Zhang v Bajada
[2024] VSC 15
•5 February 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2022 04730
| JACK ZHANG | First Appellant |
| – and – | |
| DILINA QUAN | Second Appellant |
| v | |
| JAMAS BAJADA | Respondent |
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JUDGE: | Watson J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 November 2023 |
DATE OF JUDGMENT: | 5 February 2024 |
CASE MAY BE CITED AS: | Zhang v Bajada |
MEDIUM NEUTRAL CITATION: | [2024] VSC 15 |
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ADMINISTRATIVE LAW – Appeal from Victorian Civil and Administrative Tribunal – Appeal to set aside Tribunal’s decision to strike out proceeding against respondent – Whether Tribunal erred in failing to make express findings that proceeding was frivolous, vexatious, misconceived or lacking in substance, or was otherwise an abuse of process – Whether appellants denied procedural fairness – Whether appellants will suffer substantial prejudice – Leave to appeal granted – Appeal allowed – ss 75 and 98 Victorian Civil and Administrative Tribunal Act 1998 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr H Foxcroft KC Mr B Reid | McMahon Fearnley |
| For the Respondent | Mr R Andrew KC Mr N Phillpott | Noble Lawyers |
HIS HONOUR:
This is an appeal from orders of the Victorian Civil and Administrative Tribunal (‘VCAT’ or ‘the Tribunal’).
On 18 November 2019, Jack Zhang and Dilina Quan (‘the appellants’) commenced a proceeding BP 2198/2019 (‘the VCAT proceeding’) in VCAT against a number of respondents including Mr James Bajada, the respondent to the current appeal (‘the respondent’). In the VCAT proceeding the respondent was the second respondent.
On 13 September 2022, the Tribunal struck out the appellants’ proceeding against the respondent in the following terms:
There being no claim on foot as against the second respondent, and as no respondent is seeking to apportion liability to the second respondent in the absence of a claim, the proceeding as against the second respondent is struck out.
(the strike out order).
Also on 13 September 2022, the Tribunal made a consequential order in relation to costs as between the appellants and the respondent in the following terms:
Pursuant to s 75(2) of the Victorian Civil and Administrative Tribunal Act 1998 the applicants must pay the second respondent’s costs of the proceeding, to be taxed on the County Court scale on the standard basis in default of agreement. The costs may be taxed immediately.
(the costs order).
The appellants seek leave to appeal against the strike out order and the costs order (collectively, ‘the orders’) and if leave is granted the appellants seek to have the orders set aside.
For the reasons which follow, I have determined to grant leave to appeal and uphold the appeal.
Background
The appellants were at all material times the owners of a property situated at 8 Waterside Place, Maribyrnong, Victoria. On 1 September 2010, the appellants entered into a building contract for the construction of a three-storey home with JPB Nominees Pty Ltd (ACN 006 609 061) (‘the builder’). The builder is now deregistered but at all material times relevant to the VCAT proceeding, the respondent was the sole director of the builder.
The appellants commenced the VCAT proceeding against the builder, the respondent, an engineer, the director of the engineer, a building surveyor and a plumber. The proceedings against the plumber were subsequently discontinued. The engineer and the director of the engineer were the third and fourth respondents to the VCAT proceeding. For ease of reference I will refer to them as the engineering parties. The building surveyor was the fifth respondent to the VCAT proceeding – I will simply refer to him as the building surveyor. The plumber was the sixth respondent to the VCAT proceeding – I will refer to him simply as the plumber.
On 20 July 2017, the appellants entered a second building contract with another builder Peter Harper Building Pty Ltd (ACN 072 435 422) (‘the second builder’). On 8 May 2020, the appellants commenced a further proceeding in VCAT BP 804/2020 (‘the related VCAT proceeding’). The related VCAT proceeding was against the second builder, a director of the second builder, an architect and a director of the architect. The respondent is not a party to the related VCAT proceeding.
In their initial pleading (‘Points of Claim’) in the VCAT proceeding, the appellants alleged that the builder had breached the building contract and a duty of care it owed the appellants and also that it had contravened the Fair Trading Act 1999 (Vic) (‘FTA’) and the Australian Consumer Law (‘ACL’), by engaging in misleading and deceptive conduct, each of which was said to have occasioned the appellants loss and damage.
The Points of Claim alleged only one cause of action against the respondent, being that he had been involved within the meaning of that term under the FTA and ACL in the builder’s misleading and deceptive conduct.
Paragraphs 22 to 27 of the Points of Claim pleaded the builder’s alleged contravention of the FTA and ACL. Paragraphs 28 and 29 of the Points of Claim contained the allegations against the respondent.
On 16 August 2021, the appellants’ pleading in the VCAT proceeding was amended and became the Amended Points of Claim. The substantive amendments on that occasion were to delete those paragraphs of the Points of Claim which set out the claim against the plumber. Nothing in the 16 August 2021 amendments affected the nature of the claim made against the respondent.
On 8 April 2022, the respondent filed an application (‘the April dismissal application’) with the Tribunal seeking orders pursuant to s 75 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘the Act’) to have the claims against the respondent dismissed. The application was accompanied by written submissions. The basis of the April dismissal application is described in the affidavit of the respondent’s solicitor dated 1 March 2023 in the following terms: ‘the claims, as pleaded, conflated representations as to future matters with contractual terms’.[1] For present purposes, that description is an adequate summary of the basis of the April dismissal application.
[1]Court book (‘CB’) 222.
On 26 April 2022, the appellants filed written submissions in opposition to the April dismissal application.
On 6 May 2022, the April dismissal application came on for hearing before Member Kincaid. On 6 May 2022, the Tribunal ordered that paragraphs 22-29 of the Amended Points of Claim be struck out and that the appellants have leave to file and serve further amended points of claim (‘May strike out order’).
For reasons which will become evident in my discussion of the authorities regarding s 75 of the Act, it is appropriate to reproduce portions of the May strike out order:
FINDINGS
A.For the reasons given orally, paragraphs 22–27 of the Amended points of Claim dated 16 August 2021 do not plead causes of action available to the applicants at law in respect of alleged representations as to future matters said to arise by reason of the first respondent having entered into the building contract dated 1 September 2010, and they are therefore misconceived or lacking in substance within the meaning of section 75(1)(a) of the Victorian Civil and Administrative Tribunal Act 1988 (VCAT Act).
B.Paragraphs 28–29 of the Amended Points of Claim of 16 August 2021, relying as they do on the allegations in paragraphs 22–27, are therefore also misconceived or lacking in substance within the meaning of s 75(1)(a) of the VCAT Act.
Orders
1.Paragraphs 22 to 29 of the Amended Points of Claim dated 16 August 2021 are struck out pursuant to s 75(1) of the VCAT Act.
2.The applicants have leave to file and serve on (sic) Further Amended Points of Claim by 4pm on 3 June 2022.
