BEFORE: Professor D.J. Cremean, Deputy President

DATES OF HEARING: 18, 21, 22 December 1998 & 29 January 1999

For the Applicant: Mr Hellyer of Counsel instructed by Belleli King Associates

Respondent 3. Mr Schwarz of Counsel instructed by Lovegrove, Solicitors

[1] In this matter application is made by the Applicant, by summons dated and filed on 27 November 1998, for an extension of time if it is necessary. It is sought to extend time to appeal out of time insurers' decisions made by HIH Winterthur on or about 4 June 1998 (the "HIH decision") and by FAI General Insurance on 15 October 1998 (the "FAI decision").

[2] The need to apply for an extension of time arises by virtue of s16 of the House Contracts Guarantee Act 1987. Section 16(1) provides that a decision of an approved guarantor must be appealed within 28 days after receiving notice of it. However by s126(1) of the Victorian Civil and Administrative Tribunal Act 1998 this period, being a time limit fixed by or under an enabling enactment, "may" be extended. This is so even if the time limit for compliance has expired before the application is made: s126(3). Under s126(4), however, the Tribunal "may not" extend time if to do so would cause any "prejudice or detriment" to a party that cannot be remedied by an appropriate order for costs or damages.

[3] Specifically, the need to apply for extensions of time under s126(1) of the 1998 Act arose in this case because no steps were taken by the Applicant to appeal the decisions in question within time. Indeed, as regards the HIH decision, the application for an extension of time was not even made until five months or more after notification of the decision. But the operation of s126(1), I would reason, is not dependent upon the length of time involved. In one case, a short delay may not warrant a favourable exercise of discretion. In another case, that may be warranted even though the delay is a long one.

[4] The Applicant's application for extensions of time was opposed by both Respondent insurers. Both argued that my discretion under s126(1) should not be exercised in the Applicant's favour. Both also argued that I was, in any event, precluded from exercising that discretion by s126(4) on the ground of "prejudice or detriment". The Applicant, for its part, contended that I should extend time under s126(1) and that I was not prevented from doing so by s126(4). In support of its position the Applicant relied upon Affidavit material and called Mr Belleli and Mr Horne to give evidence. Mr Belleli is a solicitor and partner in the firm Belleli King & Associates of Dandenong. Mr Horne is a cattle breeder and a director of the Applicant. The insurers called evidence from Mr Andrew. Mr Andrew is a solicitor in the firm of Lovegrove, Solicitors.

[5] The first issue, as I see it, is the nature of the discretion given by s126(1). If that discretion is one that should be exercised in favour of the Applicant, the next issue is whether that course is one prevented by s126(4). In turn that involves questions of "prejudice" and "detriment".

[6] The authorities make it very clear that the discretion conferred by provisions like s126(1) is a wide one. See, for example, Sheppard J in Wedesweiller v Cole [1983] FCA 94; (1983) 47 ALR 528 at 531. See also Brooking J in Dix v Crimes Compensation Tribunal [1993] VicRp 21; [1993] 1 VR 297 at 302 who speaking of s31(2) of the Administrative Appeals Tribunal Act 1984 said as follows:

"The power given by s31(2) is given in unrestricted terms and it is not for the court to impose an arbitrary limitation of the power not expressed in the words of the statute."

Even though s31(2) of that Act was not accompanied by a provision like s126(4) of the Victorian Civil and Administrative Tribunal Act 1998 the principle, I think, is clear: except as qualified by s126(4), the discretion given by s126(1) is an unfettered one. It is, moreover, a discretion which should not be fettered.

[7] From the fact that s126(1) gives an unfettered discretion is does not follow however that it may be exercised without regard to any factors at all. No authority would support this view, in any event. As regards Dix's case it is apparent that what went wrong in that case was that the Tribunal fettered its discretion under s31(2) by saying that, before an applicant could have a favourable exercise of discretion, an "acceptable explanation of the delay" must be shown. The Tribunal had referred to remarks of the Wilcox J in Hunter Valley Developments Pty Ltd v Minister for Home Affairs and Environment [1984] FCA 176; (1984) 58 ALR 305 at 310-11. By saying this, however the Tribunal had deprived itself of the opportunity to give consideration to all matters relevant to the exercise of its discretion.

