Kukulka v Floatcast Technology Pty Ltd
[2021] VSC 107
•11 March 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2018 02808
| MICHAEL KUKULKA | Applicant |
| v | |
| FLOATCAST TECHNOLOGY PTY LTD (ACN 141 030 882) | Respondent |
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JUDGE: | FORBES J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 February 2021 |
DATE OF JUDGMENT: | 11 March 2021 |
CASE MAY BE CITED AS: | Kukulka v Floatcast Technology Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 107 |
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JUDICIAL REVIEW AND APPEALS – Application for leave to appeal from a decision of VCAT granting summary dismissal of claim for damages – Proceeding dismissed pursuant to Victorian Civil and Administrative Tribunal Act 1998 s 75 – Whether claim is frivolous, vexatious, misconceived or lacking substance – Error of law established – Tribunal erred in law by wrongly determining the summary dismissal of the proceeding on the balance of probabilities – The Tribunal erred in law by misstating the source of power to hear and determine a no case submission as one lying under s 75 – Distinction between entitlement to damages and recovery of loss and damage – Leave to appeal granted – Victorian Civil and Administrative Tribunal Act 1998, s 75, – Forrester v AIMS Corporation & Ors [2004] VSC 506 – Lay v Alliswell Pty Ltd [2001] VSC 384 – Protean (Holdings) Ltd v American Home Assurance Co [1985] VR 187 – Weber v Deakin University [2018] VSCA 53.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J Levine | Matrix Legal |
| For the Respondent | Mr R Farhall | E C Legal Pty Ltd |
HER HONOUR:
On 19 September 2017 the applicant commenced proceedings at the Victorian Civil and Administrative Tribunal (VCAT) against the respondent, seeking damages of $12,950 arising from a dispute over the supply of webhosting services.
He claimed that he engaged Floatcast to provide hosting services for 16 websites in 2015. He uploaded content to some of those websites. On 24 July 2017, the respondent suspended the service, denied him access and thereafter refused to return the uploaded content and data to Mr Kukulka. Not having backed up the information that was uploaded, the applicant incurred costs in reconstructing the web content in order to host the pages elsewhere and sought damages for that loss.
The applicant now seeks leave to appeal from three orders of VCAT. The first order on 29 August 2018 dismissed his claim (August order). The second was an order made on 12 October 2018 (October order) following a costs hearing that ordered Mr Kukulka pay the respondent’s costs on a standard basis on County Court scale and made timetabling orders for filing a breakdown of costs claimed and any objection thereto. The third order in November was that the costs be paid in the sum of $22,808.08 (November order). This was made on the basis of ‘there being no objection to the costs filed by the applicant’.
In fact the applicant had filed objections to the breakdown of costs. The respondent concedes error in relation to the November order as the applicant was denied procedural fairness. The parties accept that the third order should be set aside and the quantum of costs be remitted for consideration according to law.
Extension of Time
The time for appealing the August and October orders had expired and the applicant requires an extension of time pursuant to s 148(5) of the Victorian Civil and Administrative Tribunal Act1998 (Vic) (VCAT Act). An extension of time may be granted in the discretion of the Court. Factors including the length and reasons for the delay and any prejudice faced by the Respondent are relevant. The discretion will not be exercised if the prospective appeal is so devoid of merit as to make any extension futile.
The applicant’s explanation for the delay is contained in two affidavits. In his first affidavit sworn on 10 January 2019 he says his solicitors informed him of the 28 day time limit. It is unclear when that was, although it was clearly some time after the October order. Although Mr Kukulka was in part unrepresented at VCAT, he did at one stage have representation from a solicitor in some limited capacity that was not entirely clear.
Mr Kukulka said that until the October order was made he was of the belief that no costs order was likely to be made against him given the comments of the Tribunal on the first day of hearing. In his second affidavit sworn 5 June 2019, Mr Kukulka deposed to receiving informal information or “advice” from a barrister shortly after the August order suggesting that he await the outcome of the costs application before deciding whether or not to appeal. He said at that time he had no knowledge of any time limits.
The respondent does not rely on any prejudice occasioned by the delay. It opposes leave based upon the inadequacy of the applicant’s reasons, submitting the material discloses no more than a change of mind, and relying on the lack of merit of any appeal.
