Kelly Graham Brennan. Melbourne. Senior Member A Vassie

Transcription

1 VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL CIVIL DIVISION CIVIL CLAIMS LIST VCAT REFERENCE NO C5955/2012 CATCHWORDS Summary dismissal claim against manager of stratum-estate service company applicant a unit owner whether the service company is an applicant jurisdiction not a consumer and trader dispute no tenable claim for compensation for unconscionable conduct Victorian Civil and Administrative Tribunal Act 1998 s 75(1) Australian Consumer Law and Fair Trading Act 2012 s 182(1), s 224 Australian Consumer Law (Victoria) s 236(1), ss APPLICANT: RESPONDENT: WHERE HELD: BEFORE: HEARING TYPE: Kelly Graham Brennan Victoria Body Corporate Services Pty Ltd Melbourne Senior Member A Vassie Summary dismissal application DATE OF HEARING: 6 February DATE OF ORDER: 25 February 2013 DATE OF REASONS: 25 February 2013 CITATION: Brennan v Victoria Body Corporate Services Pty Ltd (Civil Claims) [2013] VCAT 204 ORDER 1 80 Queens Road Pty Ltd (ACN: ) is not an applicant. The principal registrar is directed to amend the register accordingly. 2 The proceeding is struck out summarily under s 75 of the Victorian Civil and Administrative Tribunal Act SENIOR MEMBER A VASSIE

2 APPEARANCES: For Applicant For Respondent In person Mr M Simon of Counsel VCAT Reference No. C5955/2012 Page 2 of 13

3 REASONS FOR DECISION 1 There is a stratum-estate development of land at 80 Queens Road, Melbourne. A plan of subdivision created units which were capable of being individually owned. The rest of the land in the subdivision remained vested in a service company, 80 Queens Road Pty Ltd. The unit owners are shareholders in the service company. 2 In April 2011 the service company re-appointed a manager, Victoria Body Corporate Services Pty Ltd., which is the respondent in this proceeding. I refer to it as the manager. The service company and the manager entered into a written contract of appointment dated 27 April 2011 which was expressed to be for a term of two years. 3 Kelly Graham Brennan, an applicant in this proceeding, and her husband are the owners of Unit 9 at 80 Queens Road. As a unit owner, she is a shareholder in the service company. She is also a director of the service company. 4 Ms Brennan alleges that disputes between the service company and the manager culminated in the manager wrongfully terminating the contract of appointment in late July or early August On 17 August 2012 she lodged an application naming herself as applicant and the manager as respondent. The application alleged that there was an owners corporation dispute and identified the service company as the owners corporation. That was wrong. There is no owners corporation. But that is why the name of the service company appeared on the application form. 5 In the Tribunal s register, the service company appears as a second applicant. Orders that have been made in the proceeding to date reflect that fact. Whether the service company has ever been properly named or registered or joined as an applicant in the proceeding is a matter with which I shall deal below. 6 The manager has made an application for summary dismissal or striking out of the proceeding under s 75 of the Victorian Civil and Administrative Tribunal Act 1998 ( the VCAT Act ). Section 75(1) provides : 75 Summary dismissal of unjustified proceedings (1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion (a) is frivolous, vexatious, misconceived or lacking in substance; or (b) is otherwise an abuse of process 7 I heard the manager s application on 6 February The manager did not file any affidavit evidence in support of the application. It relied upon VCAT Reference No. C5955/2012 Page 3 of 13