[8] As pointed out by Brooking J (referring (at 302) to Evans v Allen [1974] VicRp 71; [1974] VR 596) there is a distinction to be drawn:

"between the recognition of matters relevant to the exercise of discretion and the elevation of some matter into a condition precedent to the existence or exercise of the discretion".

On this basis it cannot be said, therefore, that the discretion to extend time must be exercised in all cases where some factor is present or absent, as the case may be. This is made clear by his Honour's reference to the decision of O'Connor J in the Re Mulheron and Australian Telecommunications Corporation (1991) 14 AAR 42 at 50. According to his Honour (ibid) the decision in that case

"is inconsistent with the view that an applicant for an extension of time under s29(1) of the Commonwealth Administrative Appeals Tribunal Act 1975 must in all cases explain his delay in applying for review."

In truth, what purports to be an exercise of discretion by reference to a rule applying in all cases is not an exercise of discretion at all. That is why it cannot be said that in all cases an applicant must explain a delay. In turn, however, it cannot be said that, in deciding whether to grant an extension of time or not, the Tribunal may not take into account not only the delay but also the explanation for it. See Maric v Comcare [1993] FCA 31; (1993) 40 FCR 244. Indeed, in the Wedesweiller decision itself, Sheppard J even refers to this and says (at 531) that in some cases:

"it will be appropriate to consider whether the delay which has taken place has been satisfactorily explained".

Decisions of the former Domestic Building Tribunal need to be seen in this light. Other factors he mentions include:

"the prejudice which may be caused to an applicant by the refusal of an application, the prejudice which may be suffered... if the application is granted and, generally, what the justice of the case requires."

[10] The case for the Applicant is that I should extend time under s126(1) in all the circumstances, having regard particularly to the "merits". It was put to me that the merits are the principal ground of consideration. The authorities, however, do not uniformly or at all bear this out. But, even if they did, having regard to the width of the discretion involved, other factors might still be considered. In any event, in a sense, there was no argument from the Respondent insurers regarding the merits: they conceded that the Applicant had an arguable case on the merits. In light of this concession, other factors fall for consideration.

[11] It was also put to me that I should extend time because the Applicant's delay in appealing within time was due to the taking of legal advice. It was argued that the Applicant, in the person of Mr Horne, relied upon the advice of Mr Belleli that it was not necessary to appeal in relation to the decisions in question. It was said that the Applicant was relying upon Belleli King & Associates to act in its best interests and that it was quite entitled to do so. If there were any "sins" of the solicitor in this regard they should not be visited upon the client.

[12] Mr Belleli's advice, that it was not necessary to appeal in relation to the decisions in question, was completely incorrect. It is plain, upon any reading of the legislation, that, in order to appeal in respect of a decision of an approved guarantor, it is necessary to do so within 28 days after receiving notice of the decision. Mr Belleli's failure to appreciate this can only be explained in terms of his having failed to read the legislation except in the lead up period to this hearing in December 1998 and perhaps as late as the weekend before. This is quite astonishing. Mr Belleli's firm was the solicitor on record in a domestic building matter and it was he, personally, and at times also Mr McLeish, who was providing the Applicant with advice in that matter. But he had even not read the relevant Act. There is nothing at all which can commend itself in this course. It reflects poorly upon him in his professional capacity and thus upon his firm.

[13] Accepting, as I do, that Mr Belleli's advice was wrong (although even at the hearing he still would not admit this), the question is whether I should visit these "sins" of the solicitor on the client. There is clear authority, in this regard, so it was said, that the sins of a solicitor should be visited upon the client. See, for example, Northrop J in Duff v Freijah [1982] FCA 159; (1982) 43 ALR 479 at 485:

"It is well established that delays by a solicitor are visited upon the client when those delays are relevant to limitation periods or matters involving want of prosecution."