True it is he decided not to appeal and subsequently changed his mind after the October order had been made, but this was not in the knowledge that any decision was constrained by short time limits. I accept given the modest quantum of the claim and his express concern to deal with the matter in a form that did not generally involve lawyers and legal costs, that the potential cost of any appeal would be a consideration regardless of his level of dissatisfaction. That consideration changed with the subsequent costs orders that were made.
For the reasons outlined below I consider that an appeal from the August and October orders is not devoid of merit. I will extend time.
The hearing at VCAT
The hearing before VCAT took an unusual course and in order to understand the errors of law alleged it is necessary to set out the sequence of events in some detail.
The hearing initially took place on 29 May 2018. The applicant was self-represented on that date.[1] The respondent made an application to be legally represented. Initially leave was given for the limited purpose of the respondent challenging the Tribunal’s jurisdiction. The Tribunal held that it was a dispute between the purchaser and supplier of services, so s 182 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) did give it jurisdiction.
[1]The applicant gave evidence that he had the assistance of a solicitor to prepare his points of claim.
Application was then made for leave to be represented for the balance of the hearing. This was again opposed on the basis it was a simple matter. It seemed that the Tribunal agreed with this but two further issues were raised by the respondent. One was the possibility of self-incrimination by the applicant during cross examination and the other was the prospect of an adverse inference that might be sought by the respondent from any failure to call the web designer that Mr Kukulka used.
Mr Kukulka said he chose VCAT as a fast and low-cost means of dispute resolution not generally requiring lawyers and opposed the grant of leave. A fair summary of the Tribunal’s comments in permitting the representation, despite some reservations about the true complexity of the matter, was that the respondent had already engaged lawyers who were present and that the Tribunal was a no costs jurisdiction where ‘something amazing would need to happen for me to order costs against a losing party in a case like this’.[2]
[2]Transcript of Proceedings, Kukulka v Floatcast Technology Pty Ltd (Civil Claims) [2018] VCAT 1267 (Victorian Civil and Administrative Tribunal, Senior Member Forde, 29 May 2018) (‘VCAT Transcript’) 26 (Senior Member Forde).
In any event, matters proceeded that day with Mr Kukulka giving evidence and providing documentary materials in support of his case. He was cross-examined. The respondent sought to establish that the contract with Floatcast was not made by him personally but by MAK Precious Metals Pty Ltd (MAK); a company of which he was a director and which had since gone into liquidation. He was asked about ownership of the 13 active sites hosted pursuant to the agreement and said maybe one was owned by him directly and the others held for him beneficially by different owners. In cross-examination, it was also put to him that he was engaged in spamming. He denied this. He was asked to assume that the terms of the contract permitted the hosting service to suspend and deactivate the account if it reasonably believed him to be sending unsolicited bulk emails. He accepted this but said he had seen no evidence from the company that he had been doing so. He said that since deactivation he had not been able to access his content and the hosting service refused to return it to him.
At that time the Tribunal explained that positive assertions of spamming would have to be proven by the respondent. The matter was then adjourned for two reasons. One was to permit Mr Kukulka to get advice about possible self-incrimination in relation to the allegation of spamming. The other was to permit exchange of documentation about the decision to suspend and deactivate the service because Mr Kukulka, despite requesting such documentation, had not been provided with any documents.
In complaining about documents not provided, Mr Kukulka said a second Points of Defence dated 21 May 2018 for the first time:
(a)denied the contract between the applicant and respondent, asserting that MAK was the contracting party,
(b)pleaded a lack of jurisdiction, and
(c)asserted that there had been no denial of access and Mr Kukulka had the ability to access the uploaded content and therefore suffered no loss
And the late notice prejudiced his preparation for the hearing.
The respondent also sought to set off any damages against loss it incurred by reason of the unsolicited bulk emails that it asserted Mr Kukulka had caused to be sent.
Before adjourning, counsel for the respondent said:
There is a potential – and I don’t put it any higher than that – there is an opportunity perhaps to make a no case submission before having to go into evidence.[3]
[3]VCAT Transcript (n 2) 166.
