Vero Insurance Ltd v Body Corporate Strata Plan No 41716B
[2005] VSC 56
•10 March 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 7047 of 2004
| VERO INSURANCE LTD (formerly known as Royal & Sun Alliance Insurance Australia Ltd) (ACN 005 297 807) and Others | First to Fifth Plaintiffs |
| v | |
| BODY CORPORATE STRATA PLAN NO. 417161B & Others | First to Forty-Sixth Defendants |
| and | |
| VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL | Forty-Seventh Defendant |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 February 2005 | |
DATE OF JUDGMENT: | 10 March 2005 | |
CASE MAY BE CITED AS: | Vero Insurance v Body Corporate | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 56 | |
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Judicial Review – Application under Order 56 Supreme Court (General Civil Procedure) Rules 1996 – VCAT decision – Whether VCAT functus officio – Whether order in the nature of certiorari or mandamus should be made – Craig v South Australia (1995) 184 CLR 163.
Whether plaintiff can apply to re-open an order of VCAT in accordance with s 120 VCAT Act – Whether plaintiffs were “a person in respect of whom an order” was made.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr PG Cawthorn | Rodriguez Lawyers |
| For the First to Forty-Sixth Defendants | Mr JG Bolton | Rigby Cooke |
HER HONOUR:
Introduction
The five plaintiffs (“the insurers”) are insurance companies which on 18 November 1998 issued a policy of builders’ warranty insurance evidenced by Certificate No 76154 and a home building work insurance policy in respect of certain construction works at a property in Richmond consisting of 45 units and common property. The works were constructed by TP and PP Stavrou, known as Stavrou Builders (“the builders”) for Bere Nominees Pty Ltd (“the developer”). The first to forty-sixth defendants (“the owners”) are the owners of the common property and the units. On 2 August 2004 a Senior Registrar of the forty-seventh defendant (“the Tribunal”) informed the Court that the Tribunal did not intend to take an active part in this proceeding, except as regards any question as to costs, and would abide the decision of the Court.
It appears that the construction works were defective and the owners issued an application in the Tribunal (“the Tribunal proceeding”) against the builders and the developer in respect of the defects. There is an ambiguity in the copy of the application exhibited before the Court. The application form includes a heading “Total claimed” which is followed by the typed words and figures “$ damages not exceeding $100,000 (as presently instructed)”. The words “damages not exceeding” have, in my view, been typed along a line provided on the form to guide the insertion of a dollar figure after the dollar symbol. The typing is crooked, so that the line partly overlaps the words, and Mr Cawthorn, for the insurers, submitted that the relationship between the line and the typing indicated that the line may have been drawn on the form so that the words “damages not exceeding” may have been intended partly crossed out by the line. In my opinion, on examining the copy document, that is not the case. In any case, as Mr Bolton, for the owners, submitted, the expression “as presently instructed” indicates an intention that the amount claimed may be increased at a later date.
By a letter dated 13 March 2003 Rigby Cooke, the solicitors for the owners, notified Home Owners Warranty, the agent for the insurers, of the Tribunal proceeding, and indicated that a compulsory conference in that proceeding was listed for 20 June 2003. The letter stated that a copy of the application in that proceeding was enclosed, but Mr Doukas, a claims co-ordinator employed by the first plaintiff (“Vero”), deposes that no such copy was enclosed. Vero replied, acknowledging receipt of that letter, and stating that while the Tribunal proceeding remained unresolved, it was neither pertinent nor appropriate for the insurer to entertain a claim for indemnity, but that on receiving information of the result of the proceeding the insurer would be in a position to issue a claim form to the owners if they had suffered a loss.
Clause 11.1 of the Ministerial Order under the Building Act 1993 made in October 1996, provides that the policy shall contain a provision to the following effect:
Where the insurer has notice of the relevant proceedings, the insurer is required to comply with any order made by the Domestic Building Tribunal against the builder in respect of risks otherwise covered by the policy upon default by the builder in complying with such order.
Clause 18 of the insurance policy, presumably enacted in pursuance of that requirement, provides:
If the Tribunal makes an order against your builder in respect of risks covered by this policy, but your builder fails to comply with that order, then we must do so, but only if we had notice of the Tribunal proceedings.
