Hunter, Byron & Co Pty Ltd v AC Home Design Pty Ltd
[2021] VSC 777
•25 November 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2020 03913
| HUNTER, BYRON & CO PTY LTD (ACN 624 009 847) and NADINE KODSI | Applicants |
| v | |
| AC HOME DESIGN PTY LTD (ACN 600 439 549) | Respondent |
-AND-
S ECI 2020 04044
| HUNTER, BYRON & CO PTY LTD (ACN 624 009 847) and NADEN KODSI | Plaintiffs |
| v | |
| AC HOME DESIGN PTY LTD (ACN 600 439 549) | First Defendant |
| THE VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL | Second Defendant |
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JUDGE: | Keogh J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 October 2021 |
DATE OF JUDGMENT: | 25 November 2021 |
CASE MAY BE CITED AS: | Hunter, Byron & Co Pty Ltd & Anor v AC Home Design Pty Ltd & Anor |
MEDIUM NEUTRAL CITATION: | [2021] VSC 777 |
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ADMINISTRATIVE LAW – Judicial review of an order by Victorian Civil and Administrative Tribunal – Applicants did not attend or have representation at the Tribunal hearing – Whether applicants had notice of the hearing – Notice of hearing served – Natural justice – Appeal from an order of the Tribunal dismissing application to revoke primary order – Whether applicants had a reasonable excuse for not attending the hearing – Victorian Civil and Administrative Tribunal Rules 2018 (Vic) rr 4.10, 4.18 – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 56.02 – Wright v VCAT [2001] VSC 35 – Knight v Mackay [2008] VSC 602 – National Companies and Securities Commission v News Corporation (1984) 156 CLR 296.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants/Plaintiffs | L Virgona | Bedelis Lawyers |
| For the Respondents/Defendants | B Barr | Oceania Lawyers & Consultants |
HIS HONOUR:
In 2018, the first applicant/plaintiff, Hunter, Byron & Co Pty Ltd (‘Hunter’), entered into a lease of premises at 350 Punt Road, South Yarra (‘premises’) with the respondent/first defendant, AC Home Design Pty Ltd (‘Home Design’). The lease was signed by the second applicant/plaintiff, Ms Kodsi, on behalf of Hunter as tenant, and as guarantor.
In April 2019, Hunter and Ms Kodsi (‘applicants’) applied successfully to the Victorian Civil and Administrative Tribunal (‘Tribunal’) for an interim order restraining Home Design from re-entering the premises relying on a notice to rectify default under the lease. The applicants did not file further material supporting the injunction application, or appear on the date to which it was adjourned. The injunction order was discharged and Home Design repossessed the premises.
Home Design then commenced a proceeding against the applicants in the Tribunal for recovery of rent and outgoings under the lease (‘Tribunal proceeding’). No step was taken by the applicants in the Tribunal proceeding, and they did not appear on the hearing date. A Senior Member of the Tribunal heard and determined the matter and ordered that the applicants pay Home Design $54,056.86 (‘primary order’).
After they became aware of it the applicants applied for review of the primary order under s 120 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘Act’), which gives the Tribunal a discretion to revoke or vary an order if an applicant had a reasonable excuse for not attending or being represented at a hearing. Following a contested hearing a Tribunal Member dismissed the application and affirmed the primary order (‘review order’).
After the review order was made the applicants commenced two proceedings in this Court. In the first proceeding, the applicants seek judicial review of the primary order on the grounds they were denied natural justice because the Senior Member failed to enquire or satisfy themselves that the applicants had been notified of the hearing at which the Tribunal proceeding was determined. In the second proceeding, the applicants seek to appeal the review order on statutory construction and relevant consideration grounds directed to the question of whether they had notice of the Tribunal hearing.
The applicants did not commence the judicial review proceeding within time. Accordingly it was necessary to determine whether the time to commence that proceeding should be extended.
Evidence
It was agreed that evidence in one proceeding will stand as evidence in the other.
The parties relied on the following affidavits:
(a) Jamie Bedelis, solicitor for the applicants, affirmed 18 October 2020;
(b) Ms Kodsi, affirmed 21 October 2020;
(c) Melinda Li, sworn 4 August 2021 and 23 August 2021.