…
5.There will be a directions hearing on 27 June 2022 commencing at 10.00am when directions will be made for the further conduct of the proceeding…
6.The Principal Registrar is directed to list proceeding BP804/2020 for directions at the same as the directions in this proceeding.
…
(emphasis in original).
The appellants failed to file and serve further amended points of claim by 3 June 2022. On 27 June 2022 the Tribunal made an order that:
The date by which the applicants must file and serve proposed Further Amended Points of Claim is extended to 20 July 2022.
The appellants filed and served further amended points of claim (‘FAPC’) on 25 July 2022.
The VCAT proceeding and the related VCAT proceeding both came before the Tribunal on 1 August 2022. At that hearing in response to a question from the Senior Member, counsel for the appellants immediately foreshadowed that he would like an opportunity to review the FAPC (which he had not drafted) and possibly file a new pleading, though the appellants might press on with the pleading they had. Mr Noble for the respondent indicated he would almost certainly make another application to strike out the ‘points of claim’. Counsel for the appellants then indicated he would be assisted if Mr Noble would advise him of the objections to the existing pleading. Mr Noble demurred. The Tribunal suggested counsel for the appellants review previous orders, previous directions hearings and correspondence between the parties in order to gain an understanding of the respondent’s objections to the previous pleading. Counsel for the appellants indicated he was content to proceed in that way.[2]
[2]CB 117-119; Transcript 1 August 2022 (‘August Transcript’) 2/25 – 4/31.
The balance of the directions hearing related to the interaction of the VCAT proceeding with the related VCAT proceeding and the progress of the related VCAT proceeding (which by then had evidently had eight versions of the pleading).
On 1 August 2022, the Tribunal made orders that relevantly included:
1. By 22 August 2022 the applicants must file and serve any application for leave to file and serve a Second Further Amended Points of Claim (further to the Further Amended Points of Claim dated 25 July 2022). Any application must be accompanied by the proposed Second Further Amended Points of Claim.
2.The proceeding is listed together with proceeding BP804/2020 for a directions hearing before Senior Member Kirton (unless unavailable) on Tuesday 13 September 2022 at 9:30am with two hours allowed. (Note: this date and 12 September were discussed with the parties during the directions hearing. Tuesday 13 September has since been confirmed as the date which best suits the Tribunal). The directions hearing will be conducted by video conference and the Tribunal will provide instructions to the parties for accessing the videoconference.[3]
(emphasis in original).
[3]CB 266.
Those orders were not provided in writing to the appellants until 6 September 2022. Unfortunately, the solicitors for the appellants had misinterpreted the orders of the Tribunal of 1 August 2022 and did not file an application for leave to file further amended points of claim on 22 August 2022. They did however file and serve a proposed pleading entitled Further Further Amended Points of Claim (‘proposed FFAPC’). On 12 September 2022, the appellants filed their application for leave to file the proposed FFAPC. On 13 September 2022, a telephone directions hearing was held in the VCAT proceeding and in the related VCAT proceeding.
13 September 2022 hearing
The issues in dispute on this appeal require an extensive consideration of what occurred at the hearing on 13 September 2022.
At the outset of the hearing on 13 September 2022 the Tribunal granted the appellants an extension of time to file their application for leave to file the proposed FFAPC.[4]
[4]CB 140-141; Transcript 13 September 2022 (‘September Transcript’) 1/31 – 2/3.
Mr Noble, who appeared for the respondent on that day, then indicated his client’s objection to leave being granted to file the proposed FFAPC on the basis that ‘the claims are unarguable and ought not to proceed’. He said:
Last night … I sent through to the Tribunal some written submissions. Unfortunately they were incomplete as they only dealt with the new claim asserting an alleged duty of care owed by my client to the applicant owners. I did send through the correct version about 15 minutes ago dealing with both the duty of care that has been raised and the allegations of misleading and deceptive conduct against my client.
In short, the basis of the objection is that the duty of care – the matters pleaded in support of the alleged duty of care fall short of those required to establish a duty of care. There’s no conduct alleged against my client that would justify the imposition of a duty of care or suggest that there’s a tortious act by my client. In relation to the claims for alleged misrepresentation by my client, we say that those are time barred…[5]
[5]CB 142; September Transcript 3/1-17.
Mr Bobko, who appeared for the appellants at the 13 September 2022 hearing, responded:
I did receive [the written submissions] this morning from Mr Noble. I haven’t had a chance to review it in depth or turn my mind to the questions with respect to misleading and deceptive conduct. What I would say is that there is obviously the authority on when a matter becomes time barred pursuant to either the Fair Trading Act, as it was at the time, or the ACL as it is now.
There is obviously authority on establishing when that happens. … Our view is that the damages didn’t crystalise until we were able to identify them… and that we brought the matter within time. This matter has been on foot since 2019. By virtue of that, we don’t fall out of the statute of limitations; if we had have brought it now, then, yes, by all means, but we only seek to amend our pleadings.
SENIOR MEMBER: All right.
MR BOBKO: I say that without having had the benefit of being able to review – and this is no criticism of Mr Noble, these things happen, it has happened to me before, but I haven’t had the chance to look at his submissions in any great depth other than skim across them.[6]
[6]CB 142-143; September Transcript 3/26 – 4/17.
Mr Atkin, who appeared for the engineering parties in the VCAT proceeding, also objected to leave being granted to file the proposed FFAPC insofar as it made allegations against his client.
The directions hearing then moved to the issue of whether leave should be granted to file further pleadings in the related VCAT proceeding.
At page 21 of the September Transcript Mr Bobko begins to address the claims against the respondent and reiterates that he has not had the opportunity to ‘delve into the extra parts of [Mr Noble’s] submissions’ before being asked by the Tribunal to return to addressing issues in the related VCAT proceeding.[7]
[7]CB 160; September Transcript 21/30-31.
After a lengthy series of interchanges regarding the adequacy of the proposed pleading in the related VCAT proceeding and whether that proceeding should be heard with the VCAT proceeding or immediately after it, the directions hearing then returned to the issue of leave to file the FFAPC in the VCAT proceedings.
The Senior Member is recorded at page 34 of the September Transcript as saying:
SENIOR MEMBER: … Let's now turn to 2198, the earlier proceeding. So, we only had very brief submissions from Mr Noble and Mr Atkin and Mr Webb, about why they're objecting to the amendments in that proceeding. Do you want to hear more from them Mr Bobko or do you want to just address or tell me why you think the proceeding should be allowed to stand.[8]
[8]CB 173; September Transcript 34/5-11.
Mr Bobko begins to articulate that nature of the claim in tort against the respondent and there follows an interchange between him and the Senior Member where an attempt is made to clarify which portions of the proposed FFAPC are new and which portions had previously been struck out. The proposed FFAPC contained amendments in red which were those amendments which had been introduced into the pleading in the FAPC (some of which had then been marked up in strike through in the proposed FFAPC) and further amendments in blue which were amendments made to the FAPC in the proposed FFAPC. This however is not made clear in the interchange between the Senior Member and Mr Bobko:
SENIOR MEMBER: So, let me just check. So, in the pleading we've got blue and red colours, am I right in thinking the red is the new bits? So, if we look at page for example, 35 of the bundle of documents exhibited into the affidavit, so it's p19 of the pleading.