It is not in issue that the Tribunal is the successor to the Domestic Building Tribunal.
A compulsory conference in the Tribunal proceeding was held on 1 October 2003, at which the builders failed to attend or to be represented. Deputy President Baker-Smith listed the proceeding for a further compulsory conference to be held on 12 November 2003 and made a number of procedural orders.
The further compulsory conference on 12 November 2003 was held before Member Walsh. The owners and the developer were represented but the builders again failed to attend or to be represented. The owners were represented by Mr Bolton of counsel and the developer was represented by Mr Calabro, solicitor, who had previously acted for the builders as well as the developer, but who had advised the Tribunal on 29 September 2003 that he no longer acted for the builders.
Section 87 of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”) reads:
87.What happens if a party fails to attend a compulsory conference?
If a party does not attend a properly convened compulsory conference—
(a)the conference may proceed at the appointed time in the party’s absence; and
(b)if a member of the Tribunal is presiding and all the parties present agree, the Tribunal, constituted by that member, may—
(i)determine the proceeding adversely to the absent party and make any appropriate orders; or
(ii)direct that the absent party be struck out of the proceeding.
Member Walsh found that the conference was properly convened and that orders requiring their attendance had been served on the builders. He proceeded to make an order to the following effect:
I, as the Presiding Member of the Tribunal and with the agreement of all parties present and pursuant to section 87 of [the VCAT Act] determine the proceeding as follows –
a)The Tribunal strikes out the proceeding insofar as it seeks remedy against [the developer], with no order as to costs.
b)The Tribunal determines the proceeding adversely to [the builders] insofar as it [sic] seeks remedy against them.
c)the Tribunal orders [the builders] to pay to [the owners] the sum of $2,553,100.
d)[as to costs].
The order was signed and the seal of the Tribunal affixed, so that the order was authenticated, by virtue of Rule 4.16 of the Tribunal Rules, as required by section 116(1)(b) of the VCAT Act.
Mr Doukas deposes that after receiving the letter of 13 March 2003 referred to in [3] above, Vero heard nothing further until 3 December 2003 when it received a letter from Rigby Cooke enclosing a copy of the order made by Member Walsh on 12 November 2003, and a copy of a letter to the builders enclosing a copy of that order and requesting compliance with it. Thus Vero had had no notice of the compulsory conference on 12 November. On 10 December 2003 Vero replied by letter to Rigby Cooke, saying that it was not in a position to respond to the order as it had insufficient documentation, and requiring the provision of copies of the application, and of all directions and orders in the Tribunal proceeding and of steps taken by the parties to comply with those orders. On 19 December 2003 Vero received a substantial quantity of relevant material from Rigby Cooke.
Section 120 of the VCAT Act reads, so far as relevant:
120.Re-opening an order on substantive grounds
(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.
(2)An application under sub-section (1) is to be made in accordance with, and within the time limits specified by, the rules.
(3). . .
(4)The Tribunal may—
(a)hear and determine the application if it is satisfied that the applicant had a reasonable excuse for not attending or being represented at the hearing; and
(b)if it thinks fit, order that the order be revoked or varied.
Rule 4.18 of the Victorian Civil and Administrative Tribunal Rules made under the VCAT Act (“the Tribunal Rules”) provides that an application under section 120 must be made within fourteen days after the applicant becomes aware of the order. The effect of section 120(2) and Rule 4.18 is that by the time when Vero received the material from Rigby Cooke on 19 December 2003, it was already out of time to bring an application under section 120 for review of the order made by Member Walsh, as Vero had become aware of that order on 3 December 2003, sixteen days before. (I intend no criticism of the time taken by Rigby Cooke to provide the material.) As the insurers had not been aware of the calling of the compulsory conference for 12 November 2003, had they applied within time (i.e. without waiting for the material from Rigby Cooke) for a review of the order of Member Walsh, the Tribunal might well have considered that they had a “reasonable excuse for not attending or being represented at the hearing” in terms of section 120(4)(a) (leaving on one side the question, considered briefly at [36] and [37] below, of whether the insurers are persons “in respect of whom” the order of Member Walsh was made, so as to be entitled to make an application under section 120(1) at all).