Background
On 12 May 2018, Hunter leased the premises from Home Design. Ms Kodsi signed the lease as a director of Hunter, and as guarantor.
The annual base rent for the premises was $52,000 plus GST. The lease was for a term of two years, with an option for a further three years. On signing the lease Hunter paid the first year’s rent in advance.
The lease stipulated that the Retail Leases Act 2003 (Vic) applied.
Pursuant to the lease Hunter was required to pay outgoings on the premises in addition to rent. When the parties entered the lease a disclosure statement was given by Home Design estimating outgoings for the period to 30 June 2018.
In April 2019, the applicants applied to the Tribunal for an order restraining Home Design from re-entering the premises relying on a notice to rectify default under the lease. On 9 April 2019, the Tribunal made an interim injunction order in favour of the applicants, and adjourned their application to 1 May. The applicants did not file and serve any further material in support of the injunction application, and sent an email to the Tribunal on the morning of 1 May seeking, without explanation, to adjourn the hearing. The Tribunal refused the adjournment request, and discharged the injunction order, with a stay of seven days until 8 May 2019.
In an affidavit filed in these proceedings Ms Kodsi states:
I did not file any further material as I believed that agreement had been reached with the Landlord that the Lease would be terminated and I would only have to pay the amount of the outgoings that the Landlord was claiming.
No particulars or further evidence of the purported agreement were provided by Ms Kodsi.
On 8 May 2019, Home Design took possession of the premises.
On 13 June 2019, Home Design filed an application with the Tribunal against Hunter and Ms Kodsi for recovery of unpaid rent and outgoings under the lease.
On 26 August 2019, the lawyer for Home Design, Ms Li, wrote to the applicants in the following terms:
I refer to this matter where the landlord is seeking to recover money from you for the breach of lease, as guarantor.
The matter is before VCAT again this Friday at 2.00pm. Please confirm you have received this. If you have not, we can email you a copy. We suggest you obtain legal advice.
It is important that you do not simply ignore this matter. The landlord is seeking past arrears plus damages for loss into the future as the premises have not been re-let and costs.
The letter was sent by post to Unit 2, 3 Barry Street, Reservoir (’Reservoir address’) and by email to Ms Kodsi. On the same day, Ms Kodsi replied by email as follows:
Sorry I have not been served with this and you are not able to serve via email.
I am currently away for work.
Please go through the right channel for serving.
On 27 August 2019, Ms Li sent a further letter addressed to the Reservoir address by email to Ms Kodsi enclosing the Home Design Tribunal application, and a copy of a letter from the Tribunal advising of a directions hearing on 30 August 2019. The Tribunal application recorded that the address for service of the applicants was the Reservoir address. Ms Kodsi responded by email:
Sorry as stated I am unable to open this and you cannot serve me this way I am overseas.
The applicants did not appear at the Tribunal directions hearing on 30 August 2019.
On 16 October 2019, an order was made by the Tribunal setting out a timetable for filing and serving documents and listing the proceeding for final hearing on 12 February 2020 (‘February hearing’). Notice of the February hearing was given to the applicants on 25 October 2019 by the Tribunal sending the order to them at the Reservoir address.
In accordance with the timetabling order, on 1 November 2019 Home Design filed points of claim particularising compensation sought by it in the Tribunal proceeding. Ms Li served the points of claim on the applicants the same day by letter to the Reservoir address.
On 11 February 2020, Ms Li emailed to Ms Kodsi an affidavit made on behalf of Home Design giving further detail of the amount claimed by it.
Home Design was represented by counsel at the February hearing. There was no appearance for the applicants. The transcript records the following exchange at the commencement of that hearing:
Senior Member: So we’ve got no one from the respondents?
Mr Bornstein: I don’t believe so (indistinct words).
Senior Member: All right then, so we’ll proceed.
Nothing further is recorded in the transcript in relation to service of documents or notice of the February hearing. Evidence was called, following which the Senior Member made the primary order in favour of Home Design.
On 21 April 2020, Ms Li wrote to Ms Kodsi at the Reservoir address and by email attaching a copy of the primary order.
On 22 April 2020, the applicants applied under s 120 of the Act for review of the primary order.
