VCAT jurisdiction: not a corps(e)

Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226

The Victorian Court of Appeal has resolved two important questions relating to federal jurisdiction in Thurin v Krongold [2022] VSCA 226 (McLeish, Niall and Walker JJA).

First, is the fact that a party is a corporation incorporated under the Corporations Act 2001 (Cth) sufficient to bring a proceeding within federal jurisdiction? Answer: No. Where the only connection with a Commonwealth law is that it is the source of one party’s legal capacity to sue or be sued, and that matter is not in issue between the parties, the matter will not be one ‘arising under’ the Commonwealth law.

Second, if the Victorian Civil and Administrative Tribunal (VCAT) lacks jurisdiction to determine a matter because it is in federal jurisdiction, can it refer the matter to the Supreme Court pursuant to s 77 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act)? Answer: Yes. VCAT can refer a matter to a more appropriate forum – even where it lacks jurisdiction – as an incident of its power to determine its own jurisdiction.  


The facts: a complex building dispute

The dispute here concerned allegedly defective plumbing and irrigation works carried out on the applicants’ Toorak house. The applicants brought a claim in VCAT against the construction company, Krongold. By way of defence, Krongold pleaded that any loss and damage suffered by the applicants was apportionable amongst a number of third parties, including the company that supplied the pipes used in the plumbing works, on the basis that it had breached consumer warranties under the then Trade Practices Act 1974 (Cth) (TPA). Accordingly, VCAT made an order joining the supplier to the proceeding. The TPA claims were also the subject of proceedings issued in the Supreme Court.

Questions were raised as to VCAT’s jurisdiction to hear the claims under the TPA and, if it lacked jurisdiction, the extent of its powers to make consequential orders. Krongold contended that VCAT lacked jurisdiction to hear the matter because it was one in federal jurisdiction, but also that VCAT had no jurisdiction to refer the matter to the Supreme Court. 


The problem: fallout from Burns v Corbett

The High Court held in Burns v Corbett (2018) 265 CLR 304 that if a tribunal proceeding involves an issue within federal jurisdiction, it cannot hear and determine the matter. Such a dispute can only be resolved in a court exercising the judicial power of the Commonwealth.

Because VCAT is not a court (Meringnage v Interstate Enterprises Pty Ltd (2020) 60 VR 361), if a federal issue was raised in the course of the proceeding, VCAT would therefore be deprived of jurisdiction to resolve the dispute.


The Court of Appeal’s decision

The matter was largely resolved on a narrow point which simply involved the application of the recent High Court decision in Citta Hobart v Cawthorn (2022) 96 ALJR 476. The Court of Appeal concluded that once the apportionment claim under the TPA was raised in the VCAT proceeding, the matter was in federal jurisdiction. VCAT therefore lacked jurisdiction to determine it, and as a consequence it lacked power to make an order after that point joining a third party ([55]-[65]).

Matters “arising under” Commonwealth laws: the scope of s 76(ii) Constitution

The Court also considered whether a less direct connection with Commonwealth law is sufficient to bring a matter within federal jurisdiction and therefore deprive VCAT of the ability to hear it, in particular, whether the fact that a party was incorporated under the Corporations Act would alone suffice.

The Court considered the meaning of Latham CJ’s often-cited statement in Barrett (1945) 70 CLR 141: “a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement”. The High Court has also said since that where a Commonwealth law is “lurking in the background” (LNC Industries (1983) 151 CLR 575) or merely an “incidental consideration” (Moorgate Tobacco (1980) 145 CLR 457), then the matter will not be one “arising under” that law.

This was not a case where the status of a party turned on a federal law and that status was disputed, for such a case would mean the ‘very subject’ of the dispute was about Commonwealth law. The only connection with a Commonwealth law was that a party to the dispute was a corporation incorporated under the Corporations Act. The Court of Appeal found – contrary to the obiter observations of two Federal Court judges – that this was insufficient to characterise the matter as one that arises under the Corporations Act ([113]). The conclusion at [115] is a helpful summary of when a matter arises under a Commonwealth law.

Construction of s 77 VCAT Act

Having determined that VCAT lacked jurisdiction because the federal matter (the TPA defence) was raised, the Court turned to examine whether s 77 of the VCAT Act nevertheless empowered VCAT to refer a proceeding to the Supreme Court.

The starting point was that VCAT (just like a court) had a duty to identify whether or not it had jurisdiction and, in so doing, it was not exercising federal judicial power (Gaynor (2020) 102 NSWLR 123; Searle v McGregor [2022] NSWCA 213). The issue then was not about power but rather about the construction of s 77.

The Court gave s 77 its full meaning, finding that it permitted transfer of a proceeding by VCAT where that would efficiently resolve the matter in dispute, even where VCAT lacked jurisdiction because a federal claim had been raised: [137]-[145]. That conclusion was not altered by the introduction of Part 3A of the VCAT Act in 2021, dealing with federal subject matter, as those provisions were simply an alternative mechanism for referral to the Supreme Court: [163].

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