MR BOBKO: Yes, so p19 of the pleading.
SENIOR MEMBER: And there's a heading halfway down FTA/ACL claim against the builder.
MR BOBKO: So, the dark blue is the, is the most recent updates.
SENIOR MEMBER: So the red, was that previously struck out and, … you're adding in the dark blue bits.
MR BOBKO: That's right, well I'm not sure whether it was previously struck out, but I can certainly say that anything that was there previously, so the red – sorry, let me just say that again. I don't remember whether it was a case of the red being already struck out or whether it was struck out in accordance with putting in the blue. But needless to say that's all out.[9]
[9]CB 173-174; September Transcript 34/28 – 35/15.
The portions of the pleading on page 19 to which the Senior Member referred have red text all of which has been marked up in strikethrough. Mr Bobko’s answers to the Senior Member did not ultimately tell her whether those portions of the pleading had been struck out (in the sense that they were the subject of the May strike out order) or just struck through because they were portions of the previous FAPC which had been amended in the proposed FFPAC. A close reading of the proposed FFAPC makes it clear they were the latter. However this potential confusion assumes some significance given the Senior Member’s later insistence that she will not allow amendments which attempt to put back in that which Member Kincaid struck out.
The Senior Member then invites Mr Bobko to address her on Mr Noble’s two key complaints being that the proposed FFPAC does not explain how a duty of care arises and that there are time limit issues with the FTA and ACL claims. Mr Bobko says:
If I might just address you fairly quickly on the ACL [and] Fair Trading Act, this matter was commenced in 2019 we say that damage is crystalised or that the loss and damage are crystalised at the end of 2013 and when the building contract was terminated which means that it was brought within time subject to any further application by Mr Noble to strike out those sections or to bring a limitations case, then we would seek to say that we’re well within time, we don’t fall outside the statute of limitations with respect to an ACL claim. Obviously, if it was brought now, that’s a very different story but we are – this proceeding was commenced in 2019. That’s our position with respect to that.[10]
[10]CB 174-175; September Transcript 35/24 – 36/6.
The Senior Member then invited Mr Noble to address her on that issue. Mr Noble’s submission was as follows:
Well I appreciate my friend’s concession that the loss and damage crystalised in 2013, which was nine years ago. The claims made against my client are new claims. These were not brought in 2019. By the way, the original claim was filed on 18 November 2019. Mr Bobko hasn’t articulated the precise date in 2013 when the loss and damage crystalised, but if it was before 18 November 2013, then even the pleadings if they were based – any claim based on the pleadings filed on 18 November 2019, would in that case be time barred. But these are new proceedings.
Presently madam there is no claim on foot in this proceeding against my client [there is then a discussion of the claims in the Points of Claim and Amended Points of Claim] that was thrown out in May by Member Kincaid. So, since 6 May there’s been no claim on foot against my client …[11]
[11]CB 175-176; September Transcript 36/9 – 37/5.
Mr Noble then went on to make submissions regarding the pleading of a negligent breach of a duty of care. In his submissions he stated:
But nowhere where they set out in the proposed claim for breach of duty of care do they identify conduct of the sort that would constitute breach of tortious duty by my client. They allege that my client was knowingly reckless, but they don’t say how. They don’t say, for example, that my client came onto the site and directed the bricklayer not to install the damp-proof course or anything like that. It’s just an assertion and there are no material facts pleaded that would back up that claim and we say that claim must fail for those reasons.[12]
[12]CB 176; September Transcript 37/8-18.
Mr Noble then returns in his submissions to the pleading of the misleading and deceptive conduct claims and makes a series of criticisms of the pleading of the alleged representations which give rise to those claims in the proposed FFAPC. He concludes this aspect of his submissions by:
(a) saying ‘new allegations cannot be brought after the expiration of the relevant limitation period. These are not allegations that expand on earlier claims, these are all new claims’;[13]
[13]CB 179; September Transcript 40/20-23.
(b) citing paragraph [50] of the decision of Justice Toohey in Wardley Australia Ltd v Western Australia (‘Wardley’)[14] and submitting that the limitation period provision in that case is relevantly indistinguishable from the limitation period provisions in the FTA and the ACL; and
(c) saying ‘for those reasons the cause of action accruing in 2013 as conceded by my learned friend, these claims cannot now be made – brought against my client in 2022, as they are time barred’.[15]
[14] (1992) 175 CLR 514, 561-562.
[15]CB 181; September Transcript 42/8-12.
As I discuss below, the reference to the particular passage from Wardley was not particularly apt in the circumstances which confronted the Tribunal. Toohey J was dealing with the question of amendment in a context where the rule in Weldon v Neal[16] applied. That rule has been abrogated in Victoria.
[16](1887) QBD 394.
Unfortunately, the Tribunal was not taken to the portion of Wardley which was most apt in the circumstances. In the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley their Honours state:
We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.[17]
[17](1992) 175 CLR 514, 553.
For reasons which are discussed below, this was not the ‘clearest of cases’.
Returning to the course of the 13 September directions hearing, having made his submissions referred to in paragraph 38 above Mr Noble submits that there is presently no claim on foot against his client:
SENIOR MEMBER: So, if the marked-up amendments, the dark blue amendments are not allowed, does that leave any claim against your client?
MR NOBLE: It does not madam, no.
SENIOR MEMBER: And that's because of the orders made by Member Kincaid back in May?
MR NOBLE: Yes, yes. There's presently no claim on foot.[18]
[18]CB 181; September Transcript 42/13-19.
This is followed by an interchange which shows the ongoing confusion regarding what was being amended and the status of the FPAC.
MR BOBKO: With respect for example to 29C which Mr Noble points out brings in new allegation. I note that 29C is simply just a particularisation in a better format of the existing paragraph 29. So, if you look at the sections that are crossed out, what used to be the particulars which is actually the material allegation, has just been put into the proper format and particularised. They don't raise new causes of action. With respect to the Delphin representations, they're previously referred to what was originally paragraph 26 in the particulars. The representations as to reasonable quality, they're referred to in those particulars as well. What we sought to do was to remove from the particulars the allegations that were made and plead them properly.
SENIOR MEMBER: But remember paragraphs 26 and so on had been struck out. That was the order back in May. So, what you're doing is you're putting them back in in a different place, is that right?
MR BOBKO: I don't believe that these were the ones that were struck out, but if I'm incorrect in that then I think yes.
SENIOR MEMBER: I understand that on the order which says paragraphs 22 to 27 are the amended points of claim are struck out, sorry 22 to 29 were struck out.