The review hearing was held on 7 August 2020. By that time the applicants had instructed their current lawyers, and they were represented at the review hearing by counsel. After hearing submissions on the evidence the Member delivered ex tempore reasons dismissing the application for review.
The notice of appeal from the review order was filed on 13 October 2020.
The originating motion seeking judicial review was filed on 21 October 2020.
Service of Tribunal documents
In relation to notice of hearings s 99 of the Act provides:
(1)The principal registrar must give notice, in accordance with the rules, of the time and place for the hearing of a proceeding to—
(a)each party to the proceeding; and
(b)each other person entitled to notice of the proceeding or hearing under this Act, the enabling enactment or the rules; and
(c)any other person that the Tribunal directs be given notice of the hearing.
(2)If a person, including a party, to whom notice has been given in accordance with the rules fails to attend, the hearing may be held in the absence of that person.
(3)In this section, the place for the hearing of a proceeding includes the hearing of a proceeding by audio link or audio visual link.
The Victorian Civil and Administrative Tribunal Rules 2018 (‘Rules’) provide that notice of the time and place for a hearing of a proceeding must be given in writing and in accordance with any other requirement of the Rules.[1]
[1]Victorian Civil and Administrative Tribunal Rules 2018 (Vic) r 4.18 (‘Rules’).
The Act provides that a notice, order or other document may be served on a natural person by sending it by post to that person’s last known residential or business address, and on a company by sending it by post to the registered office of the company.[2]
[2]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 140 (‘Act’).
The Rules provide that any party to a Tribunal proceeding other than the applicant must, not later than 14 days after becoming a party, file with the principal registrar a statement of that party’s address in Victoria for the service of documents.[3] An address for service must include an electronic address for the receipt of electronic communications.[4] Where that has been done documents may be served on a party at that electronic address.[5]
[3]Rules (n 1) r 4.10(3).
[4]Ibid.
[5]Act (n 2) s 140(1)(a)(iia).
In an affidavit filed in these proceedings Ms Kodsi said she is the registered proprietor of the Reservoir address, which was her principal place of residence before the Tribunal proceeding was issued. Ms Kodsi said that from about April 2019 she let out the Reservoir address, and was residing at a different address in Caulfield North until April 2020. Ms Kodsi said when she was residing at Caulfield North she did not receive copies of any correspondence sent by the Tribunal to the Reservoir address.
The registered office of Hunter was the Reservoir address at all times.
Ms Kodsi said she did not receive any notification from Home Design or the Tribunal advising her of the February hearing.
The applicants do not dispute that Tribunal documents were served, and notice of the February hearing was given, in accordance with the Act and the Rules.
Judicial review
Extension of time to commence proceeding
Order 56 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Supreme Court Rules’) applies to the judicial review proceeding, and required that it be commenced within 60 days after the date on which the grounds for relief sought first arose.[6] The time to commence proceedings under ord 56 may be extended where ‘special circumstances’ exist.[7]
[6]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 56.02(1) (‘Supreme Court Rules’).
[7]Supreme Court Rules (n 6) r 56.02(3).
In Garrett v Legal Services Commissioner,[8] Derham AsJ said:
The factors relevant to the exercise of the discretion under the rule include, but are not limited to, the period of the delay, the reason for the delay, whether the plaintiff has an arguable case, the justice to both parties (which includes the prejudice to the parties) and the public interest in the finality of litigation.
[8][2015] VSC 465 [23] (citations omitted).
The applicants first became aware of the primary order on 21 April 2020. They did not sit on their hands, but immediately applied under s 120 of the Act to review the order. At that time, and until shortly before the hearing of the review application, the applicants were not legally represented. Following the review hearing it took some time for the Tribunal to respond to the applicants’ request for a copy of the review order and relevant transcripts. Because the review reasons were delivered ex tempore the unavailability of transcript did materially impact the ability of the applicants’ lawyers to advise them as to their appeal rights.
I accept that Ms Kodsi acted promptly in taking what she understood to be the appropriate steps to have the primary order revoked. I infer that Ms Kodsi was not aware that the applicants had the right to seek judicial review of the primary order.
If the s 120 application was successful there would have been no utility in judicial review of the primary order, and commencing the proceeding within time would have resulted in unnecessary costs being incurred.