In the light of other authorities, however, I cannot agree that this represents the current state of the law. I refer, for example, to Repro Corporation Ltd v Scardamaglia [1996] VicRp 2; [1996] 1 VR 7 at 13 and to Lord v Australian Safeway Stores Pty Ltd [1995] VICSC 212; [1996] 1 VR 614 at 620-1. In summary, as was said by Sheppard J in the Wedesweiller decision at 532, there can be no general rule in matters of this kind: in some cases the client should be visited with the sins of the solicitor but not in others.

[14] Although the general rule cannot be taken to be as laid down by Northrop J in Duff v Freijah, I am prepared to hold, nonetheless, that in this case the client should be visited with the sins of the solicitor and that, accordingly, the Applicant should be visited with the sins of Belleli King & Associates. It is not simply a case of the Applicant relying upon its solicitor for legal advice which, as it happens, was plainly wrong. Rather it is a case of the Applicant identifying itself with its solicitor and choosing to rely upon his advice even in the face of contradictory advice from other quarters. In the first place there is the undeniable fact that on 17 September 1998 the Applicant at a directions hearing was told by its barrister of the statutory need to appeal within 28 days. This barrister (Mr Hellyer) was a construction law specialist. Mr Horne was aware that the barrister had experience in appearances at the Tribunal before. Yet the Applicant did not heed the barrister's advice. The Applicant via Mr Horne raised the matter of appealing with Mr Belleli later that same day. But despite being given independent (and sound) advice from the barrister the Applicant chose rather to settle on Mr Belleli's advice that it was not necessary to appeal. The Applicant via Mr Horne then chose to take no further steps at all to verify with Mr Hellyer his advice or with anyone else (other than Mr Belleli) whether Mr Hellyer's advice was correct or not. Of course in appearing for the Applicant at the hearing in December 1998, I think Mr Hellyer thus found it difficult, rationally, to maintain that the Applicant was acting reasonably in September 1998 in not accepting his (Mr Hellyer's) advice. In reality, I do feel that Mr Hellyer could have declined to appear at the hearing in December. But, perhaps even more to the point, and secondly, Mr Horne was told of a statutory need to appeal within time by the Tribunal member at the directions hearing and, once again, despite this being what he was advised also by Mr Hellyer, he chose to accept, instead, the wrong advice of Mr Belleli. In other words, in my view, Mr Horne clearly identified himself with Mr Belleli at the time when he chose to accept his advice in the face of contradictory statements from two independent sources each of whom, it may be said, was expert in the area.

[15] Even, however, if I am wrong in this, and it should be correct to hold that the sins of the solicitor should not be visited upon the client, I am of the view that I should hold that the Applicant's failure to act promptly is due quite independently to Mr Horne, on behalf of the Applicant, having failed to accept the very clear advice of Mr Hellyer even after remarks from the Tribunal member. That advice should not have sufficed merely to lead him to doubt Mr Belleli's advice: it was clearly contradictory advice. When he chose not to accept it, or to verify it either with Mr Hellyer or with some other (third) party, I am of the view, on this analysis, that a new element entered the causal equation. If, from that time on, the sins of the solicitor are not to be visited on the client, then I am of the view that, on this basis, the Applicant's delay is due solely to volitional acts at that time on the part of Mr Horne.

[16] Either because Mr Belleli's sins are to be visited on the client or because the sins of the Applicant are quite its own making, I am not satisfied, in the least, that there exists a satisfactory explanation at all for the Applicant's delay. I acknowledge that the Respondent's insurers have conceded that the Applicant otherwise has an arguable case on the merits. I can accept that concession without finding whether it is well-founded or not. Perhaps, it could be put even higher than that. But it seems to me nonetheless that I am entitled to focus on the explanation for the delay in the case as a factor of importance. I refer to the remarks of the High Court in Sophran v The Nominal Defendant [1957] HCA 27; (1957) 96 CLR 469 at 475:

"There must be some positive reason for concluding that as between the parties it would be just to extend the period for giving notice. Fault on the part of the claimant in failing to give notice within three months must be an element affecting the justice of extending the time..."

