Tuesday, June 7, 2011

Turner v Hidayat [2011] VSC 202 - Implied power to reinstate proceeding in VCAT

The matter of Turner & Anor v Hidayat [2011] VSC 202 (Turner) was an application for leave to appeal in the Supreme Court of Victoria before Kyrou J from a decision made in the Victorian Civil and Administrative Tribunal (VCAT). In Turner, the plaintiffs were borrowers under a loan secured by a property. The plaintiffs defaulted under the loan and applied to VCAT for relief under the Consumer Credit (Victoria) Code.

The plaintiffs failed to attend a compulsory conference listed by VCAT because their solicitor wrote the wrong date in his diary. For reasons which Kyrou J could only speculate on, VCAT listed a directions hearing after the compulsory conference (on that day) and ordered that the proceeding against the defendant be struck out with costs. The plaintiffs applied to set aside the orders made and the parties entered consent orders where the proceeding would be reinstated only if the plaintiffs vacated the property by 25 August 2010. Because of the financial difficulties being experienced by the plaintiffs, they vacated by 30 August 2010. The Tribunal confirmed the proceeding was struck out and did not reinstate the proceeding on further application.

In granting leave to appeal, Kyrou J discussed the implied power to reinstate proceedings. I have discussed this in detail below.
Normally if a party to a proceeding in VCAT has the matter determined in its absence and has an order made against it, that party may apply to the tribunal to re-open the order under s120 Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act). s120 provides as follows:
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 subsection (1) is to be made in accordance with, and within the time limits specified by, the rules.
(3) The rules may limit the number of times a person may apply under this section in respect of the same matter without obtaining the leave of the Tribunal.
(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.
Kyrou J noted that under s120, it is a precondition to VCAT 're-opening' (i.e. revoking or varying) an order made that the applicant had a reasonable excuse for not attending or being represented at the hearing. Kyrou J said that the implied power to reinstate the proceeding is discretionary and does not have this precondition (at [35] to [36]):
35 The implied power to reinstate a struck-out proceeding was recognised by the Court of Appeal in Herald and Weekly Times Pty Ltd v Victoria. Such a power must be implied because there is doubt about whether it is expressly conferred by any provision of the VCAT Act. Section 80 may not apply because the striking out of a proceeding may not constitute a ‘direction’. Section 98(3) may not apply because an order striking out a proceeding may not constitute an order which ‘regulate[s] [the VCAT’s] own procedure’. Section 120 may not apply because a compulsory conference may not constitute a ‘hearing’.
36 Although s 120 of the VCAT Act may provide some guidance to the VCAT when it is exercising the implied power, the exercise of the implied power is not governed by that section. In particular, the precondition in s 120 that the party must have a reasonable excuse for failing to attend or being represented at the hearing does not apply. That is not to say, however, that the absence of a reasonable excuse is irrelevant. On the contrary, it is a very significant factor that must be taken into account. Other factors that must be taken into account are whether the absence of the party caused any prejudice to the party that attended, whether an order for costs would sufficiently overcome that prejudice, whether the application to reinstate was made promptly, and the merits of the proceeding that is sought to be reinstated.
Kyrou J's judgment also suggests that the implied power to reinstate a proceeding has a wider application than s120. At [35] Kyrou J noted that s120 is restricted to circumstances where a party has not attended a 'hearing', wheres the implied power to reinstate may apply to orders striking out a proceeding made at a compulsory conference or mediation.

Turner is useful as the Court of Appeal has highlighted a broader and easier way of reinstating proceedings in VCAT. For instance, where application is made to re-open an order under s120, the order must have been made at a 'hearing' and the parties must do the following:
  • Make application within 14 days after the applicant becomes aware of the order (see VCAT Rule 4.18).
  • Satisfy VCAT, as a precondition to the exercise of its discretion to re-open the order, that the applicant had a reasonable excuse for not attending 'the hearing'.
Turner suggests that these onerous requirements do not apply to the implied power to reinstate a proceeding. Instead, the applicant must point to factors (noted in [36] of Turner) which VCAT should properly consider when exercising its discretion to reinstate a proceeding.

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