Section 126 of the VCAT Act reads, so far as relevant:
126.Extension or abridgment of time . . .
.. .
(2)If the rules permit, the Tribunal, on application by a party or on its own initiative, may—
(a)extend or abridge any time limit fixed by or under this Act . . .
(3)The Tribunal may extend time . . . under this section even if the time . . . has expired before an application for extension . . . is made.
Rule 4.19 provides that the Tribunal may exercise any of the powers referred to in section 126(2) of the Act in any proceeding.
However, the insurers are not parties to the Tribunal proceeding. Accordingly, before making an application under section 126 for extension of the time within which to bring an application under section 120, they must apply under section 60 of the VCAT Act to be joined as parties to that proceeding. Section 60 provides:
60.Joinder of parties
(1)The Tribunal may order that a person be joined as a party to a proceeding if the Tribunal considers that—
(a)the person ought to be bound by, or have the benefit of, an order of the Tribunal in the proceeding; or
(b)the person’s interests are affected by the proceeding; or
(c)for any other reason it is desirable that the person be joined as a party.
(2)The Tribunal may make an order under sub-section (1) on it own initiative or on the application of any person.
Thus if the insurers wish the Tribunal to review the order made by Member Walsh on 12 November 2003, they must apply under section 60 to be made parties to the Tribunal proceeding so that if successful they will, as parties, be able to apply under section 126 to extend the time within which to apply under section 120 for the Tribunal to review the order.
On 10 May 2004 the owners issued a writ against the insurers in this Court claiming payment of the amount of $2,553,100 ordered by Member Walsh to be paid by the builders, in reliance on the provisions set out in [4] above. I understand from counsel that the insurers have filed a conditional appearance, but as yet no defence has been filed, the writ having been stayed on the application of the insurers pending the determination of this proceeding.
On 21 May 2004 Vero (and apparently the other four insurers, but the copy of the application which is exhibited to Mr Doukas’s affidavit of 15 July 2004 is incomplete) applied to the Tribunal for orders in the following terms:
The insurers be joined as parties to the Tribunal proceeding under section 60 of the VCAT Act 1998;
An extension of time in accordance with section 126 of the VCAT Act be granted to enable the applicant [sic] to appeal the VCAT orders dated 12 November 2003 and or the orders of 1 October 2003
That the orders dated 12 November 2003 and or the orders of 1 October 2003 be set aside or revoke [sic] under section 120 of the VCAT Act 1998 and or sections 97 and 98 of the VCAT Act 1998
That application was heard by Deputy President Aird on 4 June 2004. On 22 June 2004 the Deputy President made the following orders:
1.The application by Vero Insurance Ltd to be joined as a party to this proceeding, and for an extension of time in which to make application for review is dismissed.
2.Liberty to the parties to the original proceeding to apply for costs of this application until 21 July 2004. Any costs hearing to be listed before Deputy President Aird.
In the present proceeding, commenced by originating motion on 15 July 2004, the plaintiffs seek judicial review of those orders under Order 56 of the Supreme Court (General Civil Procedure) Rules 1996 (“the Supreme Court Rules”). That provision relevantly empowers the making of an order in the nature of certiorari or mandamus. As Mr Cawthorn pointed out, the right of appeal against a decision of the Tribunal contained in section 148 of the VCAT Act is conferred only on a party to the proceeding in which the order was made from which an appeal is sought.
Certiorari
In Craig v South Australia (1995) 184 CLR 163 at 175-176 the High Court (Brennan, Deane, Toohey, Gaudron and McHugh JJ) said:
Where available, certiorari is a process by which a superior court, in the exercise of original jurisdiction, supervises the acts of an inferior court or other tribunal. It is not an appellate procedure enabling either a general review of the order or decision of the inferior court or tribunal or a substitution of the order or decision which the superior court thinks should have been made. Where the writ runs, it merely enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds, most importantly, jurisdictional error, failure to observe some applicable requirement of procedural fairness, fraud and "error of law on the face of the record". Where the writ is sought on the ground of jurisdictional error, breach of procedural fairness or fraud, the superior court entertaining an application for certiorari can, subject to applicable procedural and evidentiary rules, take account of any relevant material placed before it. In contrast, where relief is sought on the ground of error of law on the face of the record, the superior court is restricted to the "record" of the inferior court or tribunal and the writ will enable the quashing of the impugned order or decision only on the ground that it is affected by some error of law which is disclosed by that record.
