Ralena Pty Ltd v VCAT & Ors (Ruling no 3)

[2007] VSC 12

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 9115 of 2006

RALENA	Applicant
v
VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL	First Respondent
XTSEA PTY LTD	Second Respondent
MOTOR CAR TRADERS GUARANTEE FUND CLAIMS COMMITTEE	Third Respondent

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 January 2007
DATE OF JUDGMENT:	30 January 2007
CASE MAY BE CITED AS:	Ralena v VCAT & Ors (No. 3)
MEDIUM NEUTRAL CITATION:	[2007] VSC 12

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COSTS – Order for costs against a third party – Criteria in Knight v F.P. Special Assets Ltd – Criteria met – Exceptional order not granted.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr S. Palmer	Lewenberg & Lewenberg
For the First Respondent	No appearance
For the Second Respondent	Mr J. Slonim	Kliger Partners
For the Third Respondent	Ms  J. Lardner	Victorian Government Solicitor

HIS HONOUR:

1. These proceedings were originally instituted by Ralena seeking to quash a decision of the Victorian Civil and Administrative Tribunal.  That decision was made in respect of an application by the second respondent, XTSEA Pty Ltd against the third respondent Motor Car Traders Guarantee Fund Claims Committee, claiming that the committee make a payment to it.

1. The decision of the tribunal upheld the claim of XTSEA against the committee.  Ralena was not a party to the proceeding before the tribunal.  However, it was a party necessarily affected by that decision and accordingly had standing in this court to seek relief by way of certiorari.  By order dated 29 November 2006 I ordered that the decision of the tribunal, which had been made on 11 September, be brought into the court and quashed, and I also ordered that the second respondent to these proceedings, XTSEA, pay Ralena’s costs of the application before me.  An application is now made on behalf of the applicant Ralena against a director of XTSEA, Benjamin Avery, and the manager of XTSEA, Peter Avery, that they be liable to pay the costs ordered to be paid by XTSEA. 

1. It is well recognised that a court does in appropriate circumstances have power to make an order for costs against a person who is not a party to the proceeding before it.   See for example Burns Philp & Co v Baggott.[1]

   [1](1993) 1V.R. at 203.

1. In Knight v F.P. Special Assets Ltd,[2]  Chief Justice Mason and Justice Dean in their joint judgment outlined certain criteria guiding the court whether it ought to exercise its exceptional jurisdiction to make such an order.  Those criteria include: whether the actual party to the proceeding has funds to meet the costs order against it; whether the parties to the application for costs had an interest in, or benefit from, the litigation; and whether they played an active part in the conduct of the litigation.

   [2](1992) 174 CLR 178 at 192/3.

1. In this application I am satisfied that each of those criteria has as a matter of fact been made out.  In the proceedings before the tribunal, the tribunal was told by Mr Benjamin Avery, who conducted those proceedings, that he - and presumably also XTSEA - was unable to pay out the balance of the payment due under what was described as the lease (to which the subject vehicle was then liable).  He also told the tribunal that moneys had to be borrowed to pay out the difference between the moneys offered to purchase the CLK203 and the balloon payment on the lease.

1. There was evidence before me that XTSEA no longer operates from the premises at which it did.  No evidence has been put before me on behalf of Messrs Avery, or on behalf of XTSEA to enlighten me as to the financial position of XTSEA.  The matters put forward by the applicant raise an inference that XTSEA might not be able to pay its costs pursuant to the order I have already made.

1. I am fortified in drawing that inference by the failure of the respondents to this application to adduce any evidence to the contrary, and accordingly on the balance of probabilities I draw that inference. 

1. It is also clear that both respondents to this application, Benjamin Avery and Peter Avery, were not at arm’s length to the subject matter of the proceeding before me, or before VCAT. It was put before the Tribunal that the vehicle in question was in fact not used by XTSEA, but rather by Mr Benjamin Avery’s mother, who presumably is the wife of Peter Avery.  In the upshot, it seems that Mr Peter Avery has purchased the vehicle and has refinanced it with the same finance company which had financed it to XTSEA.

1. In those circumstances, it would seem clear that both the respondents to this application had a real interest in and a potential benefit from the application which was made before VCAT.  Thus, the criteria referred to by the High Court in Knight’s case have been made out.  However, that is not the end of the matter.  The courts have said that the jurisdiction which is sought to be invoked before me is exceptional, and it is indeed quite unusual.  All the circumstances are relevant and are not simply confined to those adumbrated in Knight’s case and to which I have referred. 

1. In my view, in the present case there are other circumstances which are relevant and which militate against the making of this exceptional order.  Firstly, Ralena Pty Ltd was not a party to the proceeding before VCAT.  XTSEA brought the proceeding against the committee and did not join Ralena.  Ralena did not seek to be joined in those proceedings.  In my view, those circumstances to some extent modify the effect of the submissions made by Mr Palmer that XTSEA was the aggressor and that Ralena at all times has been the respondent to that aggression in terms of the litigious stance in the proceedings, which were the subject of review in this court.

1. The second matter is that the main issues before the Tribunal were issues of credibility involving competing versions of events given, on the one hand by witnesses called on behalf of XTSEA, and on the other hand witnesses called on behalf of Ralena.  The Tribunal, as a tribunal of fact, upheld the credibility of the witnesses called on behalf of XTSEA in preference to that of Ralena.  It is fair to say that XTSEA won on questions of fact before the Tribunal.

1. Allied to that is a third proposition; that the issue of law on which Ralena succeeded before me was certainly not squarely ventilated before the Tribunal, if it was ventilated at all.  It is true that Ralena was not a party to those proceedings, but nonetheless Ralena’s solicitor was present throughout holding what has been described in the materials as a watching brief.  He was an experienced solicitor who also appeared to have played a role from time to time prompting counsel for the committee in relation to legal and other submissions.  The fact remains that the issue on which the applicant has succeeded before me as a matter of substance was not squarely raised in the Tribunal below.

1. A fourth matter which I think is relevant, although only marginally so, is the fact that at no time has Ralena given due notice to the current respondents that the application for costs might be made against them.  The authorities recognise this is a relevant, although not a determinative matter.  I agree with Mr Palmer that, on the balance of probabilities, had notice been given, it is likely that the Averys would still, through XTSEA, have pursued their defence of the proceeding before me.  Nonetheless, it is fair to observe that the Averys were deprived of the opportunity to at least pause and consider their position and thus they were deprived of the possibility of either withdrawing their opposition to the application by Ralena or modifying it.

1. Combined, these circumstances in my view weigh cogently against the making of what is an exceptional and unusual order.  The ordinary order is that costs are made inter parties in a proceeding.  Whilst Mr Palmer in his very thorough submissions has made out the ingredients which are often referred to in proceedings such as this, in my view, there are other matters which weigh against the exercise of the discretion, and weigh against making such an order in this case.

1. Accordingly, I refuse the application made by Ralena Pty Ltd against Benjamin Avery and Peter Avery that the latter pay the costs of these proceedings.

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