The Supreme Court of Victoria has quashed VCAT’s decision in a complex construction dispute on the grounds that VCAT does not have jurisdiction to determine claims that arise from federal law.
In issue
- The Supreme Court of Victoria (Court) considered whether the Victorian Civil and Administrative Tribunal (Tribunal) has jurisdiction to hear and determine claims involving matters of federal law.
The background
Between 2009 and 2011, Shangri-La (Builder) constructed the Willansby Apartments in Brighton, Victoria (Property). Twenty-three applicants, comprising the relevant owners corporation and lot owners, commenced proceedings against the Builder and other suppliers and contractors in the Tribunal alleging construction defects at the Property (Proceeding). The Builder joined a number of insurers to the proceeding, including Certain Underwriters at Lloyd’s Subscribing to Policy Number P0003310PI2016AU0 (Underwriters), which had declined to indemnify the Builder for the claims made against it. Some claims were made under federal law, including allegations of misleading and deceptive conduct. The Tribunal made orders against the Builder and Underwriters regarding construction defects and insurance claims.
Underwriters sought leave to appeal following the Tribunal’s order on questions of law, including that the Tribunal had had no jurisdiction by reason of the federal law issues raised in the Proceeding.
The decision at appeal
The Court allowed the appeal and set aside the Tribunal’s decisions on the basis that once claims involving federal law were raised in the matter, the Tribunal lost jurisdiction. However, the Tribunal proceeded to hear and make determinations on these federal claims.
The Court noted that the Tribunal is a creature of statute, and that its jurisdiction derives entirely from statute. The Tribunal is not a ‘State court’ for the purposes of adjudicative authority in respect of any of the matters listed in ss75 and 76 of the Constitution (which includes any matter arising under any laws made by the Parliament). The Tribunal has no inherent jurisdiction to hear claims arising out of federal law and cannot acquire jurisdiction by conduct or even by consent of the parties or by a party's waiver of the jurisdictional point.
The Court made clear that that the Tribunal does not have jurisdiction to hear and determine a proceeding involving the exercise of judicial power in relation to a proceeding that involves any federal subject matter.
Implications for you
The decision of the Court reinforces the importance of recognising the jurisdictional limits of state tribunals and to carefully select the appropriate forum for litigation to avoid wasted time, increased cost, potentially having to transfer or revisit the litigation altogether in another forum or having the outcome set aside.