MR BOBKO: I would have to, I would have to check that Senior Member.
SENIOR MEMBER: And my concern is if what was previously pleaded has been struck out, you're trying to put those points back in again.
MR BOBKO: Yes, of course, of course I can see what you're saying.
MR NOBLE: Sorry madam if I may jump in. I'm not sure if my learned friend is getting confused between the amended points of claim and the proposed further amended points of claim that were circulated in July, because paragraph 26 of the amended points of claim merely says that 'by reason therein of the builder engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 9 of the Fair Trading Act, alternatively s 8 of the ACL, further or alternatively s 12B of the Fair Trading Act, alternatively section 29(i)b of the ACL.
So, I think that when he says that matters pleaded in 29C were previously alleged by, I get the impression that he may be referring to the proposed further amended points of claim dated 25 July. Because my reading of the amended points of claim at paragraph 26, which my friend referred to, doesn't appear to support the contention.
MR BOBKO: I just – let me just have a look quickly at the 25 July ones. Can I just, so can I just take that away for the moment, if that's all right Senior Member.[19]
[19]CB 181-183; September Transcript 42/24 – 44/12.
At this point the Senior Member says:
So, we’ve got two issues, we’ve got the time limit issue… which is, it might be more than just a defence, it might make the proposed amendments hopeless anyway. And then we’ve got the question of the duty of care, if that’s adequately pleaded or not.
…
And I’ll just say openly I’m not going to revisit that Member Kincaid looked at back in May and ruled against. I’m not going to allow that to come back in. So if this is a new – your problem then is that you’re in a situation where this is a new pleading and Mr Noble referred us to the authority of Justice Toohey, there’s other decisions of the Tribunal, I made one not too long ago, Vincentis, where I went through the various authorities about relating back and I think Judge Birchall followed my decision and other decisions of the Tribunal recently as well.
Essentially, if the amendment has the effect of introducing a new claim where no like claim previously has been asserted, then it’s not an amendment but instead it’s a substitution of a new claim and that takes effect at a later date in which case you’re out of time to do that. So, if you’re now trying to rely on the Delphin representation, the sub-paragraph B, you’ve got real difficulties because I think these are new claims as Mr Noble says.[20]
[20]CB 183-184; September Transcript 44/13 – 45/9.
In response Mr Bobko says:
I’m just looking at Member Kincaid’s orders from 6 May and I can see, I can see what Mr Noble’s referring to and what you’re referring to Senior Member. I take that point. I would have to take that on notice and take it away, but I can’t say much more to that at the moment I’m afraid.[21]
[21]CB 184; September Transcript 45/10-15.
Later Mr Bobko is asked which bits of the pleading against Mr Atkin’s clients (‘the engineering parties’) he wants to have another look at and again explains he is not in a position to deal with the matters which have been raised:
The reality of it is I think Senior Member, is that we’ve descended into a pleadings fight when this was meant to be a short directions hearing about an application to bring on the – to be able to file the further amended points of claim. I haven’t had the opportunity to turn my mind to all of these objections which are being raised. A lot of them came in this morning before I haven’t had a chance to be able to take them away…[22]
I’m trying to do it on my feet at the moment with the documents in front of me. That’s no criticism to anybody who has come to the court or to the Tribunal this morning, but it’s difficult for me to defend all of these pleadings on the fly. If the application was to be brought to strike out parts of it or to have those issues agitated, I think that’s fine and obviously the respondents have the ability to do that.[23]
[22]The transcript here records Mr Bobko as saying, ‘and have, be able to give them some thought’. I suspect this is an inaccurate rendering of what was said, and that Mr Bobko said ‘and haven’t been able to give them some thought’.
[23]CB 186-187; September Transcript 47/26 – 48/11.
Immediately following this response from Mr Bobko the transcript records the following:
SENIOR MEMBER: Well the simple option is I just don’t give you leave to file these further documents.
MR BOBKO: Well, that’s…
SENIOR MEMBER: And then there’s no strike out to be brought. If down the track you did want to make another application for leave to further amend, then we would have to have another hearing along those lines.
MR BOBKO: Yes.
SENIOR MEMBER: But you will have now heard a lot of the complaints and if you were to come up with yet another version, you would presumably address that in the next, the seventh version.
MR BOBKO: Yes, yes, Senior Member, that would be, that would be the case if we were to have another bite of the cherry, so…
SENIOR MEMBER: Look I think, and we have already spent two hours as you say, I think the best option today in the circumstances is I’m not going to give leave to either of the amended pleadings. I know some of the parties haven’t objected in any great detail, but I can’t work out which paragraphs stay in and which paragraphs go out, so I think the best option is not to give leave to either of them in both proceedings. But at the same time, I make orders progressing this matter because we can’t keep it sitting hanging around until you think about whether or not you want to make a seventh application to amend.[24]
[24]CB 187-188; September Transcript 48/12 – 49/6.
It should be noted that the references to a seventh application to amend clearly relate to the related VCAT proceeding and not the VCAT proceeding which is the subject of this appeal.
A discussion ensued regarding whether the VCAT proceeding and the related VCAT proceeding should be heard together. The Senior Member then indicated she would make orders for the progress of the related VCAT proceeding and then turned to the question of the VCAT proceeding:
SENIOR MEMBER: And so then on the other proceeding, the 2198 proceeding, I’m not giving leave to file any amended points of claim in that proceeding. So, Mr Noble, you’re no longer involved.
MR NOBLE: No Madam, and I’ll be seeking an order that the proceeding as against my client be dismissed under section 75 of the Act.
SENIOR MEMBER: I’m not going to do that today because it’s – at the moment, there’s an application for leave to amend. There’s not a section 75 application in front of me as such. I’ve refused the leave to amend. I don’t want to revisit what Member Kincaid did and I don’t know if they’re going to make any further applications or not. So let’s leave that to one side. There’s no claims currently made against your client and I’ll note that in the order. As to whether technically they’re still a party but when there’s no claims made against them, I can strike out the proceeding against them if you want me to do that today.
MR NOBLE: Yes, Madam, I would like that.
SENIOR MEMBER: So that doesn’t preclude them applying to reinstate against you but if I dismiss it, that stops it completely and that’s my hesitation today, given we don’t actually have that level of an application before me.[25]
[25]CB 196-197; September Transcript 57/25 – 58/17.
Mr Noble then renewed his oral application for the proceeding against his client to be dismissed on the basis that there was no claim on foot against his client, but said he accepted that the Tribunal had indicated it was minded not to dismiss the proceeding but to strike it out against his client.
The Tribunal then asked Mr Noble whether anybody had an apportionment defence involving his client, to which he responded ‘not that I’m aware of, Madam.’[26] Mr Atkin for the engineering parties then said that he was sure that his clients would have apportionment defences as against all defendants.
[26]CB 198; September Transcript 59/26.