I refer also to comments of Sheppard J in Wedesweiller at 531 set out in [9] above. Of course the delay in the case of the HIH decision is much greater than that in respect of the FAI decision. But as I indicated in [3] the length of the delay, for very good reason, is not necessarily the criterion. It is apparent, in any event, that the Applicant's attitude to the FAI decision was once again that it was content to rely upon Mr Belleli's advice that it was not necessary to lodge an appeal. Mr Horne sought only to consult Mr Belleli's office despite the fact that only a month or so before he had received competent and independent advice confirmed by another source to contrary effect. Despite the impression which he may have sought to convey in the witness box, and despite what he may have admitted to, I would not regard Mr Horne as someone lacking a capacity to be critical. He did not impress me as an unintelligent person. I do not regard him as having "drifted" into accepting Mr Belleli's advice. Rather, I think he chose to disregard the other very clear advice. And I think this applies also with regard to the FAI decision.

[17] Amongst the factors also to be considered on an extension of time application is the question of prejudice. See for example the remarks in Sophran v The Nominal Defendant at 475:

"an element affecting the justice of extending...time...must be the prejudice which the...defendant has or may have suffered because of [the] failure [to give notice within time]."

In Victoria, however, by virtue of s126(4) of the Victorian Civil and Administrative Tribunal Act 1998 there is a statutory provision governing this question by which, as noted above, time may not be extended if there is prejudice or detriment that cannot be remedied by costs or damages. I recognise there will be (or may be) loss caused to the Applicant if time is not extended under s126(1) of that Act. However, even if I was minded to extend time under that provision, I am prepared to say that I would be prevented from doing so because of s126(4). There is a "prejudice or detriment", it seems to me, in the insurers, if time was extended, no longer having a vested right of being free from the prospect of appeal. But this might be able to be remedied by an order for costs or damages. More to the point, however, it seems that the First Respondent (the builder) has now gone bankrupt and I am told that this means that he is unable to offer to complete the Applicant's house himself;

"which could assist in a settlement of the dispute, and would reduce any potential liability to the builder and to the insurers."

See paras 21 and 21A of the Affidavit of Mr Andrew sworn of 17 December 1998. If this is so, and I am not suggesting I doubt it, then I am unable to see how such a prejudice or detriment could possibly be remedied by any order for damages or costs.

[18] In the end, in any event, taking all circumstances into account, I have decided, in the exercise of my discretion under s126(1), not to extend time under that section. By s126(1) of the House Contracts Guarantee Act 1987 as amended Parliament obviously intended a 28 day time limit to apply. Although there may be no onus of proof in matters of this kind, at the end of the day nothing said to me in support of the Applicant persuaded me that, under s126(1) of the 1998 Act, I should extend that time limit to defeat that expression of intention. Amongst the factors which I have considered in the exercise of my discretion, I have chosen to focus on the absence of any satisfactory explanation for the delays involved. Consistently with the authorities, as I understand them, I believe I am entitled to do so. In this way, strictly, s126(3) does not even arise in issue. I should add, that in the exercise of my discretion - which is an unfettered one - I have considered the possibility of the Applicant maintaining an action against Belleli King & Associates for negligence or breach of duty. But that, I must point out, has not determined my decision not to extend time.

[19] In all the circumstances, for these reasons, I decline to exercise my discretion to extend time.

[20] Accordingly I dismiss the Applicant's Summons.

[21] The Respondents indicated their desire to apply for costs should I rule against the Applicant. There is no guarantee that a successful party will get its costs under s109 of the 1998 Act. It is, fittingly, a matter of discretion, having regard to the provisions of that section. In view of my comments, however, I would draw attention to the provisions of s109(4) of the Act.

[22] I shall direct the Registrar to relist this matter on some convenient date for further hearing on the question of costs only.