elsewhere. Rigby Cooke was represented by Mr Brad Parker of Counsel who said that his client sought an order under s 75 of the Victorian Civil and Administrative Tribunal Act summarily dismissing the proceeding. Rigby Cooke contends that the proceeding is not within the Tribunal's jurisdiction and should be summarily dismissed for that reason.
7. I put it to Mr Wood that given this more fundamental and definitive issue's being raised, as a matter of logic, it should be determined whether the matter was or was not within the Tribunal's jurisdiction before any issue could properly be raised under the discretion granted by s 77 of the statute as to whether there was a more appropriate venue for the dispute to be heard.
8. Mr Parker said that in truth s 77 could only properly be invoked where a dispute was within VCAT's jurisdiction. He referred to Naylor v Oakley Thompson & Co Pty Ltd [2007] VCAT 958 at [47] and Pizer's Annotated VCAT Act [VCAT 77.40 page 362]. I respectfully agree with what was said Naylor's case but at any rate, whether the decision is correct on that point or not, the argument as to jurisdiction has gone forward first. Mr Parker has contended that there is no jurisdiction and Mr Wood has contended the opposite - though with the concession that, had he commenced the proceeding on behalf of Virtually Made, he would have commenced it elsewhere, perhaps in the Magistrates' Court.
9. The Tribunal has a miscellany of jurisdictions. Mr Wood has said that the present proceeding invokes the `consumer and trader jurisdiction' which the Tribunal has under the Australian Consumer Law and Fair Trading Act 2012. He said it was on the edge of that jurisdiction, but nevertheless clearly within it. I asked him whether there was any attempt to invoke the Legal Profession Uniform Law Application Act 2014 and he said that there was not. I should say incidentally that his view on the Legal Profession Uniform Law Application Act 2014 appears to be correct. VCAT has jurisdiction under that Act to deal with certain disciplinary matters. As to disputes between solicitors and clients there is a jurisdiction VCAT created by s 98 and 99 to deal with costs disputes. However, that jurisdiction is exercisable only upon referral from the Commissioner under the legal profession legislation. It cannot be invoked simply by commencing a proceeding in the Tribunal without that preliminary. So I can put the Legal Profession Uniform Law Application Act 2014 to one side and concentrate therefore upon the Australian Consumer Law and Fair Trading Act 2012.
10. Section 182 is the initial section in that statute under the heading "Chapter 7 Functions of VCAT'. Sub-section(1) provides:

In this chapter a consumer and trader dispute is a dispute or a claim arising between a purchaser or a possible purchaser of goods or services and a supplier or possible supplier of goods or services in relation to a supply or possible supply of goods or services.

1. The parties are agreed, I think, that this is the field within which the jurisdiction of the Tribunal has either been properly or improperly invoked. Mr Parker made a number of submissions which were premised upon the view that it was being contended on behalf of Virtually Made that Virtually Made was a purchaser of services and that his client, Rigby Cooke, was a supplier of services, as a stakeholder. Mr Parker submitted that such an invocation of the jurisdiction would be inappropriate and ineffective.
2. Nevertheless, in clarification of Virtually Made's position, Mr Wood said that according to Virtually Made, the jurisdiction was invoked in this way. Virtually Made was a supplier of goods. The customer, Maxtra, now Hicom (in liquidation), was the purchaser and this constituted the dispute which was properly brought before the Tribunal. The first thing to note about this contention is that it would appear Maxtra, or Hicom, was already in liquidation at the time that the proceeding was brought. No proceeding could, without leave to proceed from the Supreme or Federal Court, have been brought against the customer company in liquidation and it has not been suggested that any such leave to proceed was brought. Rather, the proceeding was brought against the present respondent, Rigby Cooke, and the liquidator of the company. The liquidator, as my earlier narration shows, has been removed from the field, apparently on the application of Virtually Made.
3. What the formulation of the jurisdiction adopted by Mr Wood would appear to indicate is that the supply relationship said to engage the definition of consumer and trader dispute in s 182 of the Australian Consumer Law and Fair Trading Act was the original one between Virtually Made and the now insolvent company. The effect of the settlement, said Mr Wood, was that Rigby Cooke became a party to the proceeding and thereby a party to the supply arrangement and properly brought before the Tribunal. Necessarily, Mr Wood conceded that there was no question of there being a supply arrangement for stakeholder services to be provided by Rigby Cooke. In my view, Mr Wood's concession or analysis negating this was accurate enough. The email exchange to which I have made reference is an email exchange between two solicitors who were acting as spokespersons for their respective clients. The solicitors were not parties to the arrangement which was made. One of the terms of the arrangement between seller and buyer, (supplier and purchaser to use the statutory expressions in the fair trading legislation) was that a third party, namely, Rigby Cooke's services would be availed upon in the circumstances described. Rigby Cooke made no promise and agreed to supply no service. The premise of the email exchange was that the services of Rigby Cooke should be engaged by Maxtra as it then was and in certain circumstances Maxtra would give instructions to a particular effect to Rigby Cooke.
4. The structure of the definition of consumer and trader dispute which I have read earlier, indicates that what is contemplated is that the disputes which the Tribunal can adjudicate upon are disputes between two sides of supply arrangements. The mere fact that there is a supply arrangement does not in itself enable a claim to be brought against someone who might be regarded as a supplier to another party under a different arrangement. No doubt, Rigby Cooke was a supplier of services and Maxtra was a purchaser of those services but the definition of consumer and trader dispute, in my view, requires that the parties be on different sides of the same supply relationship, not parties to different supply arrangements. In those circumstances, I believe that this proceeding falls outside the Tribunal's jurisdiction and should be terminated for want of jurisdiction.
5. In those circumstances, no occasion arises to consider the exercise of any powers under s. 77 of the Victorian Civil and Administrative Tribunal Act 1998 for determining that this proceeding should be summarily dismissed for want of jurisdiction.