There is no material prejudice to Home Design resulting from the extension of time to commence the judicial review proceeding. Whether or not time is extended the applicants would still be entitled to agitate the appeal proceeding. In other words Home Design is not being excluded from the benefit of the primary order by the applicants’ delay in commencing the review proceeding. Further, the public interest in the finality of litigation is not advanced by refusing the application to extend time.
I accept, for the purposes of the application to extend time, that the applicants have an arguable case on the merits in relation to the subject matter of the primary order.
I am satisfied there are special circumstances justifying extension of time under r 56.02(3) to commence the review proceeding.
Grounds of review
The grounds of review relied upon by the applicants are:
1.The Victorian Civil and Administrative Tribunal (Tribunal) has denied the plaintiffs natural justice, in that the Tribunal failed to satisfy itself that the plaintiffs had received proper notification of the hearing at the Victorian Civil and Administrative Tribunal on 12 February 2020 (February Hearing).
2.Further, or alternatively, the Tribunal has denied the plaintiffs natural justice in that it failed to make any enquiries at the February Hearing as to the following:
a)the whereabouts of the plaintiffs; and/or
b)whether the plaintiffs had been notified of the February Hearing.
Submissions
Applicants
While s 99(2) of the Act expressly authorises the Tribunal to hold a hearing in the absence of a party, that authorisation can only apply where the Tribunal satisfies itself that the absentee party has been provided notice of the hearing. In Wright v VCAT (‘Wright’),[9] Gillard J noted that the Tribunal should not proceed in the absence of a party if it is not proven that notice has been given in accordance with the Tribunal’s rules, and stated:
117.One can not over-emphasise the importance of complying with the rules of natural justice and acting fairly. Except in the case of an interim injunction, the Tribunal must not proceed without notice against another party making findings and making orders and without giving that party an opportunity to be heard.
118.The Tribunal must, as a first step, where a party fails to attend, be satisfied that proper service has been effected on that person and that person does not propose to appear.
[9][2001] VSC 35.
Similar considerations were applied by Williams J in Knight v Mackay (‘Knight’),[10] where her Honour quashed Tribunal orders on the grounds that Mr Knight was denied natural justice because there was no evidence the Tribunal Member addressed the issue as to whether or not he had been given notice of the relevant hearing. Her Honour said:
The fact that other letters were sent to Mr Knight’s residential address and were not returned does not persuade me that he was notified of the hearing so that he could have attended and presented his defence to the Mackays’ claim.[11]
[10][2008] VSC 602.
[11]Ibid [60].
Transcript of the February hearing shows no attempt was made by the Tribunal member to ascertain whether proper service had been effected on the applicants. There was no evidence the Member enquired about service or notice of the hearing, or whether there was any indication the applicants did not intend to appear or defend the Tribunal proceeding. The critical failure by the Tribunal to satisfy itself that service had been effected, or that the applicants were otherwise aware of the February hearing, means that natural justice was not afforded to them. In those circumstances the primary order should be set aside by the court.
Home Design
The applicants do not contest that Tribunal documents were served and notice of the February hearing was given to them in accordance with the provisions of the Act and the Rules. The gravamen of Ground 1 is therefore that the Tribunal failed to afford the applicants natural justice because it did not satisfy itself at the February hearing that they had received actual notice of the hearing.
The content of the rules of natural justice may vary according to the circumstances of the particular case. In this case, they must be considered by reference to:
(a) the notice requirements under the Act and the Rules;
(b) the history of the proceeding before the Tribunal; and
(c) prior correspondence between the parties.
The decisions of this court in Wright and Knight are readily distinguishable on their facts, and give no support to the applicants’ case. Unlike Wright and Knight, the court was able to be satisfied that the applicants had been served with the application and were aware of the proceeding. The applicants simply failed to engage with or make enquiry about the proceeding, as a consequence of which their failure to appear can be attributed to their own conduct.
Alternatively if there was a breach of the rules of natural justice by the Tribunal it is not such to render the primary orders invalid. Had the Tribunal engaged on transcript at the February hearing in a thorough consideration of the Act and the Rules, the inevitable conclusion would have been that the statutory requirements of service and notice of the hearing had been satisfied. The Act does not require the Tribunal to enquire as to the whereabouts of the party, or whether they have actual notice of the hearing.