4 what appeared on the face of Ms Brennan s initiating application and on the face of a document headed K Brennan Amended Claim which she filed and which was dated 10 September Ms Brennan did not file any affidavit evidence specifically in response to the summary dismissal application, although soon after filing her initiating application she had filed a copy of an affidavit by her sworn on 19 August At the hearing Ms Brennan appeared on her own behalf. By leave, Mr Simon of Counsel appeared for the manager. He spoke to a detailed written submission. I asked Ms Brennan whether she wished to ask me for an adjournment so that she could obtain legal advice, particularly about the effect of one term in the contract of appointment to which she had drawn my attention. She replied that she did not wish to ask for an adjournment. At the end of the hearing, I reserved my decision. The Claims made 9 In her initiating application, Ms Brennan claimed $18, and sought the following orders against the manager, which she called VBCS : 1. An order for VBCS to repay an $1800 portion of service fees for inadequate service. 2. An order for VBCS to compensate 80 Queens Road Pty Ltd for $15,000 (or any other amount determined by VCAT) for the effects of this drawn out dispute, including directors distress, anxiety & extra workload, as well as the worsening decline of the property and subsequent effect on property value. 3. An order for VBCS to compensate Kelly and Nigel Brennan $2,000 (or any other amount determined by VCAT) for our particular anxiety and extra workload as the owners most directly impacted by the demands of this dispute. 4. An order for VBCS to publish an unequivocal apology to the owners of 80 Queens Road, acknowledging its failure to provide adequate service. Such apology to be published : On the home page of the VBCS website for a duration of 30 days, and In the VBCS electronic newsletter to clients, and In either the Age or Herald Sun newspaper. 10 Ms Brennan s affidavit sworn on 19 September 2012 contained the following sentences VBCS has recently terminated our relationship significantly earlier than agreed and it has effectively frozen our finances without any notice to our company. As a result, our company is unable to function. This has caused significant anxiety to myself and other directors. VCAT Reference No. C5955/2012 Page 4 of 13

5 I believe the VBCS action was a deliberate, malicious response to our complaints about the Manager s performance and our decision to end the long term management agreement. I believe it amounts to unconscionable, misleading and deceptive conduct by the company that we paid to protect us. She went on in the affidavit to detail what she alleged had been the disruption to the service company s affairs and the alarm and distress that she had experienced as a result of the abrupt termination of the manager s appointment. 11 Because the application did not reflect an owners corporation dispute and because Ms Brennan had claimed a sum exceeding $10,000.00, the principal registrar sought from her a larger filing fee than the one she had paid. So as to avoid the need to pay the larger filing fee (so Ms Brennan explicitly stated in her correspondence with the principal registrar), Ms Brennan filed the Amended Claim dated 10 September In that document she reduced the monetary claim to one below $10, By an order dated 25 September 2012, the Deputy President in charge of the Tribunal s Civil Claims List allowed the amendment to the application, directed that the Amended Claim should stand as Amended Points of Claim, and recorded that the claim for damages or compensation had been capped at $ In the Amended Claim Ms Brennan sought the following orders : 1. A declaration the VBCS actions were unconscionable, misleading and deceptive. 2. A declaration that VBCS actions were deleterious to the functioning of 80 Queens Road during the final 6-9 months of the relationship and especially in the way it terminated the contract. 3. An order for VBCS to pay all costs associated with this VCAT claim. 4. An order for VBCS to pay up to $10,000 to compensate the owners for : a. Inadequate service during the final 6-9 months of the relationship, and b. Unexplained Management fees of $3431 withdrawn by VBCS before closing our account, and c. Management fees to be charged by our new managers to rectify our finances, and d. The worsening decline of our property and extra repair work required as a direct result of VBCS delays. 5. An order for VBCS to publish an unequivocal apology to the owners of 80 Queens Road, acknowledging its failure to provide adequate service and its damaging action in terminating our contract without notice. VCAT Reference No. C5955/2012 Page 5 of 13