There then followed further interchanges between the Tribunal and Mr Atkin regarding the issue of whether or not the overlap between the two cases meant they should be heard together and further discussion of expert materials and particularisation of loss in both proceedings.
At the conclusion of the hearing the parties turned their attention to costs. In that context the Senior Member in response to Mr Noble’s submission said:
… in terms of the striking out of the claim as between – any claim between the applicants and your client – I would make a note that they would remain a party to the proceeding for the purpose of any apportionment defence.[27]
[27]CB 210; September Transcript 71/10-14.
Other parties made their submissions regarding costs.
Mr Bobko then responded in the following terms:
With respect to descending into a pleadings argument today, we were scheduled for a directions hearing and it descended into a pleadings arguments by the matters raised by the various parties which is fair enough but I think that having – this has turned into an application and a hearing for the application rather than a directions hearing with respect to the application. So I just thought I’d mention that from the outset – that this wasn’t – it was never the intention today to descend into a full blown two and a half hour hearing on the merits of the different – of the amendments.[28]
[28]CB 212; September Transcript 73/10-20.
The Senior Member responded:
I think it was – I think – and you weren’t here last time obviously – but we allowed two hours – we required you to file a proposed pleading. We had two hours allowed because I thought we were going to be discussing the pleadings. We have gone a bit longer because we’ve now moved into what we’re going to do next with the proceeding and I think we had to have the directions hearing to work out where we’re heading next.[29]
[29]CB 212; September Transcript 73/21-28.
There then ensued further discussion regarding the costs of the day and the Senior Member indicated that she was inclined to make orders against the appellants.
At this point Mr Noble revisits the question of defences of proportionate liability against his client. He stated that the proportionate liability defence of Mr Atkin’s clients ‘only relates to the allegations that were made in paragraphs 22 to 29’.[30] Mr Atkin advised the Tribunal that: ‘We make no allegation against Mr Noble’s client in his personal capacity … that was not adopting an allegation by the owners.’[31]
[30]CB 217; September Transcript 78/14-16.
[31]CB 217; September Transcript 78/21-24.
Mr Noble then submits that if the same situation pertains in relation to the fifth respondent then his client does not need to remain a party for proportionate liability and that he would like his client not to be a party in the event that there is no proportionate liability claim based on anything other than the paragraphs that have been struck out by Member Kincaid.[32]
[32]CB 217; September Transcript 78/25-30.
The Senior Member then inquired of Mr Webb whether his client had pleaded a defence of proportionate liability involving the respondent. Mr Webb replied: ‘I don’t recall that he has’.[33]
[33]CB 218; September Transcript 79/3.
This is followed by an interchange on which the respondent places considerable reliance:
SENIOR MEMBER: So does anybody object if I make an order then just striking [the respondent] out from the proceeding with mentioning he remains a party – he does not remain a party for the purposes of an apportionment defence?
MR ATKIN: No objection from me, Senior Member.
MR BOBKO: It would seem that there’s no grounds for objection from the applicant.[34]
[34]CB 218, September Transcript 79/4-10.
Shortly after the matter was adjourned.
Extension of time and nature of the orders
Before turning to the substance of the appellant’s grounds it is appropriate to dispose of two preliminary matters.
First, the appellants require an extension of time. The orders were made 13 September 2022 and so unless the Court grants an extension of time the appellants had 28 days from that date to seek leave to appeal.[35] However, a written copy of the orders was not in fact provided to the appellants until 28 October 2022 and this proceeding commenced on 17 November 2022. The respondent did not oppose an extension of time and in the circumstances an extension of time should be granted to allow the filing of this proceeding on 17 November 2022.
[35]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 148(2).
The second preliminary matter is the appropriate characterisation of the order from which the appellants seek leave to appeal. The respondent submits, and I accept, that an order striking out the proceeding against the respondent is an interlocutory rather than a final order.[36] This means that the appellants need to show a substantial prejudice in order to be granted leave to appeal.[37]
[36]See Herald and Weekly Times Pty Ltd v State of Victoria [2006] VSCA 146, [19].
[37]See Niemann v Electronic Industries Ltd [1978] VR 431.
For reasons which are discussed below, I am satisfied that the appellants have shown that they will suffer substantial prejudice if leave is not granted.
The appellants’ grounds for relief
The appellants’ grounds for relief are as follows:
(a) The Tribunal misapplied s 75 of the Act because it made no express finding as to whether the claim against the respondent was frivolous, vexatious, misconceived or lacking in substance, or is otherwise an abuse of process. Such an express finding being an essential pre-condition for the exercise of the power under s 75;
(b) The Tribunal’s only express finding for striking out the claim against the respondent was that there was ‘no claim on foot’ against the respondent and no other respondent in the proceedings is seeking to apportion liability against the respondent. This was not the test for striking out a claim under s 75 of the Act and, in any event:
(i) there was a claim against the respondent; and
(ii) other respondents were seeking to apportion liability against the respondent.
(c) The appellants were denied procedural fairness; and
(d) The Tribunal failed to give reasons for its order.
The failure to give reasons ground can be disposed of shortly. As I have held the Tribunal’s order was interlocutory in nature. The Tribunal was not obliged to provide written reasons because its order was an interim order within the meaning of s 117 of the Act.[38]
[38]See also Dura (Australia) Constructions Pty Ltd v Victorian Managed Insurance Authority (2009) 25 VR 290, [32].
No express finding
In Martin v Fasham Johnson Pty Ltd[39] Kyrou J held:
[39][2008] VSC 289.
It is a precondition to the making of an order by the Tribunal summarily dismissing or striking out all, or any part, of a proceeding pursuant to s 75, that the Tribunal make an express finding that that proceeding or part of the proceeding (as relevant) is frivolous, vexatious, misconceived or lacking in substance, or is otherwise an abuse of process, and that its reasons support such a finding. Reasons which, in essence, merely repeat the words of s 75(1) are inadequate and may reveal an appealable error.
…
The power to make an order pursuant to s 76 of the VCAT Act (which deals with summary dismissal or striking out all or part of a proceeding for want of prosecution) or s 77 (which deals with striking out of all or any part of a proceeding in the Tribunal’s original jurisdiction where there is a more appropriate forum for the subject matter of the proceeding) is only enlivened where the Tribunal has made a finding that the requirements specified in those provisions are met. It was common ground before me that ss 76 and 77 are not relevant in this appeal.
…
Section 78(2) makes it clear that an order dismissing or striking out the proceeding under that section can only be made where the Tribunal finds that the applicant’s conduct unnecessarily disadvantages another party. Unlike ss 75 and 76, s 78(2) does not empower the Tribunal to dismiss or strike out a part of a proceeding. It therefore does not authorise the striking out of points of claim, as this does not constitute a striking out of the proceeding.
