Plaintiff Appeals Tribunal's Default Judgment

Heng Yang Developments Pty Ltd v Red Earth Developments (Aust) Pty Ltd [2022] VSC 231 (12 May 2022)

The plaintiff filed an appeal from a decision of the Victorian Civil and Administrative Tribunal (‘Tribunal’).  The Tribunal refused leave to apply to set aside default judgment.  The Court, in adjudicating this dispute, relied upon the Victorian Civil and Administrative Tribunal Act 1998 (Vic).

Facts:

Heng Yang Developments Pty Ltd (‘Heng Yang’), the applicant, engaged Red Earth Developments (Aust) Pty Ltd (‘Red Earth’), the respondent, to build two dwellings on a block in Eaglemont.  Disputes arose between them.  Red Earth commenced a proceeding in the Victorian Civil and Administrative Tribunal (‘the Tribunal’) and, when Heng Yang failed to file points of defence in time, obtained a default determination against Heng Yang (‘the default judgment’).  Heng Yang unsuccessfully applied to have the default judgment set aside.

It wanted to apply for a second time to have the default judgment set aside. Under the Victorian Civil and Administrative Tribunal Rules 2018 (‘the Rules’), Heng Yang needed the leave of the Tribunal to bring a second application.  On 8 January 2021, the Tribunal refused to grant it that leave.  Heng Yang has now applied to this Court under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (‘the Act’) for leave to appeal against the decision of the Tribunal to deny it leave to bring a second application to set aside the default judgment.  Between 26 July 2018 and 21 September 2018, Heng Yang and Red Earth engaged in a conciliation facilitated by the Domestic Building Dispute Resolution Victoria service.  The conciliation did not lead to a resolution of the dispute between them.

On 1 March 2019, Red Earth’s solicitors wrote to Heng Yang’s solicitors, advised that Red Earth had retained some building consultants, and sought access to the Eaglemont properties so that they could ‘resolve this matter’.  On 7 March 2019, Heng Yang’s solicitors replied saying that their client was ‘confused’ as to the purpose of the proposed inspection, and stating that their client was ‘no longer capable of producing access to the abovementioned property (or part thereof).’  The same day, Red Earth’s solicitors replied confirming that the inspection was to assist with the resolution of the issues that had been the subject of the conciliation.  On 12 March 2019, Heng Yang’s solicitors replied saying that their client did not have ‘any rights of access in respect of the abovementioned property (or part thereof).’

On 8 March 2019, Mr Ou applied to the Australian Securities and Investments Commission (‘ASIC’) to have Heng Yang voluntarily deregistered.  In making that application, Mr Ou declared that Heng Yang had assets of less than $1,000, no outstanding liabilities, and was not a party to any legal proceedings.  Heng Yang has since filed a counterclaim in which it asserts that it is owed money by Red Earth of some $403,479, which is considerably more than $1,000. Mr Ou’s willingness to sign the declaration he did in those circumstances raises a question as to his reliability.

On 9 May 2019, Red Earth commenced a proceeding in the Tribunal against Heng Yang by filing a form headed ‘Application to the Building and Property List’ (‘the Application’).  The Application was filed with a company search and points of claim.  The Application itself indicated that Red Earth was seeking a monetary amount of over $1.3 million.  The points of claim indicate that the claim was for $194,970 owing under a building contract, $139,696 for expenses incurred plus a profit margin that had not been invoiced, and $995,839 for ‘restitution on a quantum meruit’.  

The Tribunal ordered Heng Yang to file points of defence by 15 July 2019, failing which an order would be made determining the proceeding in favour of Red Earth with the quantum of damages to be assessed.  Heng Yang did not file any points of defence.  On 13 September 2019, the Tribunal, in chambers, ordered that the proceeding be ‘determined’ in favour of Red Earth with the quantum of damages to be assessed.  

Issues

Whether or not the Tribunal erred by not considering new evidence.

Applicable law:

Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 120(4A)(a) - provides that the Tribunal may hear and determine the application if it is satisfied that—

(i)     the applicant had a reasonable excuse for not attending or being represented at the hearing; and

(ii)     it is appropriate to hear and determine the application having regard to the matters specified in subsection.

Avonwood Homes v Milodanovic [2005] VCAT 1297 - noted that the Tribunal ought to adopt a liberal approach where, for example, ‘the failure to attend is due to oversight or accident or the reliance upon one’s solicitors’, but not where the failure arises from a party ‘hiding themselves’ from the other party and the Tribunal.  

D A Christie Pty Ltd v Baker [1996] VicRp 89; [1996] 2 VR 582 - provides that the issues which may be considered in determining whether an application is an abuse of process are not closed.

Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 - relied upon in holding that Heng Yang, but for r 4.24, would have been able to bring a second application unless the second application would amount to an abuse of process. 

Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 - provides that by reason of r 4.24, the question of whether or not a second application is an abuse of process is decided on the application for leave, rather than on any application by a respondent to have it struck out.

PNJ v The Queen [2009] HCA 6; (2009) 252 ALR 612 - provides that the question for the senior member became whether allowing a second application by Heng Yang would bring the administration of justice into disrepute or would be unjustifiably oppressive to Red Earth. 

Walton v Gardiner (1993) 177 CLR 378, 393 - provides that in order to determine whether or not the second application would be an abuse of process in this way, the senior member could have regard to the nature of the additional material and whether it was of sufficient significance to justify the application being heard, in the sense that the proposed second application was not ‘foredoomed to fail’.

Red Earth Developments (Aust) Pty Ltd v Heng Yang Developments Pty Ltd (Building and Property) [2021] VCAT 15 - where the senior member had dismissed the first application on the basis that Heng Yang did not have a reasonable excuse for not attending the hearing. 

Analysis:

The senior member of the Tribunal did not dismiss the application for leave on the basis that although the new evidence was significant, there was no proper reason for which it was not called on the first application.  The conclusion that the evidence by Mr Chiang ‘added nothing of any substance’ to the material before the Tribunal on an application under s 120 of the Act was not open to the Tribunal. The senior member has approached the matter as if corroborative evidence was not new evidence in the relevant sense, because it dealt with the same issues and supported the same arguments.  

Conclusion: 

The Court concluded that the senior member either misdirected himself on the test to be applied, or made a material finding that was not open.  These are errors of law.  The matter should be remitted to the Tribunal for a redetermination of the application for leave to bring a second application under s 120 of the Act.  Heng Yang is given leave to appeal and the appeal is allowed.