6 13 It is noteworthy that the claims made in the initiating application for the payment of $ to Ms Brennan and her husband for our particular anxiety and extra workload and all other references to those matters, were omitted from the Amended Claim. 14 After having set out the orders quoted in paragraph 12 above, Ms Brennan went on in the Amended Claim to give a summary of the facts that gave rise to it and on the basis of which she sought those orders. The summary was : After 6-9 months of contractual breaches, inadequate service and bungled levy collections, Victoria Body Corporate Services (VBCS) terminated its contract with owners of 80 Queens Road Pty Ltd (80QR) 2 months earlier than agreed, without any notice. The action was deliberate and damaging, leaving us unable to function for 4 weeks. Requests for information were refused VBCS refused to issue an invoice or explanation for $3431 in Management fees it withdrew before closing our bank account. The action sabotaged a levy collection process that was underway and jeopardised urgent repair and renovation works. It caused distress for owners because of mounting uncertainties about our financial status. Our distress was compounded when we found accounting anomalies, a bank shortfall of more than $5,000 and some inaccurate documents lodged with ASIC. Further requests for information and explanation were refused. We were forced to make a snap decision on new managers, without the reasonable time needed to make a considered decision. Our new managers are expected to charge extra fees for the work they are putting in to investigate and restore our financial status. 15 There followed, in the Amended Claim, a timeline of events. The timeline included allegations that the manager had withdrawn $ in unexplained management fees on 31 July 2012 and that the manager had notified the service company on 15 August 2012 that files were finalised implying that it was no longer acting as manager. The Service Company is not an Applicant 16 The way in which the initiating application, the affidavit and the amended claim were expressed the references to our company, we and us, and the claims made for compensation to the service company gave the impression that the service company, as well as Ms Brennan, was making claims in the proceeding and so was an applicant. 17 Ms Brennan told me that her intention, when filing the initiating application, was to be the sole applicant. She alone had signed the application form in which she had named herself as the applicant. I have already explained how the service company s name happened to be on the VCAT Reference No. C5955/2012 Page 6 of 13

7 face of the application form. She now believed, however, that the service company subsequently approved of her making the application and of her now purporting to make it on its behalf as well as on her own behalf. 18 I accept Mr Simon s submission that the service company is not properly an applicant in the proceeding, regardless of what the Tribunal s register shows. 19 There are only two ways in which a person can properly be an applicant in a Tribunal proceeding. One way is to be named as such in the application form 1 and either sign the form or authorise another person to sign it on behalf of the named person. That has not happened here. The service company was not named as an applicant, Ms Brennan did not purport to sign the application on its behalf, and the service company has never, by resolution passed at a meeting of its members or otherwise, authorised her formally to commence the proceeding on its behalf. The other way is to be joined as a co-applicant by a Tribunal s order, made in exercise of the Tribunal s power to join a person as a party. 2 A person, however, does not become a party to a proceeding, let alone become a co-applicant, merely because a document issues from the Tribunal registry describing that person as a party. 20 Sometimes it may be implied from a Tribunal order that the power to join a named person as a party has been exercised. In the present proceeding, the Deputy President s order of 25 September 2012, authorising the amendment of the application, named the service company as a second applicant. So did subsequent Tribunal orders. Had it been clear that the service company had consented to be joined as a co-applicant, it might have been possible to imply a joinder. But it appears that the service company had not formally so consented. The Tribunal orders have simply perpetuated a mistake that derived from the use of an owners corporation dispute application form. In the order that I make when determining the manager s summary dismissal application, I shall endeavour to correct that mistake. Summary Dismissal The Principles 21 The principles governing the disposition of an application under s 75(1) of the VCAT Act for summary dismissal or striking out are well established. It is a very serious matter to dismiss or strike out a proceeding summarily, and the power to do so under s 75(1) should be exercised only where it is obvious that the case cannot possible succeed or where it is obvious that the proceeding is an abuse of process for other reasons. Otherwise, an applicant is entitled to have the case fully heard and adjudicated upon at a final hearing. 3 Moreover, the application for summary dismissal or striking VCAT Act s 59(1)(a)(ii). VCAT Act s 59(1)(a)(iii), s 60. Forrester v AIMS Corporation (2004) 22 VAR 97. VCAT Reference No. C5955/2012 Page 7 of 13