Where the Tribunal is exercising a power under ss 75, 76, 77 or 78, its order (which, in accordance with s 117(6) of the VCAT Act, includes its reasons for decision) must expressly state that it is doing so. It cannot exercise such an important power “impliedly”, “in passing” or in a latent manner. In compliance with the Tribunal’s obligations to act fairly (s 97 of the VCAT Act) and to comply with the rules of natural justice (s 98(1)(a) of the VCAT Act), before an order is made under ss 75, 76, 77 or 78, reasonable notice must be given to the applicant that such an order may be made and the grounds of the foreshadowed order.
[His Honour then set out s 98 of the VCAT Act].
During argument, Mr Laird, who appeared for Fasham Johnson, submitted that s 98(3) authorises the Tribunal to bring to an end a proceeding that is before it. I do not accept this submission. While s 98(3) authorises a myriad of procedural orders and actions, it does not authorise the Tribunal to dismiss, strike out or permanently stay the whole of a proceeding before it, or to otherwise dispose of the whole of such a proceeding in a manner akin to a dismissal, striking out or permanent stay except perhaps where this is sought by consent to give effect to a settlement agreement. I need not decide whether s 99(3) empowers the Tribunal to make an order (other than by consent) dismissing, striking out or permanently staying a claim in a document akin to a pleading (such as points of claim) as distinct from dismissing, striking out or permanently staying a proceeding as a whole.[40]
[40]Ibid at [29], [31], [33], [34] and [36].
On its face, the strike out order does not meet the requirements laid out in Martin v Fasham Johnson. The order does not expressly state that it is the exercise of a power under any of ss 75, 76, 77 or 78 of the Act. It was not contended by the respondent that the strike out order could be justified as an exercise of the power under ss 76, 77 or 78 of the Act. The respondent instead advanced three propositions:
(a) That the Tribunal was not obliged to explicitly state that the order was being made under s 75 of the Act because it was not under an obligation to provide written reasons;
(b) That express findings were made on 6 May 2022 by Member Kincaid and that because there was no claim on foot against the respondent as at 13 September 2022, no further findings were required to be made; and
(c) That even if the exercise of power under s 75 miscarried in some way it was open to the Tribunal to make the same order under the Tribunal’s powers to regulate its own procedure in s 98(3) of the Act.
None of the respondent’s arguments in this regard should be accepted.
I have accepted the respondent’s contention that the strike out order was interlocutory in nature and, as a result, the Tribunal was not obliged to provide reasons for its decision. Nonetheless, it is plain that the decision in Martin v Fasham Johnson stands for the proposition that in the exercise of its jurisdiction under s 75 of the Act it is necessary for the Tribunal to make findings which ground the exercise of that jurisdiction. In this context there is a distinction between findings which Martin v Fasham Johnson says should be made before the power in s 75 of the Act is exercised and reasons. No findings were made by the Senior Member on 13 September 2022 and the respondent cannot rely on the findings made by Member Kincaid on 6 May 2022 because those findings related to a different pleading and a different order.
The strike out order does not make any express finding that the proceeding is frivolous, vexatious, misconceived or lacking in substance, or otherwise an abuse of process.
The Tribunal made its order on the basis that there was ‘no claim’ against the respondent. I have considered whether such a finding constitutes an implied finding that the proceeding was ‘lacking in substance’. The first point to be made about such a proposition is that Martin v Fasham Johnson holds that such an important power as exists in s 75 of the Act cannot be exercised impliedly, in passing or in a latent manner.[41] In any event, it is not apparent that the Senior Member regarded the proceeding as lacking in substance, notwithstanding that her decision on 13 September 2022 was not to grant leave for the filing of the FFPAC, she seems to have accepted that the appellants might be able to replead a claim against the respondent.
[41]Ibid [34].
The respondent’s argument that s 98(3) is an alternative basis for the strike out order is directly contrary to the decision in Martin v Fasham Johnson.
The respondent sought to make good this portion of its submissions by reference to a decision of the Court of Appeal in Weber v Deakin University & Ors (‘Weber’).[42] In Weber the Court held that an order purportedly made pursuant to s 75 of the Act summarily dismissing a proceeding was improperly made because the Tribunal had conflated two discrete bases for dismissing the proceeding:
[42][2018] VSCA 53.
(a) the compulsory conference order which granted leave to the respondents to make a no case submission at the conclusion of Mr Weber’s case, to be determined as if it was a final submission on the balance of probabilities; and
(b) the right to make a summary dismissal application pursuant to s 75 of the [Act].[43]
The Court of Appeal in Weber however held that s 98(3) did provide a power for the Tribunal to authorise the making of a no case submission.[44]
[43]Ibid [28].
[44]Ibid [33].
Weber does not assist the respondent in this case. There is no suggestion that the Tribunal in this case was doing anything other than striking out a proceeding against the respondent and in that context, s 98(3) of the Act does not provide a power by a side wind to avoid compliance with the specific sections of the Act (ss 75 to 78) which provide for the striking out of a proceeding.
On this basis, the appellants have demonstrated an error of law on the part of the Tribunal in striking out the proceeding without having made an express finding that the VCAT proceeding was frivolous, vexatious, misconceived or lacking in substance, or was otherwise an abuse of process in accordance with s 75 of the Act and, subject to the discussion of prejudice below, I would uphold the appeal on this ground.
There was in fact a claim on foot
If I am wrong in my view that the Tribunal’s order fails for want of express findings as required by s 75 of the Act, I am nonetheless of the view that the Tribunal’s order was made in error because the appellants did in fact have a claim against the respondent.
First, I consider the better view is that the claims in the FPAC were on foot.
On 6 May 2022, Member Kincaid gave leave to the appellant to file further amended points of claim by 3 June 2022.[45] When the Tribunal made its orders of 27 June 2022 it granted an extension of time to file ‘proposed further amended points of claim’. I do not consider that by using the word ‘proposed’ the order of 27 June 2022 required the appellants to seek leave to file their further points of claim; leave had already been granted and it was not revoked.
[45]CB 262.
The FPAC was filed and served late and the Tribunal made no express order for an extension of time in which it could be filed. However, the order of 1 August 2022 that the appellants file any application for leave to file and serve a second further amended points of claim (further to the further amended points of claim) is consistent with the view that the Tribunal had waived (at least implicitly) the failure to file the FPAC in accordance with the previous order and that it treated the FPAC as filed and served. It is also clear that the appellants’ counsel on 1 August 2022 did not abandon that pleading. He indicated he would like an opportunity to consider the pleading and if necessary file a further pleading but said it may be that the appellants would just press on with the pleading they had.[46]
[46]CB 118; Transcript 1 August 2022 3/2-14.
Thus, the Tribunal was wrong as a matter of law in finding that there was ‘no claim’ against the respondent by the appellants, the claims in the FPAC were extant and because the strike out order was predicated on the assumption that there was no claim it was made in error.
Secondly, even if the FPAC was not operative as at 13 September 2022, the Tribunal was nonetheless in error because it failed to distinguish between a claim and points of claim.