When the matter came back part heard on 24 July 2018, Mr Kukulka tendered further documents to the Court including witness statements from various friends and family. The statements were to the effect that the persons were the owners of relevant websites held beneficially for the applicant and a statement from the applicant’s father regarding provision of the cash used to pay for the reconstruction of the content relevant to the question of loss and damage. Mr Kukulka had a solicitor who sought leave to appear with limited instructions on the second day. The transcript suggests this was principally to advise in relation to matters of self-incrimination and to cross-examine the respondent’s witness. The applicant’s solicitor understood that the respondent was going to present evidence from Mr Ryan Alavi of Smart SEO Hosting regarding the termination and suspension of service and whether or not such action precluded the applicant from accessing the web content.[4]
[4]Incorrectly identified in the transcript as Mr Ellery.
After some discussion regarding outstanding issues the respondent indicated it had concluded the cross-examination of Mr Kukulka and the Tribunal then announced that was the end of the case for the applicant.[5]
[5]I note that there was a late notified application to amend the notice of appeal to include a ground that an opportunity for re-examination was not afforded. The application was opposed and not pressed in the face of that opposition.
The respondent indicated it did not intend to call evidence. As foreshadowed, it said it intended to make a ‘no case submission’ under s 75 of the VCAT Act and an application for costs. Oral submissions were made in support of the applications. The applicant’s representative sought and was granted an opportunity to make written submissions on any no case submission.
The Tribunal ultimately granted the respondent’s application for summary dismissal under s 75 and provided reasons. The reasons are dated 14 August but I am informed they were in fact 29 August 2018. Nothing turns on this discrepancy. The application for costs then went to a costs hearing on 12 October 2018.
Questions of Law / Grounds of Appeal
In relation to the August order dismissing the claim, the applicant identifies error in the Tribunal’s construction and/or application of the test for summary dismissal in s 75.[6]
[6]Michael Kukulka, ‘Amended Notice of Appeal’, Submission in Michael Kukulka v Floatcast Technology Pty Ltd, S ECI 2018 02808, 14 June 2019 (‘Applicant’s Amended Notice of Appeal’), p. 2 -4.
In relation to both the August and October orders the applicant identifies errors of procedural fairness.[7]
[7]Ibid, p. 2, p. 9 - 10.
In relation to the October order, the applicant says the Tribunal relied on findings or conclusions that were not open to it.[8]
[8]Applicant’s Amended Notice of Appeal (n 7), p. 2, p. 9 - 10.
The focus of the oral submission of the parties was principally directed to the summary dismissal ground so I will deal firstly with that.
Summary dismissal of the proceeding
The Tribunal outlined the following reasons:[9]
10In Court proceedings it is conventional to distinguish between an application for summary dismissal based on the submission that the plaintiff’s pleadings show that the case is misconceived, lacking in substance or the like; and a no case submission which is made after the plaintiff has given their evidence. In the Tribunal both applications are made under section 75(1).
11. The difference is that when an application is made on the basis of the applicant’s ‘pleadings’, the Tribunal is to proceed by assuming for the purpose of the exercise that all of the pleaded facts are established and then analysing whether the case is misconceived, lacking in substance or the like; whereas on a no case submission the Tribunal can consider the evidence actually presented by the applicant.
[9]Kukulka v Floatcast Technology Pty Ltd (Civil Claims) [2018] VCAT 1267 [10]-[11].
After then setting out the evidence relied on by the applicant and the submissions of both parties on the respondent’s application, the Tribunal concluded:[10]
[10]Kukulka (n 9) [50], [54], [56].
50.I find that Mr Kukulka has not demonstrated that he is the owner of the Intellectual Property or has an entitlement to immediate possession of the Intellectual Property. Apart from his mere vague assertion of such a right, no evidence to support the contention has been led apart from him having created some of the content. He has not satisfied me that on the balance of probabilities he is the owner of the Intellectual Property.
…
54.Apart from the Virtual R Web Development invoice, no evidence was led by Mr Kukulka about loss and damage.
…
56.I do not find that Mr Kukulka is owner of the Intellectual Property. The sites on which the Intellectual Property is located are not owned by Mr Kukulka. Whilst he claims to be the beneficial owner he has not led sufficient evidence to discharge his onus of proof to show he had an enforceable right to possession of the Intellectual Property.
The respondent conceded that the Tribunal made two errors. First, it misstated the source of the power to hear and determine a no case submission as one derived from s 75.[11] Second, it erred because its finding about ownership of the content (contained in paragraph 50) was a finding on the balance of probabilities and therefore could not enliven s 75.[12] However, the respondent contended that the s 75 application was properly enlivened as the applicant on his own case could not establish an entitlement to relief.