8 out should be dealt with on the footing that the Tribunal should assume that all the facts alleged in the claim are able to be proved Instances in which the power could and should be exercised are where it is clear that the Tribunal has no jurisdiction to hear and determine the dispute and to make the orders that the applicant seeks, and where it is obvious that the applicant has no standing to invoke the Tribunal s jurisdiction and to seek the orders. 23 The manager s submission is that the present case reflects both those instances. Standing 24 Mr Simon submitted, correctly, that some of the claims made in the Amended Claim and in the initiating application, for that matter were claims that, as a matter of law, could be made against the manager only by the service company, and not by Ms Brennan in her own right or purportedly on behalf of the service company. 25 In particular, the claims that fall into that category are those for orders that the manager pay compensation for inadequate service and repay $ wrongly withdrawn as management fees, and for a declaration that the manager s actions were deleterious to the functioning of 80 Queens Road. The claims for those orders and for that declaration depend upon allegations that the manager breached its contract with the service company and had no right to withdraw their sum of $ from the service company s account. The rights being asserted are those of the service company. It may bring a claim in the Tribunal to assert those rights. Ms Brennan cannot. She has no standing to do so. 5 To the extent that Ms Brennan has made claims that at law may only be made (in the Tribunal) by the service company itself, they are untenable and cannot possibly succeed. They ought to be dismissed or struck out. 26 Elsewhere, Ms Brennan may be able to bring a claim on behalf of the service company, if she obtains the leave of a court to bring it in that court. 6 But it could not be brought in the Tribunal. Jurisdiction : Consumer and Trader Dispute 27 The Australian Consumer Law and Fair Trading Act 2012 ( ACLFT Act ), Chapter 7, confers upon VCAT jurisdiction to hear and determine a consumer and trader dispute, defined in s 182(1) as follows : 182 What is a consumer and trader dispute? (1) In this Chapter a consumer and trader dispute is a dispute or claim arising between a purchaser or possible purchaser of goods or services and a supplier or possible Klona v Cummins Engine Co Pty Ltd [2002] VCAT 733. Foss v Harbottle (1847) 67 ER 189. Corporations Act 2001 (Commonwealth) Part 2F.1A. VCAT Reference No. C5955/2012 Page 8 of 13

9 supplier of goods or services in relation to a supply or possible supply of goods or services. 28 Under the contract of appointment, the manager was supplying services to the service company, and the service company was the purchaser of those services. A dispute between the service company and the manager over the way in which those services were supplied, or not supplied, would be a consumer and trader dispute as defined, and VCAT would have jurisdiction to hear and determine it. 29 This proceeding, however, raises disputes or claims between Ms Brennan and the manager. On the face of things, the manager supplied no services to her. It supplied them to the service company, which in turn supplied services to her. So, on the face of things, there is no consumer and trader dispute between the manager and her over which the Tribunal would have jurisdiction. 30 Ms Brennan drew to my attention, however, clause 11.3 of the manager s contract of appointment. Clause 5 of the contract sets out duties and obligations of the manager. Clauses 8 and 9 of the contract set out obligations of the service company, including obligations to pay the manager s fees and obligations to repair and maintain the common land vested in the service company. Ms Brennan was one of the two persons who signed the contract as a witness attesting to the affixing of the service company s common seal to the contract. Clause 11.3 provided : 11.3 DIRECTOR S GUARANTEE As the signatories on behalf of the Company represent other persons and entities (namely the Company, co-director(s) and shareholders or members), therefore the signatories engage the Manager on their behalf, and warrant that : (i) they have the authority to do so; and (ii) the other persons and/or entities will acknowledge that in writing if requested. The signatories agree that they on behalf of the Company, other persons or entities they represent are bound by this Appointment, jointly and severally, and that each of them jointly and severally undertake personal liability to observe all of the obligations under this Appointment, and guarantee the Manager payment of all amounts due under this Appointment by the Company, other persons or entities and indemnify the Manager against all costs losses and expenses which the manager may incur pursuant to the Appointment. 31 The exact scope and effect of this clause were unclear to me during the hearing and are still unclear to me. At the very least, the clause appears to constitute a guarantee by Ms Brennan and by her co-signatory of the service company s obligations to pay the manager s fees. It also appears to be an agreement by them to indemnify the manager against claims by others. VCAT Reference No. C5955/2012 Page 9 of 13

