Ryan & Anor v Victorian Managed Insurance Authority - [2007] VSC 474

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PRACTICE COURT

No. 7095 of 2007

GLENN RYAN and NARDIA PAPAS	Plaintiffs
v
VICTORIAN MANAGED INSURANCE AUTHORITY	Defendant

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JUDGE:	HOLLINGWORTH J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 August 2007
DATE OF JUDGMENT:	23 November 2007
CASE MAY BE CITED AS:	Ryan v Victorian Managed Insurance Authority
MEDIUM NEUTRAL CITATION:	[2007] VSC 474

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Practice & procedure – Costs – Appeal from VCAT – VCAT ordered that home owners entitled to reasonable costs of enforcing claim under insurance policy – VCAT subsequently ordered home owners to pay some of insurer’s costs under s109 of the VCAT Act – Whether VCAT had power to make latter order – Whether VCAT functus officio

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr D Aghion	Rigby Cooke Lawyers
For the Defendant	Mr S Stuckey	LMS Lawyers

HER HONOUR:

The plaintiff house owners (“the owners”) were insured by a company in the HIH group for the purposes of the House Contracts Guarantee Act 1987 (Vic) (“the Guarantee Act”). Part 6 of the Guarantee Act contains what is commonly referred to as “the rescue package”, which was designed to protect house owners who would otherwise have been unable, due to the demise of the HIH group, to recover in respect of damage suffered by them.

The owners sought indemnity under the Guarantee Act for incomplete and defective domestic building works. That claim was settled for $100,000, prior to hearing by the Victorian Civil and Administrative Tribunal (“VCAT”). The owners also claimed to be entitled to interest and an indemnity for their reasonable legal costs; the parties were unable to agree on those matters.

The original VCAT decision

On 27 September 2004, a Senior Member of VCAT found that the owners were entitled to interest, under the Insurance Contracts Act 1984 (Cth).[1] The Senior Member also ordered that:

The [owners] are entitled to have their reasonable legal costs and expenses of enforcing the claim against the [insurer] and such costs are to be paid on an indemnity basis, such costs to be agreed, and failing agreement, to be assessed by the Principal Registrar in accordance with s111 of the Victorian Civil and Administrative Tribunal Act.

[1]VCAT proceeding D339 of 2003.

The first Supreme Court appeal

The insurer appealed against that order to this court. The insurer in both the original proceeding in VCAT and the appeal to this court was Housing Guarantee Fund Ltd. Victorian Managed Insurance Authority, the current defendant, has subsequently assumed the relevant functions and powers of that entity and is now responsible for the administration of the rescue package scheme. I will use the expression ”the insurer” to refer to whichever of Housing Guarantee Fund Ltd and the current defendant was the insurer at the relevant time.

On 23 June 2005, Mandie J allowed the insurer’s appeal in relation to costs. His Honour set aside the Senior Member’s order and ordered that the owners were…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] VSC 474
Decision Date: 23 November 2007

CaseChat Overview and Summary

The plaintiffs, Ryan and another, appealed against a decision of the Victorian Civil and Administrative Tribunal (VCAT) concerning costs incurred in enforcing their claim under an insurance policy. The defendant, the Victorian Managed Insurance Authority, was the insurer. The primary dispute centred on whether VCAT had the authority to order the plaintiffs to pay some of the insurer's costs after previously ordering the insurer to pay the plaintiffs' reasonable costs. Additionally, the court considered whether VCAT's initial order rendered it incapable of making the subsequent order due to the principle of functus officio.

The key legal issues before the court were whether VCAT possessed the jurisdiction to alter its earlier order regarding costs and if the principle of functus officio applied, thereby precluding VCAT from making the subsequent order. The plaintiffs argued that VCAT lacked the power to revise its initial cost order, and that the principle of functus officio prevented VCAT from making the subsequent order. The insurer contended that VCAT had the requisite authority to adjust its earlier order and that the principle of functus officio did not apply.

The court found that VCAT did not have the jurisdiction to make the subsequent order compelling the plaintiffs to pay some of the insurer's costs. The court held that VCAT's initial order was a final determination of the matter concerning costs and that the principle of functus officio applied, preventing VCAT from revisiting and altering that order. Consequently, the court quashed the subsequent order and held that the initial order regarding costs remained in effect. The insurer's appeal was dismissed with costs to be paid by the insurer to the plaintiffs.

The final orders of the court were that VCAT's subsequent order compelling the plaintiffs to pay some of the insurer's costs was quashed, and the initial order that the insurer pay the plaintiffs' reasonable costs remained in effect. The insurer was directed to pay the plaintiffs' costs of the appeal.

Orders