Analysis
In National Companies and Securities Commission v News Corporation,[12] Gibbs CJ made the following observation about the requirements of natural justice:
In Russell v. Duke of Norfolk, Tucker L.J. said: ‘The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth.’ The passage has frequently been approved — for example, by this Court in Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group. The authorities show that natural justice does not require the inflexible application of a fixed body of rules; it requires fairness in all the circumstances, which include the nature of the jurisdiction or power exercised and the statutory provisions governing its exercise. Moreover, as Stephen J. said in Salemi v. MacKellar [No.2], the rules of natural justice ‘may also vary from case to case although each be conducted before one and the same tribunal or person’.[13]
Accordingly what natural justice required of the Tribunal at the February hearing depended on the statutory provisions governing the exercise of power by it and the circumstances of the Tribunal proceedings.
[12](1984) 156 CLR 296.
[13]Ibid 311–12 (citations omitted).
In Wright, Gillard J observed that if a party is properly served with the notice of a hearing, the Tribunal may proceed if that person fails to attend.[14] Mr Wright was not served with copies of the Tribunal applications, or given notice of the Tribunal hearings, in accordance with the Act, and was not otherwise aware of the claim being made against him or of proceedings in the Tribunal to which he was a party. These problems were contributed to by the Tribunal recording Mr Wright’s surname as ‘Dwight’, and incorrectly recording his address. It was in those circumstances that Gillard J concluded the Tribunal had failed to act fairly in the proceeding and to comply with the rules of natural justice.
[14]Wright (n 9) [85].
In Knight, the Mackays entered into a contract with a builder, Mr Knight, to build a dwelling. Problems arose, and Mr Knight stopped building work. The Mackays brought proceedings against Mr Knight in the Tribunal claiming substantial damages. Documents in the Tribunal proceeding and notices of hearings were posted to Mr Knight at an address known to the Mackays. No contact was made with Mr Knight in relation to the Tribunal proceeding by the Mackays’ solicitors or the Tribunal. The Tribunal proceeded to hear and determine the Mackays’ application, awarding them over $240,000 by way of damages and indemnity costs. On an application for judicial review Mr Knight gave evidence, which does not appear to have been contested, to the effect that he was not aware until he received the Tribunal order that the Mackays were claiming compensation from him relating to the building contract, or that they had brought proceedings in the Tribunal; he had not received any Tribunal documents or notice of hearings, and was unaware of the Tribunal proceeding; and at the relevant time he was not living at the address to which documents had been sent by the Mackays’ solicitors and the Tribunal, but he sometimes stayed at that address. Williams J set aside the Tribunal order because she found Mr Knight was denied natural justice. Her Honour concluded:
The fact that other letters were sent to Mr Knight’s residential address and were not returned does not persuade me that he was notified of the hearing so that he could have attended and presented his defence to the Mackays’ claim. A substantial order for damages was then made against him in his absence and he was subjected to an unusual order for costs calculated on an indemnity basis.[15]
After citing Gillard J’s decision in Wright with approval, her Honour continued:
One can not over-emphasise the importance of complying with the rules of natural justice and acting fairly. Except in the case of an interim injunction, the Tribunal must not proceed without notice against another party making findings and making orders and without giving that party an opportunity to be heard.[16]
[15]Knight (n 10) [60].
[16]Ibid [117].
The circumstances of this case are materially different to those in Wright and Knight. First, the applicants were aware of the dispute with Home Design in relation to performance of the lease before the Tribunal proceeding was commenced.
Second, the applicants were aware that the Reservoir address was the registered office of Hunter, and the residential address of Ms Kodsi during the period of the lease.
Third, the Tribunal application was served on the applicants in accordance with the Act and the Rules.
Fourth, actual notice of the application and the Tribunal proceedings was given to the applicants by the correspondence in late August 2019 addressed to the Reservoir address, and also sent by email to Ms Kodsi. The applicants were told at that time that Home Design was making a claim for unpaid rent and outgoings, and were encouraged to seek legal advice and respond to the claim.