10 Whatever else it might mean, the clause does appear to create a distinct contract between the manager of the one part and the two co-signatories of the other part, which is ancillary to the main contract between the service company and the manager. 32 A guarantor supplies services to the creditor by giving the guarantee. 7 A person who gives an indemnity to the creditor would, by the same reasoning, supply services to the creditor. Does that mean that this proceeding reflects a consumer and trader dispute between Ms Brennan, as the supplier of services, and the manager, as the purchaser of those services, in relation to the supply of those services? If so, the Tribunal would have jurisdiction to hear and determine it. 33 In my opinion, the answer is no. There is no dispute in relation to the services that Ms Brennan was supplying : the guarantee, or the indemnity, or whatever else clause 11.3 obliged her to supply. The dispute, on the contrary, is in relation to services that the manager was supplying and, in the end (according to Ms Brennan), wrongly refused to continue to supply. The purchaser of those services was the service company, not her. The manager supplied them to the service company, not to her. While she is in dispute with the manager about them, that dispute is not a consumer and trader dispute as defined. Chapter 7 of the ACLFT Act does not confer upon VCAT any jurisdiction to hear and determine it. Jurisdiction : Australian Consumer Law (Victoria) 34 The Tribunal has jurisdiction to hear and determine any cause of action that arises under the Australian Consumer Law (Victoria) ( the ACLV ) Section 236(1) of the ACLV provides : 236 Actions for damages (1) If (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. 36 In this proceeding, Ms Brennan is alleging that she has suffered loss or damage because of conduct of the manager that she has described, both in her affidavit and in the Amended Claim, as misleading and deceptive and as unconscionable. Thereby, she is alleging that the conduct contravened 7 8 Tucci v VCAT and Athedium (Vic) Pty Ltd [2010] VSC 425. ACLFT Act s 224. The ACLV derives from Schedule 2 to the Competition and Consumer Act 2010 (Commonwealth), applies as a law of Victoria, and is a part of the ACLFT Act: see ss 7 and 8 of that Act. VCAT Reference No. C5955/2012 Page 10 of 13

11 s 18(1) and/or s 20(1) or s 21(1) or s 22(1) of the ACLV. Those sections provide : 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 20 Unconscionable conduct within the meaning of the unwritten law (1) A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time. (2) This section does not apply to conduct that is prohibited by section 21 or Unconscionable conduct (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to another person, engage in conduct that is, in all the circumstances, unconscionable. 22 Unconscionable conduct in business transactions (1) A person must not, in trade or commerce, in connection with : (a) the supply or possible supply of goods or services to another person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from another person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. 37 One may put to one side the allegation of misleading and deceptive conduct and the possible contravention of s 18. The particulars of the manager s conduct of which she has complained focussed upon allegedly poor service while the contract of appointment was still on foot and upon the alleged wrongful termination of the contract. Those particulars cannot possibly justify a characterisation of the conduct as misleading or deceptive. There is no other factual allegation in the summary (quoted in paragraph 14 above) set out in the Amended Claim that could be so characterised. In that context the phrase misleading and deceptive is empty of meaning. On the facts alleged, Ms Brennan could not possibly establish a contravention of s The allegations that the manager s conduct was unconscionable was, however, given a factual foundation in Ms Brennan s affidavit sworn on 19 September 2012 and in the Amended Claim. There she alleged that the VCAT Reference No. C5955/2012 Page 11 of 13