1. As a result of my ruling on jurisdiction, Mr Parker for the respondent who sought summary dismissal, has applied for an order that the applicant company pay his client's costs either on a full indemnity basis for the entirety of the proceeding or alternatively, on the standard basis until the applicant's solicitor, Mr Wood came on the record and thereafter, on a full indemnity basis. Mr Parker relies on s 75(2) of the Victorian Civil and Administrative Tribunal Act. Section 75 empowers the Tribunal summarily to dismiss a proceeding that is frivolous, vexatious, misconceived, lacking in substance or is otherwise an abuse of process. The application mounted by Mr Parker was expressed to be made under that sub-section. Sub-section (2) provides:

If the Tribunal makes an order under sub-section (1) it may order the applicant to pay any other party an amount to compensate that party for any costs expenses, loss, inconvenience, embarrassment resulting from the proceeding.

1. There is authority for the view that when a matter is brought before a court or tribunal and is found to be beyond jurisdiction, that finding necessarily deprives the court or tribunal a power to make a costs award. There is, I think, ground to believe that s 75(2) in the case of VCAT removes the operation of that rule. It can, I think, be properly concluded that to press a proceeding before a body that lacks jurisdiction to deal with it, is properly characterised as frivolous, vexatious, misconceived, without expressing a view as to which of those prerogative perfect participles accurately describes the process.
2. In exercising the power under sub-section (2) which, being introduced by the word 'may', is necessarily discretionary (see s 45 of the Interpretation of Legislation Act 1984), one considers that the general rule is that the Tribunal determines matters without resort to any rule that costs follow the event. So much is made clear by s 109(1) of the Tribunal's statute. It creates a default position that costs lie where they fall. Plainly, s 75(2) empowers the Tribunal in the present circumstances to depart from that default situation. Mr Wood submitted in the circumstances it should not do so. He referred to a lengthy narrative in an affidavit which he swore just before today's hearing, indicating a lack of co-operation on the part of the respondent firm with the procedural directions that had been given by the Tribunal. Mr Wood referred generally to the unhappy history which attended Virtually Made's attempts to collect the debt apparently owed to it from the company now in liquidation. Mr Wood submitted that it would in effect be adding insult to injury to subject his client now to a costs penalty as well as a finding that it had, in effect, advanced up a blind alley in commencing this proceeding.
3. In reply, Mr Parker observed that the matters put before the Tribunal related only to jurisdiction, and the underlying merits of the case had not been gone into. It would be wrong to presume anything as to the overall merits of the dispute between Virtually Made and the respondent. I accept that submission. Nevertheless, there are certain things that are undisputed and one of them is that the offer which was accepted and led to the establishment of a fund of money held by Rigby Cooke did characterise, in more than one place, Rigby Cooke's role as that of stakeholder. Rigby Cooke has resorted to the fund to pay its costs which, absent any provision which specifically authorised that, seems difficult to reconcile with the concept of its being a stakeholder. Just on what terms the stake was to be held regrettably remains unstated in the accepted settlement offer between Virtually Made and the company now in liquidation. However, the fact that the concept of stakeholder was invoked and the unhappy procedural background to all this, leaves me with the feeling that this is one of the occasions on which the legal system has not well served those who seek to resort to it.
4. Accordingly, I think the just outcome is the default position stated by s 109(1) of the Victorian Civil and Administrative Tribunal Act that the costs should lie where they fall and that therefore, there be no order as to costs upon this dismissal.