Fifth, despite that encouragement, the applicants did not take any step in the Tribunal proceeding, or make any attempt to engage with the solicitors for Home Design in relation to the dispute prior to the February hearing. In response to the August 2019 correspondence, Ms Kodsi simply directed Ms Li to ‘go through the right channel for serving’. There is no evidence that Ms Kodsi subsequently checked whether documents and hearing notices had been sent to the applicants at the Reservoir address. Ms Kodsi has not sought to explain her failure to take any steps after she was put on notice of the claim for rent, outgoings and costs by Home Design, that Tribunal proceedings were underway, and that documents were being sent to the applicants at the Reservoir address.
Sixth, notice of the February hearing was served on the applicants in accordance with the Act and the Rules. The points of claim on which Home Design relied were also served.
Seventh, Ms Kodsi received further notice of the Tribunal proceeding and the claim by Home Design when an affidavit was emailed to her on 11 February 2020.
At the time of the February hearing the Tribunal file contained the correspondence between Ms Lee and Ms Kodsi in August 2019, and evidence that notice of the February hearing had been given to the applicants by the Tribunal by sending it to the Reservoir address.
There was compliance with the statutory provisions governing the exercise of power in s 99 of the Act by the Senior Member at the February hearing to hear and determine the Tribunal proceeding in the applicants’ absence. Further, the circumstances demonstrate that the real cause of non-attendance by the applicants at the February hearing was not a failure to serve documents or notice of the February hearing, but a choice made by the applicants to ignore the claim made against them by Home Design and the Tribunal proceeding.
I conclude that there was no failure to accord natural justice and procedural fairness to the applicants. The judicial review proceeding will be dismissed.
Appeal
A party may appeal from an order of the Tribunal on a question of law with leave of this Court.[17] To justify leave the appeal must have a real prospect of success.[18]
[17]Act (n 1) s 148(1).
[18]Kennedy v Shire of Campaspe [2015] VSCA 47 [12]–[14].
Relevantly s 120 of the Act 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.
(4)The Tribunal may—
(a)hear and determine the application if it is satisfied that—
(i)the applicant had a reasonable excuse for not attending or being represented at the hearing; and
(ii)it is appropriate to hear and determine the application having regard to the matters specified in subsection (4A); and
(b)if it thinks fit, order that the order be revoked or varied.
(4A)For the purposes of subsection (4)(a)(ii), the matters are—
(a)whether the applicant has a reasonable case to argue in relation to the subject-matter of the order; and
(b)any prejudice that may be caused to another party if the application is heard and determined.
(4B)The Tribunal may hear and determine an application under this section despite subsection (4A)(b) if the Tribunal is satisfied that any prejudice that may be caused to a party may be addressed by an order for costs under section 109 or an order for reimbursement of fees under section 115B or both.
Tribunal reasons
The Member delivered ex tempore reasons dismissing the application under s 120 of the Act on 7 August 2020.
The Member said, in relation to Ms Kodsi’s explanation that she was not living at the Reservoir address in the period from April 2019 to April 2020:
She provided no other evidence about the lease of the premises. She provided no evidence to show why the letters addressed to her from the Tribunal had not been forwarded to her and no supporting material from former tenants deposing to the fact that they had failed to forward letters addressed to her. A great deal of material was sent to that address by the Tribunal. The registered address of the company - the tenant company - was the same as her residential address and I note that Ms Kodsi did not choose to comply with her obligations in relation to notifying ASIC when she changed her address. If the address was, in fact, changed and not notified, then the reality is that Ms Kodsi's failed to comply with her obligations under the legislation and the service on the company itself was good as [counsel for Home Design] pointed out.
In relation to the August 2019 correspondence, and the email to Ms Kodsi on 11 February 2020 attaching a further affidavit in support, the Member observed:
Ms Kodsi is in this position. She knows there is a proceeding on foot against her in relation to her guarantee. She knows that it is ticking along because she receives the affidavit from Ms Li, which in the words of a well-known TV program says 'Danger, Will Robinson' to most attentive people. Yet, she does nothing about it…
The Member proceeded to assess the evidence as follows:
Knowing that it was on foot, served with an affidavit, she takes no steps to protect her position. In my mind, that is confirmatory of the evidence provided by the Tribunal's file. Namely, that many letters were sent to both Ms Kodsi in relation to this proceeding and - they were sent both to her and to the company of which she is the sole director which were never returned and they do suggest strongly that what, in fact, took place is that Ms Kodsi, for whatever reason, chose not to defend the proceeding or take active steps to protect her position.