[11]Weber v DeakinUniversity [2018] VSCA 53 [32].
[12]Ibid [24].
Secondly the respondent contended that a no case submission was also properly before the Tribunal and properly decided. Accordingly, the respondent submitted that neither error vitiated the Tribunal’s conclusions.
No case submission
Before me the applicant contested whether a no case submission was before the Tribunal.
The respondent said to the Tribunal:
My application is that the proceeding against my client be dismissed….The basis for the application is twofold. One is that the no answerable case has been presented, and secondly, I make application under Section 75 of the VCAT Act for summary dismissal of unjustified proceedings…. I rely on the fact that the case is misconceived and lacking in substance.[13]
[13]VCAT Transcript (n 2) 209.
The respondent submitted that it did in substance make an election by indicating that it did not propose to go into evidence. It said that the applicant clearly understood there to be two distinct applications as he provided written submissions on the principles applicable to no case submissions and to s 75 summary dismissal. Insofar as the applicant’s understanding might be relevant, the written submission describe an application under s 75 which he ‘understood in effect to be a no case application’. My reading of the submission is that the applicant understood the submission to be one made under s 75.
The Tribunal described to the applicant on the first day that a ‘no case submission’ was decided ‘even if everything you [the applicant] say is right and accepted by me, you still haven’t discharged your onus and you can’t win’.[14] The Tribunal made reference to the fact that there can be consequences when it doesn’t succeed whether a respondent is still entitled to call evidence or not. However, when returning for the second day of hearing, the respondent simply indicated to the Tribunal that ‘I’ll repeat it ….When Mr Kukulka gets here, but I do intend to make a no case application’.[15]
[14]VCAT Transcript (n 2) 166.
[15]VCAT Transcript (n 2) 184.
It is the right of a respondent to advance a no case submission given the adversarial nature of Tribunal proceedings. The Tribunal has power to make orders for the ‘expeditious or fair hearing and determination of a proceeding’.[16] This may include hearing a no case submission. When foreshadowing a no case submission at the conclusion of the first day of hearing, the respondent indicated it was ignorant of whether it would be put to an election and the procedure that might be prescribed by the Tribunal. It may be that the indication that it did not propose to call evidence led the Tribunal to simply proceed on that basis without making clear to the respondent whether or not it would be put to its election.
[16]Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 80 (see also ss 97 and 98).
When Mr Kukulka and his legal representative did arrive, discussion canvassed a number of other matters including whether further documents exist but had not been provided. After a short adjournment the respondent simply proceeded with its dismissal application. No further consideration was given to the procedure to be followed, until the conclusion at which time Mr Kukulka was given leave to file written submissions ‘addressing the in effect no case submissions, Section 75 application and costs reserved’.[17] This gave no further clarity as to whether the Tribunal had permitted a no case submission and, if so, on what terms.
[17]VCAT Transcript (n 2) 219.
Faced with a party seeking to make a no case submission, the Tribunal must first decide whether to put that party to its election to call no evidence. Generally, a party will be put to an election, save for limited circumstances.[18] The Tribunal has wide powers in conducting proceedings and by s 98 of the VCAT Act is required to act with as little formality and technicality as a proper consideration of the matters before it permit.
[18]Protean (Holdings) Ltd v American Home Assurance Co [1985] VR 187.
However, a no case submission is itself a procedure of some technicality, the outcome of which may be to decide the case other than on the balance of probabilities upon consideration of the totality of evidence. In such instances the parties should be clear as to the procedure under which the Tribunal is hearing such an application. The Tribunal’s only reference to what might occur if the application did not succeed was made at the conclusion of the application. The Tribunal then said that ‘we will have to have a relisting for the balance of the case’.[19] If anything, this indicated that no such election was required and if a summary dismissal was not granted that the matter would proceed to its ordinary conclusion. It is far from clear that the respondent was put to its election in substance or at all. I do not accept that the respondent did in substance make an election.
[19]VCAT Transcript (n 2) 219.
In Weber v Deakin University,[20] the Court of Appeal held that the Tribunal had heard and determined the matter in accordance with an order made at compulsory conference that allowed the respondent to make a no case submission without being put to its election. Further, the order specifically permitted the no case submission to be decided on the balance of probabilities. No such order existed here and no clarity as to the way in which the Tribunal was to conduct the application was provided.
