Constitutions become the ultimate tyranny

Constitutions become the ultimate tyranny

This article gives clarity for circumstances in which a dispute has arisen between parties of two differing states where VCAT holds original jurisdiction.

This article is by Leila Idris (Special Counsel), Chris Oster (Associate) and Alexandra Pantelis (Law Clerk) in the Melbourne office.

The recent cases of Burns v Corbett[1] & Meringnage v Interstate Enterprises Pty Ltd[2] highlight the significance of:

• Identifying if parties to a dispute reside in differing territorial states.
• Ensuring that proceedings are initiated in a Court/Tribunal that has the requisite jurisdiction to hear a dispute.

Burns v Corbett

Recently, the issue of jurisdictional limits of state tribunals was considered in the 2018 High Court case of Burns v Corbett[3].

This case concerned a proceeding that had been brought at the Civil and Administrative Tribunal of New South Wales (“NCAT”) where the parties were residents of different states.

The High Court ultimately ruled that NCAT did not have the jurisdiction to hear a dispute that concerned residents of different states. In summary, the basis of this decision was that NCAT was exercising judicial powers, but it was not entitled to do so as it was not a Court of a state.

Relevantly, the High Court held that Chapter III of the Constitution contains an implied limit on State Parliaments.  Specifcially, those parliaments have no ability to confer judicial power with respect to matters identified in sections 75 and 76 of the Constitution.

The Court noted that:

“The first issue in these appeals is whether the Commonwealth Constitution precludes the Parliament of a State from conferring jurisdiction in respect of a matter between residents of different States within s 75(iv) of the Constitution on a tribunal which is not one of the “courts of the States” referred to in s 77 (“the Implication Issue”). If that issue were to be resolved in the negative, the further issue would arise as to whether a State law which purports to confer jurisdiction on such a tribunal in respect of such a matter is rendered inoperative by virtue of s 109 of the Constitution on the basis that it is inconsistent with s 39 of the Judiciary Act 1903 (Cth) (“the Judiciary Act”) (“the Inconsistency Issue”)”[4]

“The Implication Issue should be resolved in the affirmative. Considerations of constitutional text, structure and purpose compel the conclusion that a State law that purports to confer jurisdiction with respect to any of the matters listed in ss 75 and 76 of the Constitution on a tribunal that is not one of the courts of the States is inconsistent with Ch III of the Constitution, and is, therefore, invalid.”[5]

It was further stated in Burns v Corbett that:

“Section 39 of the Judiciary Act excludes the jurisdiction of the State courts where the High Court has original jurisdiction or where original jurisdiction can be conferred on it, and then invests the State courts with that jurisdiction subject to certain conditions and restrictions.

The effect of these provisions of the Judiciary Act is that the exercise by a State court of adjudicative authority in respect of any of the matters listed in ss 75 and 76 of the Constitution, including matters between residents of different states, in an exercise of federal jurisdiction.”[6] 

Based on the authority of Burns v Corbett, a dispute between residents of different states requiring the exercise of judicial power in respect of federal jurisdiction may only be determined by a court of a state.

Victorian Position

The ruling of Burns v Corbett was subsequently considered in the Victorian case of Meringnage v Interstate Enterprises Pty Ltd[7].

In this case, the Victorian Court of Appeal considered if the Victorian Civil and Administrative Tribunal (“VCAT”) was a Court of a State or not.

Ultimately, the Court ruled that:

“In Burns v Corbett the High Court held that there is a negative implication from Ch III of the Commonwealth Constitution that federal jurisdiction can only be exercised by an institution of a State that is a ‘court of a State’. The issue has now arisen whether the Victorian Civil and Administrative Tribunal (‘VCAT’) is a court of a State and, … In our view, VCAT is not a court of a State.”[8]

The Court of Appeal further noted that:

“It was common ground between the parties on the referral that if the proceeding brought in VCAT is a matter within federal jurisdiction it can only be heard and determined by VCAT if VCAT is a ‘court of a State’. Burns v Corbett is authority for the proposition that a State Parliament cannot confer State judicial power on a body that is not a ‘court of a State’ within the meaning of s 77(iii) of the Constitution in respect of any proceeding which comes within the matters listed in ss 75 and 76 of the Constitution.”[9]

Given the above position taken by the Court of Appeal, VCAT must be considered not to have been vested with federal jurisdiction to determine a proceeding between residents of different states requiring the exercise of judicial power.

So how has this dilemma been resolved?

In response to the recent case law, the Victorian Parliament passed the Victorian Civil and Administrative Tribunal and Other Acts Amendment (Federal Jurisdiction and Other Matters) Act 2021.

This Act has now given the Magistrates’ Court of Victoria, under section 57B, jurisdiction to deal with matter which:

• would ordinarily be the VCATs original jurisdiction; and
• concerns federal subject matter, including disputes between two parties of two differing states.

This has now provided clarity for circumstances in which a dispute has arisen between parties of two differing states in which VCAT holds jurisdiction.

Lesson

A party to a dispute, prior to the commencement of legal proceedings, should take great care in identifying if the other parties to the dispute reside interstate.  Should they do so, proceedings that ordinarily would fall under the jurisdiction of VCAT, can be brought in the Magistrates’ Court of Victoria pursuant to the Victorian Civil and Administrative Tribunal and Other Act Amendment Act 2021.

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[1] (2018) 92 ALJR 423.

[2] [2020] VSCA 30.

[3] (2018) 92 ALJR 423.

[4] (2018) 92 ALJR 423.

[5] (2018) 92 ALJR 423.

[6] (2018) 92 ALJR 423.

[7] [2020] VSCA 30.

[8] [2020] VSCA 30.

[9] [2020] VSCA 30.