JD Phillips J pointed out in Hansford v Judge Neesham (1994) 7 VAR 172 at 179 that the dividing line between error of law on the face of the record and want of jurisdiction is not always easy to draw.
However, it is clear from the passage from Craig v South Australia which is quoted above that the writ of certiorari does not empower the Court to do what Mr Cawthorn, for the insurers, suggested should be done; that is, having quashed the decision under review, to make a fresh decision in substitution for the decision so quashed.
Mandamus
Mandamus will lie, speaking generally, where the respondent has refused to comply with a demand by the applicant to perform a public duty. In R v War Pensions Entitlement Appeal Tribunal: Ex parte Bott (1933) 50 CLR 228, Rich, Dixon and McTiernan JJ said at 242:
A writ of mandamus does not issue except to command the fulfilment of some duty of a public nature which remains unperformed. If the person under the duty professes to perform it, but what he actually does amounts in law to no performance because he has misconceived his duty or, in the course of attempting to discharge it, has failed to comply with some requirement essential to its valid or effectual performance, he may be commanded by the writ to execute his function according to law de novo, at any rate if a sufficient demand or request to do so has been made upon him.
Thus an order in the nature of mandamus may issue to direct the making of a fresh order.
The reasons of the Tribunal
By virtue of section 10 of the Administrative Law Act 1978, the reasons for the decision of the Tribunal form part of “the record” for the purposes of this application for review.
The Tribunal in its reasons records that Mr Cawthorn, who appeared for the insurers before the Tribunal, indicated that his clients were applying for the proceeding to be reinstated, as a first step, before the application was otherwise considered and determined. However, the Tribunal found that it was premature to make an order for reinstatement prior to otherwise determining the application; to do so would be a determination of any application under section 120. In any case, the insurers were out of time to apply under that section.
The Tribunal went on to dismiss the application for joinder under section 60 on the ground that
the section contemplates a current proceeding, not yet determined, to which a person can be joined. In this case the proceeding has been disposed of. A final determination has been made and the Tribunal is functus officio.
It will be apparent that, for the reasons summarised in [15] above, that finding disposed of the whole of the application made on 21 May 2004.
However, the Tribunal, noting that the application must fail for that reason, nevertheless went on to dismiss the application under section 120 on the grounds first, that the insurers were not persons “in respect of whom” the order had been made, and second, that the proceeding had been determined and the Tribunal was functus officio. It did not refer to the application under section 126(2) for an extension of time to bring an application under section 120. But in any case, the application for joinder having been dismissed, the insurers, not being parties to the Tribunal proceeding, had no locus standi under section 126(2).
Finally, the Tribunal concluded that there was nothing in sections 97 and 98 of the Act which would enable it to make the orders sought. Those provisions read, so far as relevant:
97.Tribunal must act fairly
The Tribunal must act fairly and according to the substantial merits of the case in all proceedings.
98.General procedure
(1)The Tribunal—
(a)is bound by the rules of natural justice;
.. .
(4)Sub-section (1)(a) does not apply to the extent that this Act . . . authorises, whether expressly or by implication, a departure from the rules of natural justice.
The submissions of the insurers
Mr Cawthorn submitted that the decision of Member Walsh did not have the effect of rendering the Tribunal functus officio. There had been no adjudication on the merits. That decision was in effect a default judgment and should be set aside on several grounds. The insurers did not have notice that orders to the effect of those made by Member Walsh would be sought, and there was no cogent evidence that the builders had had such notice. Despite the authentication of the decision as set out above, section 120 enabled it to be re-opened. As a general rule, any person affected by a default judgment, whether or not a party, could apply to have the judgment set aside.