Counsel for the respondent accepted that there was a distinction between a claim and the articulation of a claim in a pleading and accepted that a pleading might be struck out but the claim survives, but described such a distinction as ‘theoretical’ and argued that was ‘too fine a distinction to draw in this case’.[47] I disagree. An applicant or plaintiff may plainly have a claim in the sense of a claim for relief even though they have no extant pleading. Striking out points of claim does not have the effect of meaning there is no claim on foot against a respondent in a proceeding.[48]
[47] Transcript 24 November 2023 (‘Trial Transcript’) 60/22-31.
[48]Martin v Fasham Johnson Pty Ltd [2008] VSC 289, [26].
Even if the FPAC was not on foot and operative and there was no extant pleading against the respondent, it was therefore not right to say that there was no claim against him. On this basis also the strike out order was made in error.
As is evident from the terms of the strike out order and from the transcript of 13 September 2022, a factor in the Tribunal’s determination to make the strike out order was its view that the engineering parties and the building surveyor were not seeking to apportion liability to the respondent in the absence of a claim by the appellants.
However, each of the engineering parties and the building surveyor in their points of defence pleaded an apportionable claim against the respondent and the engineer parties and the engineering parties also pleaded contribution from the respondent.
The respondent seeks to characterise the submissions made to the Senior Member as, in effect, the engineering parties and the building surveyor electing not to pursue proportionate liability defences against the respondent. I do not think this is an accurate description of what occurred before the Tribunal. Mr Atkin for the engineering parties said his clients made no allegation against the respondent that did not adopt an allegation of the appellants. That submission does not go so far as to say no claim for proportionate liability is being pressed and would appear to be inaccurate so far as a claim for contribution is concerned. Mr Webb for the building surveyor when asked if his client had an apportionment defence replied that he didn’t recall that he had.
Even in the absence of a claim by the appellants it is clear that as at 13 September 2022 in their points of defence the engineering parties and the building surveyor were seeking to apportion liability to the respondent and that the engineering parties were seeking contribution from the respondent. The strike out order was based on an assumption to the contrary which is a further reason why the order should not stand.
The Tribunal’s determination that there was ‘no claim’ against the respondent was consequent upon the decision not to grant leave to file the FFAPC. Whilst it is not strictly necessary for the conclusion I have reached, it is appropriate to say something of the reasons (at least as they appear on transcript) for the Tribunal’s refusal to grant leave to file the FFPAC.
It is not entirely clear whether the Tribunal accepted all that Mr Noble put in his submissions, but it is clear that the Tribunal formed a view that:
(a) It would not revisit anything which Member Kincaid looked at in May and ruled against; and
(b) That it would not permit an amendment which had the effect of introducing a new claim where no like claim had previously been asserted.
I have referred above to the potential confusion which existed in relation to those portions of the FFAPC which were marked in red. If the Senior Member was proceeding on the assumption that the matters which were in red and struck through on pages 19 and 20 of the FFAPC had been struck out by Member Kincaid in May 2022, then that was a false assumption and one that may have induced the view that the representations pleaded in paragraphs 28A of the FFAPC were an attempt to reintroduce matters which had earlier been struck out. Certainly, aspects of that pleading appear to be substantially different from that which was the subject of consideration in April and May 2022.
Further, it was not appropriate in the circumstances to form a view as to whether the pleaded claims were statute barred and to disallow the fresh pleading on this basis. There are a number of reasons why this is so.
I have referred above to the passage from the judgment of the plurality in Wardley where their Honours state that limitation questions should only be determined in interlocutory proceedings in the clearest of cases. This was not a clear case:
(a) Counsel for the appellants who appeared on the day was clearly not in a position where he was able to fully address matters raised in relation to limitations and he said so in terms to the Tribunal.
(b) It was not clear when loss and damage had occurred:
(i)Despite counsel for the appellants having made a submission ‘on the fly’ that damage had occurred in 2013, in the circumstances it would be inappropriate to regard this as a concession that no damage had occurred at any later point.
(ii)In his written submissions (to which the Tribunal was not taken) Mr Noble for the Respondent apparently accepted that loss and damage may have been suffered as late as 25 June 2015.[49]
(iii)Indeed, insofar as the pleading alleges that part of the loss and damage sustained or allegedly sustained by the appellants is the cost of rectification works (which apparently occurred over ensuing years), it is entirely possible that a proper analysis after evidence has been adduced at trial will show that loss and damage to the appellants occurred later than 2015.
(c) Mr Noble’s submissions, which the Tribunal appears to have accepted, assume the limitation period for the ACL and FTA claims is six years. That is so under s 236 of the ACL and s 159 of the FTA which are the sections specifically pleaded against the respondent in the FFAPC, but the FFAPC pleaded a claim for such further or other relief under the FTA and the ACL as the Tribunal deemed fit. Having been appraised of the respondent’s arguments, the appellants may have sought to avail themselves of claims under ss 232 and 238 of the ACL or ss 149 and 158(3) of the FTA which on the basis of the reasoning in Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd[50] and Energex Ltd v Alstom Australia Ltd[51] are not subject to such a limitation period.
[49]CB 412; Second Respondent’s Written Submissions dated 12 September 2022 (filed in the VCAT proceeding), [43].
[50](2001) 109 FCR 528.
[51][2005] FCAFC 215, [66]-[75].
Further, the Tribunal erroneously proceeded on the basis that a ‘new claim’ could not be introduced by way of amendment after the limitation period had expired even if the proceeding had been commenced prior to the expiry of that limitation period. In doing so the Tribunal appears to have accepted the submissions of Mr Noble and followed one of her own previous decisions Vincentis v SDJ Property Fifth Pty Ltd (Building and Property) (‘Vincentis’).[52] Neither course was appropriate.
[52][2022] VCAT 29.
As noted above, Mr Noble’s submission rested on a passage from Justice Toohey’s judgment in Wardley. It is apparent from that judgment that Justice Toohey was dealing with the rules of the Federal Court of Australia, in circumstances where what is described as the rule in Weldon v Neal[53] applied. That rule has been abrogated in Victoria and the passage in Wardley on which reliance was placed is not apposite.
[53](1887) 19 QBD 394, 395.
In Vincentis the Tribunal stated:
It seems to me that s 134 of the Building Act and the authorities referred to above give rise to the following proposition: that where an action is commenced in time, and an amendment is sought to be made after a limitation period has expired, the amendment does not constitute a new claim if all it is doing is re-characterising the nature of the claim, or seeking a different legal conclusion based upon facts already in issue in the proceeding. It is an amendment of a claim already issued and takes effect from (i.e. can be related back to) the date of the original claim. However if the amendment has the effect of introducing a new claim, where no like claim previously was asserted, then it is not a true amendment of the original claim, but instead is a substitution of a new claim which takes effect only at the later date.[54]
[54][2022] VCAT 29, [33].