[20][2018] VSCA 53.
Given the lack of clarity as to the consequences to follow the application should the respondent not succeed, and given the error of the Tribunal in stating that a no case submission is made under s 75, I am not satisfied that the Tribunal was dealing separately with a no case submission. In the absence of an election being required, or a dispensation from an election if appropriate being communicated, there was only one application before the Tribunal - for summary dismissal under s 75.
Summary dismissal pursuant to s 75
Section 75 of the VCAT Act provides:
75 Summary dismissal of unjustified proceedings
(1)At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion—
(a) is frivolous, vexatious, misconceived or lacking in substance; or
(b) is otherwise an abuse of process.
In Forrester v AIMS Corporation & Ors, Kaye J considered the statutory criteria for summary dismissal under this provision. He said:
On an interlocutory application under s 75 the Tribunal was obliged to view the evidence in the light most favourable to the complainant.[21]
[21]Forrester v AIMS Corporation & Ors [2004] VSC 506 [38].
In Weber,[22] the Court of Appeal discussed the statutory criteria for dismissal under s 75. The Court made clear that the section is not confined to applications made prior to the commencement of a full hearing. In Weber, the application to dismiss was made at the conclusion of the applicant’s evidence. Notwithstanding the fact that the evidence of the complainant has been fully articulated, the test remains unchanged:
Whether a claim is frivolous, vexatious, misconceived or lacking in substance within the terms of s 75(1) is not to be determined in accordance with the balance of probabilities. In order for the power of dismissal under s 75 to be enlivened the Tribunal must have a higher degree of satisfaction. In Forrester v AIMS Corporation Kaye J concluded that a claim is ‘misconceived’ for the purpose of s 75(1) if it is ‘undoubtedly hopeless’.[23]
[22][2018] VSCA 53.
[23]Weber (n 11) [24].
In Weber, the Court determined that VCAT failed to exercise the power of summary dismissal conferred by s 75 but upheld the Tribunal’s dismissal of the claim in accordance with the specific order that a ‘no case submission’ could be made and determined ‘as if it was a final submission on the balance of probability’. In accordance with that unusual order, the no case submission was determined. In that situation the Court said:
A respondent who does not wish to lead evidence at the conclusion of an applicant’s case cannot be forced to do so. The ultimate determination remains a determination on the merits. If the proceeding is dismissed, as here, it is not a summary dismissal and the preconditions to s 75 do not need to be met.
The discretion to deal summarily with a case is to be exercised with caution.[24] The test does not change whether the application is made prior to a final hearing, as it was in Forrester, or at some point during a final hearing as in this case. It is a test that decides on the material presently available, taken at its most favourable to the applicant, determining whether their case is ‘so utterly hopeless to justify’[25] the summary disposition of the case.
[24]Lay v Alliswell Pty Ltd [2001] VSC 385 at [14], adopting the test in Fancourt v Mercantile Credits Pty Ltd (1983) 154 CLR 87 at [27]; Towie v Victoria (2008) 19 VR 640 [29]–[30].
[25]Ibid [44].
The effect of Floatcast’s application directed the Tribunal to decide the case not on the balance of probabilities as it might ordinarily do at the close of such evidence chosen by both parties to be presented, but in accordance with the higher standard imposed by s 75.
It is clear that such an application is not a determination on the merits, resolving factual disputes on the balance of probabilities. Yet that is fundamentally the approach taken by the Tribunal. As can be seen from paragraph 11 of the reasons, set out above, the Tribunal described an application made at the conclusion of the complainant’s evidence, unlike one made at an earlier stage, as one permitting consideration of the evidence actually presented on the balance of probabilities. What is absent from that statement of principle is that it remains to assess that evidence and the applicant’s case at its highest. Despite being made at the conclusion of the applicant’s evidence, it remains a summary determination rather than a final determination.
The Tribunal identified two issues that Mr Kukulka needed to establish. The first was his ownership or right to possession of the website content. The second was that he had suffered loss and damage by the refusal to return it. The Tribunal identified these two issues for determination saying ‘To succeed in his claim Mr Kukulka must prove on the balance of probabilities…’. This underpins the error outlined above.