However, the authorities on which Mr Cawthorn relied for those propositions each turned on the specific legislation applicable in the jurisdiction in question. The Tribunal is the creature of statute, and the relevant statute contains, in section 120, a specific provision for the review of a decision made in the absence of a party. And, for the reasons set out in [11] to [15] above, section 120 is not available to the insurers.
Barwick CJ said in Bailey v Marinoff:[1]
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed. In my opinion, none of the decided cases lend support to the view that the Supreme Court in this case had any inherent power or jurisdiction to make the order it did make, its earlier order dismissing the appeal having been perfected by the processes of the Court. I would add that, however hard the case might seem for the would be appellant the loss of its right of appeal derived from its own conduct or from that of persons for whom it must take responsibility. The finality of the order dismissing the appeal does not seem to me to partake of injustice in the circumstances or to call for any departure from well settled principles, themselves essential in my opinion to the due administration of our system of law. (Emphasis added)
That passage applies with added force to a statutory tribunal.
[1](1971) 125 CLR 529 at 530-1
Taylor v Taylor[2] is authority for the proposition that an order made against a party who did not have a reasonable opportunity to present his case ought, in a proper case, to be set aside. However, that case relates only to an order made against a party, and the insurers are not parties to the Tribunal proceeding. Clearly, the fact that there are circumstances, not relevant in the particular case, in which a decision of a court or tribunal may be set aside, does not ipso facto affect the finality of any particular decision made by that court or tribunal.
[2](1979) 143 CLR 2
Mr Cawthorn submitted that Mr Calabro, representing the developer, had consented to orders which were in conflict with the interests of his former clients, the builders, and this was an irregularity in the judgment which required that it be set aside. There is no evidence before me as to the circumstances of Mr Calabro’s retainer by either client which would allow me to make any finding on that submission. In any case, what I have said above applies again; whatever the position may be, section 120 is not available to the insurers.
He submitted that the orders of Member Walsh, being orders made effectively against the insurers (see [4] above) but made without notice to the insurers, and in their absence, were made in breach of the rules of natural justice and fairness, which the Tribunal was bound to observe by virtue of sections 97 and 98 of the VCAT Act, and that the procedure adopted was antithetical to one designed to achieve a result based on “the substantial merits of the case”, as required by section 97. However, he did not suggest that Member Walsh had failed to comply with any of the requirements of section 87, which expressly enables the making of a decision in the absence of a party which fails to attend a compulsory conference. Sections 97 and 98 do not operate to override section 87 (and see sub-section 98(4)).
As to the Tribunal’s finding that the insurers were not persons “in respect of whom an order was made”, so as to be unable to make an application under section 120, Mr Cawthorn relied on the passage from the judgment of Mann CJ in Trustees Executors & Agency Co Ltd v Reilly[3] where His Honour said:
The words “in respect of” are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer.
He referred to the provisions of the insurance policy and the Ministerial Order which are set out in [4] above and submitted that the effect of those provisions was that an order requiring payment by the builders was, in effect, an order requiring payment by the insurers, and accordingly was made “in respect of” the insurers. Had Parliament intended to limit the entitlement to make an application under section 120 to a person “against whom” an order was made, it could have done so.
[3][1941] VLR 110 at 111
I consider, without deciding the matter, that that argument has much to commend it. However, were I to find the Tribunal to be in error on this point, it would be futile to exercise my discretion to make an order in the nature of certiorari quashing its decision, because the decision is not defective in any way which would entitle the issue of a writ of mandamus to direct the making of a fresh decision. I have found no error of law in the decision of Deputy President Aird, dismissing the applications before her on the ground that the Tribunal was functus officio. The fact that the grant of an order for certiorari would be futile has been found to be a ground for refusal to exercise the discretion to make such an order. See for example the decision of Fullagar J in R v Registrar-General; Ex parte Lange.[4]
[4][1950] VLR 45 a 654; reversed on appeal on the admission of further evidence Lang [sic] v Registrar-General of the State of Victoria [1950] VLR 307
Conclusion
For the reasons given, the application of the insurers is dismissed. Counsel may wish to make submissions as to costs.
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