In relation to the letters sent to the Reservoir address, the Tribunal Member said:
It seems more than coincidental that Ms Kodsi failed to receive any of the materials that were sent to her by the Tribunal and, in particular, failed to receive the letter enclosing the Tribunal's order, setting the matter down for hearing on 12 February.
The Member concluded:
I do not, accordingly, accept that Ms Kodsi has a reasonable excuse for not having attended or explanation for not having attended the hearing on 12 February. Accordingly, I will strike out her application under s.120 and I will reaffirm the order made by the Tribunal on 12 February 2020.
Grounds of appeal
The lengthy grounds of appeal may be summarised as follows:
(a) Ground 1 — The Member erred by finding that the applicants did not have a reasonable excuse for not attending or being represented at the February hearing without first finding that they had received proper notice of that hearing, as was required by s 120 of the Act.
(b) Ground 2 — The Member applied the wrong test, or took into account an irrelevant consideration, by making the anterior finding that the applicants took no positive steps to inform themselves of the Tribunal proceeding, or whether a hearing date had been listed, in finding (if it did) that the applicants had received proper notification of the February hearing.
(c) Ground 3 — The Member erred by applying the incorrect test or taking into account an irrelevant consideration by relying upon the anterior finding that the applicants had not established that notice of the February hearing was not sent to the Reservoir address, when the real question was whether notice of the February hearing was brought to their attention.
(d) Ground 4 — The Member erred by failing to take into account as a relevant consideration Ms Kodsi’s evidence that she was not residing at the Reservoir address when notice of the February hearing was sent to that address.
(e) Ground 5 — The Member erred by taking into account a finding that the applicants had not complied with obligations to notify ASIC of a change to Hunter’s registered address.
Submissions
Applicants
On its proper construction, s 120 of the Act required the Member to find that the applicants had received proper notice of the February hearing before it could be determined the applicants did not have a reasonable excuse for not attending or being represented at the hearing. While the Member ultimately found that notice of the February hearing had been sent to the Reservoir address, the Member made no finding about whether the notice was brought to the attention of the applicants, or whether Ms Kodsi was residing at the Reservoir address at the time notice was sent. In doing so, the Member proceeded on the basis that it was only necessary to consider service of the notice, rather than the applicable question under the provision, which is whether the party in question had actually received notice of the hearing. The Member was not entitled to ignore Ms Kodsi’s evidence that she did not reside at the Reservoir address at the relevant time, and to simply proceed on the basis that notice of the February hearing had been given in accordance with the Act and the Rules.
It is apparent the Member put considerable weight on the fact that Ms Kodsi had been served with the Tribunal application in August 2019, and a further affidavit on which Home Design relied the day before the February hearing, but did not take any positive steps to keep herself informed of the Tribunal proceeding or hearing dates. What positive steps Ms Kodsi may or may not have taken is an entirely irrelevant consideration when one considers the ultimate question which must be decided, that is, whether the notice of the hearing was brought to the attention of the applicants.
For the same reasons, the Member erred by taking into account irrelevant considerations that Ms Kodsi had not established that notice of the hearing was not sent to the Reservoir address, had not called evidence from tenants residing at the address to explain why letters from the Tribunal were not forwarded to Ms Kodsi, and had failed to notify ASIC of a change to Hunter’s registered address. The Tribunal, in effect, disregarded Ms Kodsi’s evidence that she was not residing at the Reservoir address at the time the notice of hearing was sent.
Home Design
Notice of the February hearing was given to the applicants in accordance with the Act and the Rules.
Section 120 of the Act does not expressly or by implication require the Tribunal to be satisfied that the absent party had actual notice of the hearing. Imposition of such a condition would fetter the Tribunal’s powers under s 120 in a way that is neither necessary nor desirable.
Further, while the Member plainly took into account Ms Kodsi’s evidence that she was not residing at the Reservoir address when the notice of hearing was sent, the applicants’ submission that the Member accepted that evidence is not correct. The Member’s reasons demonstrate a healthy degree of scepticism about Ms Kodsi’s evidence. In circumstances where the Member was satisfied notice of the February hearing was sent to Hunter’s registered address, it is plain that the discretion under s 120 did not miscarry. Accordingly, the Court ought not be satisfied that proposed Ground 1 has real prospects of success.