The Tribunal granted the application based in part upon a specific finding of ownership made on the balance of probabilities.[26] Mr Kukulka’s evidence most favourable to him did establish a right to possession of the content, although a determination on the balance of probabilities might not necessarily lead to that conclusion. The respondent led no evidence to demonstrate that access had not been refused so Mr Kukulka’s evidence that he could not access the content stood uncontradicted. Accordingly, the applicant’s case, on his own evidence that he was entitled to possession which had been refused, was not hopeless.
[26]Kukulka (n 9) [50].
The respondent conceded this finding was in error but submitted that the Tribunal specifically found the complaint lacking in substance because he had not established loss and damage. On this basis, the Tribunal could properly dismiss the claim under s 75.
The respondent’s defence was that there was no entitlement to damages because access to the content had at no time been denied. There were genuine concerns that the quantification of loss evidenced by the KAM Exports (KAM) invoice was perhaps greater than what might reasonably be required to recreate the content. The person who did the work was not called to give evidence.
The Tribunal’s approach to the issue of loss and damage was coloured by the Tribunal’s adverse findings of Mr Kukulka as a witness and by a finding that some web content was false and misleading, such that any entitlement to damages would offend public policy. The respondent’s case was that to the extent that there was any damage, it hasn’t been shown to be to the applicant,[27] because KAM paid the bill. Mr Kukulka gave evidence that he contributed $10,000 towards payment of this invoice and provided a statement from his father confirming this.
[27]VCAT Transcript (n 2) 213.
The advance of funds to KAM to pay for the recreation of the content, might itself be evidence establishing a loss in light of Mr Kukulka’s evidence that he requested this work be undertaken by Virtual R Web Development. It was not clear why a right to recover those funds from KAM negated any loss caused by the respondent. In the context of the reasons as a whole, this aspect of loss and damage was treated the same way as the question of ownership of the content – a determination on the balance of probabilities.
In any event, there is a distinction between the entitlement to damages and the recovery of loss and damage. It is an important distinction when dealing with a summary dismissal procedure. If ownership of content and a refusal to return that content is established, then the remedy is an entitlement to recover loss and damage subject to proving the nature and extent of that loss. The respondent submitted that if the Tribunal was satisfied of ownership and then gave consideration of loss and damage, there may be some damage. However, in the absence of proper quantification of that loss, by testing the quantum of the invoice in cross-examining the person who undertook the work, then any damages should be nominal. This submission goes to quantification of loss rather than whether or not a loss can be established. There was no basis on the evidence before the Tribunal to find that the case for loss and damage was misconceived or lacking in substance as access to content had not been refused.
If the claim of ownership survives a summary dismissal application and fell to be determined on its merit, then any remedy for such a claim could not independently provide a basis for summary dismissal, unless such a remedy was not available as a matter of law. Insofar as this application for summary dismissal directed attention at damages, it dealt with whether damage was established as a question of fact. This had to be established in order to obtain the relief sought, but not to establish the claim itself.
Accordingly, I find that the Tribunal did err in law by wrongly determining the summary dismissal of the proceeding on the balance of probabilities.
Is the error one that vitiates the Tribunal’s decision?
This conclusion does not necessarily dispose of the matter. Had the respondent not sought to make an application but simply elected not to call evidence, the Tribunal would then have decided the matter on the balance of probabilities, as it erroneously did. In those circumstances, it might be said that notwithstanding the error in approach, the applicant would nevertheless have been faced with the same adverse outcome.
There is one compelling reason against this argument. Had the matter been approached on the balance of probabilities, the applicant could have made submissions seeking an adverse inference be drawn against the respondent for its failure to call evidence. As the applicant noted in its submissions to the Tribunal on the summary dismissal application, if the respondent’s application did not succeed then ‘in the light of no competing evidence, the Tribunal ought find for the Applicant’.
Despite the admission of suspension and termination and the point of defence that access was at no stage refused or denied, the respondent pursued an argument that the denial of access was permitted by reason of the ‘prohibited usage’. Ultimately, the respondent’s position was that the terms included the right to ‘deactivate’ an account and remove a customer’s access if the respondent thought activity such as spamming was occurring. Deactivation was said to mean that the customer can’t access the account, and evidence was foreshadowed to make good these propositions.[28]
[28]VCAT Transcript (n 2) 85 – 86.