With respect to the Tribunal, in my view, the last sentence of that passage does not correctly state the law in Victoria since the abrogation of the rule in Weldon v Neal. As Brirek Industries Pty Ltd v McKenzie[55] shows, in Victoria a new claim, that is a new cause of action, can be introduced by way of amendment after the expiration of a limitation period and ‘related back’ to the commencement of the proceeding subject to a consideration by the Court of any prejudice suffered by the defendant or respondent to that claim. Notwithstanding the reference in Vincentis to Brirek Industries Pty Ltd v McKenzie, the Tribunal has stated the law as though the rule in Weldon v Neal still pertains.
[55](2015) 48 VR 558.
It is not clear whether the Tribunal had formed a view that the negligence claim was unsustainable as pleaded and, if so, whether this was because it accepted the submission of Mr Noble that the claim had not been pleaded with sufficient material facts or because the Tribunal regarded that as a ‘new claim’ which was being sought to be introduced after the expiry of a limitation period. If the latter, then for the reasons I have indicated the Tribunal proceeded on an unsound basis. If the former, then in circumstances where this was the first occasion on which the appellant had been apprised of the respondent’s concerns regarding that aspect of the FFAPC and the first occasion on which the Tribunal had considered it, a decision to strike out the proceeding in its entirety against the second respondent was not an appropriate remedial response.
Procedural fairness
Counsel for the appellants was plainly not in a position to respond to the respondent’s criticisms of the FFAPC and he said so on a number of occasions. It is apparent that counsel for the appellants on that day thought he was attending for the purposes of appearing on a directions hearing rather than on the application to seek leave to file and serve the FFAPC.
In addition, counsel for the appellants had no adequate notice of the attack which was going to be made on the pleading. Fifteen pages of submissions were provided to him shortly before the hearing. The respondent had had the FFAPC since 22 August 2022 and had not raised any objection to the amendment until the evening prior to the directions hearing. It may be that this was because of the appellant’s failure to file a formal application for leave to file and serve the FFAPC but it nonetheless created a situation in which counsel for the appellants on 13 September 2022 could not fairly be expected to respond to all of the respondent’s criticisms of the FFAPC.
The respondent’s application under s 75 of the Act was made orally in the course of the hearing on 13 September 2022 and in circumstances where counsel for the appellants had indicated he was not in a position to deal with the application. In these circumstances, the Tribunal correctly determined not to accede to the respondent’s application under s 75 of the Act.
It is nonetheless problematic that the Senior Member then determined, in effect on her own motion, to strike out the entirety of the appellants’ proceeding against the respondent. That was also a course of which the appellants had been given no notice, on grounds which had not been foreshadowed to them prior to the hearing and which emerged in circumstances where it is clear there was considerable confusion as to which pleading was extant. In this latter regard, even if I am wrong and the FAPC was not extant, the transcript demonstrates that Mr Bobko proceeded on an assumption that it was. Even if the order of the Tribunal provided the appellants with the capacity to seek to reinstate the proceeding against the respondent, that does not cure or vitiate the denial of procedural fairness which occurred.
The respondent says that any procedural unfairness is, in effect, cured because when the Tribunal inquired of the parties whether anyone had objection to the course it was then proposing Mr Bobko said ‘it would seem there is no grounds for objection from the applicants’. I do not regard this as decisive of the question of procedural fairness in all of the circumstances. It comes after an interchange between the Tribunal and the respondents as to whether there was an apportionable claim. In this context it is not apparent that Mr Bobko’s response is to anything more than the question of the respondent not remaining a party for the purposes of an apportionment defence.
Even if Mr Bobko’s response is to be understood to refer more generally to the proposition that the Senior Member will strike the respondent out from the proceeding I do not think Mr Bobko’s response is anything more than an acknowledgment that the Tribunal has earlier determined upon that course and he has said all he can say on the matter.
For these reasons, I conclude that the appellants were denied procedural fairness in the making of the strike out order and I would uphold their appeal on these grounds.
Substantial prejudice
I have formed the view that the appellants will suffer substantial prejudice in the event the appeal is not allowed and leave is not granted. I note in this context that whilst the order striking out the proceeding is interlocutory in nature, the authorities indicate that it is an order of the kind which because of its practical effect in bringing the proceeding to a close is one where leave will more readily be granted.[56]
[56]Ex parte Bucknell (1936) 56 CLR 221, 225-226.
There are two primary bases on which I regard the appellants as having shown substantial prejudice.
First, the proceeding as against the respondent has been struck out in its entirety. The Tribunal acted on the assumption that the appellants could apply to reinstate their proceeding. Nonetheless I do not think this is dispositive of the issue of substantial prejudice. If the orders are left undisturbed they effectively deprive the appellants of a presumptive right to have their proceeding advanced against the respondent. I regard this as a substantial prejudice.
Secondly, I was advised that the appellants have paid a sum of approximately $30,000 pursuant to the costs order.[57] On its own this constitutes a substantial prejudice which would warrant the grant of leave.
[57]Trial Transcript 17/4-6.
In argument, senior counsel for the appellants said one reason the appellants suffered substantial prejudice was that there might be a ‘potential loss of claims’ on a reinstatement application as compared to an amendment application.[58] As I understood this argument, it was that there might be a substantive difference in the impact on limitations period in the situation which will pertain under a reinstatement application and that which pertained if the appeal is allowed and the appellants have further leave to file a pleading. Senior counsel for the respondent submitted there would be no difference between those two situations on the assumption that the limitation periods would have all expired under both scenarios but accepted that there might be a difference if, contrary to his primary submission, a relevant limitation period had not expired for the purpose of an amendment.[59] I am not persuaded there is a difference in either scenario but not for the reason that counsel for the respondents contends. Rather, I incline to the view that in the event the proceeding were reinstated the appellants would still have the benefit of any ‘relation back’ in any subsequent amendment application and so there would be no difference in the substantive position relating to limitation periods. In circumstances where I have already determined there is substantial prejudice to the appellants I do not need to express a concluded view on this issue.
[58]Trial Transcript 17/2-4.
[59]Trial Transcript 51/5-29.
Conclusion
For the above reasons, I grant leave to appeal and allow the appeal and set aside the strike out order and the costs order.
In their notice of appeal the appellants sought an order in the event that the appeal was allowed that the s 75 application be remitted to the Tribunal to be heard and determined according to law. I will not make that order, as I do not regard it as being appropriate in the circumstances to re-enliven the s 75 application made by the respondent (not least because it is not clear that the strike out order was made pursuant to that application). Rather, the appellants should now be given an opportunity to take on board the respondent’s criticisms of the FFAPC and should seek leave to file and serve what will still be a second further amended points of claim. It is to be hoped that the parties are able to ensure that any application for leave and any further strike out or dismissal application are conducted in a fashion which ensures greater procedural fairness to all parties and provides greater assistance to the Tribunal in the hearing.
The appellants should have their costs of the appeal.
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