Grounds 2 to 5 fail because they depend on a fundamental misconstruction, that s 120 of the Act requires that the applicants had actual notice of the February hearing.
A fair reading of the ex tempore reasons makes it plain the Member did not require that the applicants establish they had taken positive steps to keep themselves informed of the Tribunal proceedings in order to make good their application. Further, in exercising the discretion in s 120(4) of the Act, the Member was not prohibited from considering what steps were taken by the applicants in the Tribunal proceeding, the paucity of evidence about whether tenants in the Reservoir property had forwarded correspondence from the Tribunal to the applicants, or whether the applicants had notified relevant authorities of their change of address.
Analysis
To succeed with an application under s 120 of the Act to have the primary order revoked, an applicant must first establish that they had a reasonable excuse for not attending or being represented at the hearing. The application for review of the primary order fell at this first hurdle.
The applicants’ construction of s 120(4)(a)(i) of the Act is not supported by the natural and ordinary meaning of the words of the legislation, or by the broader context of the Act. The question posed by the provision is whether the applicants had a reasonable excuse for not attending the hearing, not whether they received ‘proper’ or actual notice of the hearing. This is consistent with provisions in the Act dealing with service of documents, including notice of a hearing, being by ordinary post or email. Concepts of ‘proper’ and actual notice are not found in the Act.
There may be a good basis for focusing on the reasonableness of an excuse for not attending or being represented at a hearing, rather than the question of notice. For example, an applicant who had actual notice of a hearing may be found to have a reasonable excuse if they were impecunious and could not afford representation and were unable to attend a hearing because of serious ill health; or an applicant who had actual notice, but was confused on an objectively reasonable basis about the requirement to attend may be found to have a reasonable excuse.
There is no guidance in the Act about what considerations are relevant to whether an excuse proffered by an applicant is reasonable. Whether or not an applicant has a reasonable excuse is a question of fact to be determined on all the circumstances of the case, and is not confined or restricted to a consideration of whether there was actual notice of the hearing as the applicants submitted.
It was open for the Member to take into account that from the time of the correspondence in August 2019 the applicants were aware that a claim was being made against them by Home Design for rent and outgoings related to their lease of the premises.
The applicants could have taken a number of steps following the August correspondence. They could have contacted the solicitors for Home Design, as they were invited to do, to discuss the claim and obtain details of the Tribunal proceeding. They could have contacted the Tribunal directly to obtain details of the proceeding. They could have contacted the residents at the Reservoir address to enquire about the correspondence sent to them by the Tribunal and the solicitors for Home Design, and to request that future correspondence be forwarded to them. Alternatively they could have arranged through Australia Post to have their correspondence redirected.
Ms Kodsi’s email responses to the August correspondence show that she was aware of the requirement that Tribunal documents be served on her and Hunter. Her response to the solicitors for Home Design was to ask that they ‘… go through the right channel for serving.’ The fact that documents in the Tribunal proceeding, including notice of the February hearing, were served on the applicants in accordance with the Act and the Rules makes the inaction of the applicants after the August correspondence more damning. Further, Ms Kodsi was aware from the August correspondence that documents were being sent to the Reservoir address.
The Member’s reasons show an appropriate focus on the question of whether the applicants had a reasonable excuse for not attending or being represented at the February hearing. The Member was not obliged to accept Ms Kodsi’s evidence that she did not have notice of the hearing. The Member was appropriately concerned that there was a lack of evidence from the applicants about two important and related matters. First, an explanation for them not receiving correspondence about the Tribunal proceeding sent to the Reservoir address. Second, an explanation for not taking any steps to protect their position after they were put on notice that a claim for damages for rent and outgoings was being made against them by Home Design in the Tribunal proceeding. The brief ex tempore reasons show the Member applied the right test, took into account relevant considerations, and did not take into account irrelevant considerations.
None of the grounds of appeal are made out.
Conclusion
The time to commence the judicial review proceeding is extended. The grounds for judicial review are not made out, and that proceeding is dismissed.
I conclude in relation to the appeal proceeding that none of the proposed grounds of appeal had a real prospect of success. Accordingly leave to appeal will not be granted, and the proceeding will be dismissed.
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