12 manager deliberately and maliciously terminated its contract with the service company with a view to causing as much inconvenience and disruption to the service company s affairs as it could. In accordance with the principles applicable to the disposition of a summary dismissal application, I am obliged to assume that she will be able to prove those allegations. Once proved, they might well lead the Tribunal to conclude that the conduct was unconscionable 9 within the meaning of s 21 or s 22 of the ACLV. They would not lead to a conclusion that the conduct was unconscionable, within the meaning of the unwritten law from time to time, in contravention of s 20, because conduct is unconscionable within that meaning only if the perpetrator has take advantage of some vulnerability (such as old age, unfamiliarity with English, or physical or mental ill health) on the part of the person complaining of the conduct. 10 Nothing that Ms Brennan has filed in the proceeding so far suggests that she has had any such vulnerability. A conclusion that the conduct contravened s 21 or s 22, however, would be well and truly open. 39 A contravention of one or other of those sections does not give rise to a tenable claim under s 236(1) of the ACLV unless the claimant has suffered loss or damage because of that conduct. In the Amended Claim she made no claim that she had suffered loss or damage as a result of that conduct. The only loss or damage that she alleged in the Amended Claim was financial loss to the service company. It is true that the summary of facts in the Amended Claim includes an allegation the manager s conduct caused distress to her; the loss or damage for which a person may seek recovery under s 236(1) includes non-economic loss such as distress and inconvenience. But the orders that she has sought in the Amended Claim do not include payment of compensation for distress or inconvenience. It is also true that the orders sought in the Amended Claim did include payment of compensation for the worsening decline of our property and extra repair work required as a direst result of [the manager s] delays, but the claim is linked to the allegation of poor service, not to the allegation of deliberate, malicious, wrongful termination or to any other alleged conduct that could possibly be characterised as unconscionable. I therefore conclude that the Amended Claim does not express any tenable cause of action under s 236(1) of the ACLV. 40 In the previous paragraph, I have confined my attention to the Amended Claim. In the initiating application, there had been an explicit claim for compensation for Ms Brennan s particular anxiety and extra workload. Had that claim been repeated in the Amended Claim, there may well have been a tenable claim that I would have been obliged to assume that she would be able to prove and obliged to permit her to pursue to a final hearing. But she discarded that claim at the same time as she reduced the overall claim to below $10, so that she could avoid paying an 9 10 Hurley v McDonalds Australia Ltd [1999] FCA ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51. VCAT Reference No. C5955/2012 Page 12 of 13

13 additional filing fee. I think it would be wrong, and unfair to the manager, if I were to have regard to what she had claimed in the initiating application, but had later discarded, when deciding whether she was making a claim that could possibly succeed. It would be wrong to permit Ms Brennan to rely upon the original application, when it suited her, and then to rely instead on the Amended Claim but not the original application, when it suited her, to avoid paying a higher filing fee. Conclusion 41 For the above reasons, I have concluded that Ms Brennan cannot possibly succeed in this proceeding, constituted as it is now by the Amended Claim, and that the proceeding should be disposed of summarily under s 75(1) of the VCAT Act. 42 Because, as I have decided is the case, the service company is not and never has been an applicant in this proceeding, the decision to dispose of the proceeding summarily will not prevent the service company from commencing a new proceeding of its own against the manager, should its members properly resolve to commence one. 43 I also consider that I should leave open to Ms Brennan the possibility of making again the limited claim that she originally made, but later discarded, for compensation for distress or inconvenience caused by the manager s allegedly unconscionable conduct in terminating the contract with the service company when and how it did. For that reason, I propose to order that the proceeding be struck out, not dismissed. I do not want it to be thought, however, that I am giving Ms Brennan any encouragement to make that claim again. I am not. The difficulty that she would face in making out her allegations about the manager s motives is obvious. 44 I shall order that the proceeding is struck out summarily under s 75(1) of the VCAT Act. SENIOR MEMBER A VASSIE VCAT Reference No. C5955/2012 Page 13 of 13