The Tribunal explained to the applicant that the respondent said they had reasonable grounds for believing there were spam emails going on and so terminated the account entitling them to deny access. Mr Kukulka was told that as the respondent was alleging a basis for deactivating the account they would have to establish that by evidence on which they carry the burden of proof. That led to a discussion about further documentation to establish the belief of the respondent that it was entitled to deactivate the account. Despite the points of claim and defence as amended not raising any issue of why the service was suspended, the respondent nevertheless sought to conduct its defence by raising the issue. The reason for the suspension of services and the potential for self-incrimination that were raised by the respondent were the reasons for an adjournment.
Ultimately, the respondent chose not to present evidence of any of those matters raised by it and an adverse inference might have been raised against it, in the same way it sought an inference from the applicant’s failure to call the web designer. It is possible that the approach to the evidence before the Tribunal might have been different when deciding matters on the balance of probabilities at final hearing.
Breach of Natural Justice
In addition to the error in application of s 75, the applicant relies on various natural justice grounds to demonstrate error in the August and October orders of the Tribunal.
It is trite to say that the Tribunal is bound to act in accordance with the rules of natural justice.[29] It was submitted that as a self-represented litigant, the applicant was entitled to assistance from the Tribunal both as to substantive legal rights and to the procedure that will be followed by the Tribunal.[30] The applicant contends that the Tribunal caused him to have a mistaken view of the test it would apply in determining the summary dismissal and thereby making the August orders.
[29]See Victorian Civil and Administrative Tribunal Act 1998, s 98(1)(a).
[30]Tomasevic v Trravaglini [2007] VSC 337.
The premise of this ground is that the Tribunal did not explain to him the test that it in fact applied. That test being in error, the ground of denial of natural justice in failing to explain the matter or explaining in such a way as to leave the applicant with a mistaken belief, falls away.
In part this ground relies on a mistaken view of the applicant that he would have an opportunity to cross examine witnesses called by the respondent. It is clear that the applicant was under the belief that he would have an opportunity to do so – that was the primary purpose identified by the solicitor who sought leave to represent him on the second day of hearing. It was never made clear to him that the respondent could not be compelled to call witnesses. To the extent this remained unclear to the applicant, he was represented by a legal practitioner on the second day of hearing and any mistaken belief was in my view cured by the opportunity to present written submissions. The submissions filed did address the state of the evidence and the absence of contradictory evidence led by the respondent.
I am not satisfied that in making the August Order the applicant was denied procedural fairness.
In making the October order that the applicant pay the respondent’s costs, the Tribunal departed from the general rule that each party bear its own cost. The reasons are contained in the transcript of hearing on 12 October 2018. The Tribunal did not rely on s 75(2). The Senior Member made reference to s 109 of the VCAT Act, which provides that the Tribunal may make an adverse costs order if satisfied that it is fair to do so having regard to the matters set out in s 109(3), in particular (3)(c) –
The relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;
The Tribunal then had regard to the fact that a s 75 application for summary dismissal had succeeded. It was again described as:
‘even if everything that had been introduced – this is paraphrasing it, but was correct, you would still fail to discharge the onus of proof to succeed on your case.’[31]
[31]VCAT Transcript (n 2) 225.
The Tribunal went on to discuss offers made prior to the hearing, including one made on 12 April 2018 said to bind not only the parties to the proceeding but any companies associated with Mr Kukulka.
A dispute arose as to whether any such offer was appropriate given its ‘without prejudice’ nature. The Tribunal deliberately did not base its reasons on prior settlement offers made by the respondent.
Ultimately the Tribunal said:
Taking into account the reasons for finding that the Section 75 application was successful, as set out in my order and reasons dated 14 August 2018[32] I will be making an order for costs in favour of the respondent. Based on the findings I made in my reasons, I am satisfied that it is fair to make that costs order in the respondent’s favour.
[32]Accepting in fact they are dated 29 August 2018.
In short compass, the error in determining the summary dismissal application on the balance of probabilities has infected the decision to award costs. Though it should not have been, the summary dismissal was determined on the balance of probabilities. It was therefore not open to award costs on the basis that the reasons for granting the summary dismissal demonstrated a case that was lacking in substance or was an abuse of process.
I am satisfied that error attended both the August and October orders such that the matter should be remitted for final hearing and determination before a differently constituted Tribunal.
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