Appellant v Respondents

(a) Owners Corporation PS623721 & Ors v Shangri-La Construction Pty Ltd & Ors (Building and Property) (Final Orders Defects) ('the defects reasons');[1] and

(b) Owners Corporation PS623721 & Ors v Shangri-La Construction Pty Ltd & Ors (Building and Property) (Insurance) ('the insurance reasons').[2]

3 The Tribunal previously published its initial reasons concerning the building defects claims in Owners Corporation PS623721 v Shangri-La Construction Pty Ltd (Building and Property) ('the initial reasons').[3]

4 The VCAT proceeding was brought by the 10th - 32nd respondents, who are the owners corporation and owners (collectively, 'the owners') of a building in Willansby Avenue, Brighton, known as the Willansby Apartments. The Willansby Apartments were designed and constructed between 2007 and 2011. The following building permits were issued for their construction:

(a) on 28 October 2009, a stage 1 building permit;

(b) on 11 February 2010, an amended building permit;

(c) on 12 March 2010, a stage 2 building permit; and

(d) on 8 February 2011, an amended building permit for all stage 2 works, including the fire services,

5 Construction commenced on 28 October 2009 and was completed on 24 March 2011, when an occupancy permit was issued.

6 The owners made claims alleging construction defects in the VCAT proceeding. They advanced claims against:

(a) Shangri-La Construction Pty Ltd ('Shangri-La') - the builder;

(b) Nicholson Wright Pty Ltd (now CODEHQ Pty Ltd) ('Nicholson Wright') and Jim Tsaganas - the building surveyors;

(c) Simco Consulting Pty Ltd ('Simco Consulting') - the fire engineers - and Peter Simenko;

(d) The Silver Arc Pty Ltd ('The Silver Arc') - the draughtsman;

(e) Total Seal Waterproofing (Vic) Pty Ltd (in liquidation) - the waterproofing contractor;

(f) Hurricane Metal Roofing Pty Ltd (now known as ACN 145 482 622) - the roofing contractor; and

(g) Mohammad Pacha and Hamzaie Hafizullah who trade (or traded) as K & P Rendering Texture Finishing - the renderers.

7 Shangri-La initially joined three parties to the proceeding:

(a) Haiying Jiang, who trades (or traded) as GPS Plaster - the plasterer;

(b) CMM Group Pty Ltd - the subcontractor; and

(c) Insurance Australia Limited (ACN: 000 016 722) trading as WFI - the insurer.

8 On 8 April 2021, Shangri-La obtained orders joining Arch Underwriting at Lloyd's Australia Pty Ltd ('Arch') to the proceeding as the fourth joined party. On 3 November 2021, Shangri-La obtained orders joining the appellants as the fifth joined party. The appellants insured Shangri-La under a Professional Indemnity Contract of Insurance - Design & Construction Civil Liability, bearing policy number P0003310PI2016AU0, from 6 June 2016 to 6 June 2017 ('the contract of insurance'). Arch arranged the contract of insurance, acting on the appellants' behalf. The underwriters declined to indemnify Shangri-La for the claims made against it in the proceeding, and Shangri-La sought orders, among others, that the appellants indemnify it for the claims made against it in the proceeding under the contract of insurance.

9 The hearing commenced on 7 June 2021 and, after several adjournments, concluded on 31 March 2022.

10 Following the hearing, three decisions of possible relevance to the claims in the proceeding were published. They were:

(a) the decision of the High Court in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 ('Allianz');[4]

(b) the decision of the Victorian Court of Appeal in Thurin v Krongold Constructions (Aust) Pty Ltd & Ors ('Thurin');[5] and

(c) the decision of Delany J (sitting as an Acting Member of the Tribunal in Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) ('Vaughan')).[6]

11 After the High Court handed down its decision in Allianz, the appellants sought leave to file further submissions. The Tribunal gave directions for written submissions, and scheduled a hearing for 15 March 2023. At the hearing on 15 March 2023, Shangri-La contended that the Tribunal could not make final orders regarding damages. Counsel for The Silver Arc submitted that the Tribunal had no jurisdiction because of the existence of federal subject matter, referring to Thurin. The proceeding was listed for a further directions hearing on 6 April 2023. However, Shangri-La went into liquidation, and the directions hearing scheduled for 6 April 2023 did not occur.

12 On 13 April 2023, Arch and the appellants filed submissions concerning the Tribunal's jurisdiction to make orders. On 3 May 2023, the Tribunal made the orders set out in the defects reasons and the insurance reasons without further hearing from the parties on the question of jurisdiction.

13 On 31 May 2023, the appellants filed a notice of appeal seeking leave to appeal from the whole of the orders set out in the defects reasons and the insurance reasons. They rely on the affidavit and exhibits of Katie Kyung filed 7 June 2023.

14 In their notice of appeal, the appellants raise 18 questions of law which include the question whether the Tribunal had jurisdiction to hear and determine the VCAT proceeding.

15 On 17 November 2023, Croft J made orders in the proceeding which included an order that the question of whether the Tribunal had jurisdiction to hear and determine the VCAT proceeding be heard first.

17 None of the respondents filed affidavits or made submissions in opposition to the appeal. Nor did they oppose the appeal, or the grant by the Court of the relief sought by the appellants.

18 Section 148(1) of the VCAT Act enables a party to a proceeding in the Tribunal to appeal on a question of law from an order of the Tribunal to the Supreme Court by leave of the Court. Section 148(7)(a) empowers the Court to make an order setting aside the order of the Tribunal. Section 148(7)(d) empowers the court to make any order it considers appropriate.

19 In Osland v Secretary to the Department of Justice,[7] the High Court described the function and operation of s 148 and said:

Section 148 confers 'judicial power to examine for legal error what has been done in an administrative tribunal'. Despite the description of proceedings under the section as an 'appeal', it confers original not appellate jurisdiction; the proceedings are 'in the nature of judicial review'.

The jurisdiction conferred by s 148(1) is confined to appeals on questions of law. Section 148(7) does not enlarge that jurisdiction. It confers powers on the court in aid of its exercise. ...

The Court of Appeal, in the exercise of its jurisdiction under s 148 of the VCAT Act, may make substitutive orders where only one conclusion is open on the correct application of the law to the facts found by the tribunal. Such a case arises when no other conclusion could reasonably be entertained. In that event, the Court can make the order that the tribunal should have made. The language of s 148(7) is also wide enough to allow the Court of Appeal to make substitutive orders in other circumstances. But its powers must, as with the equivalent powers of the Federal Court in relation to the AAT, be exercised having regard to the limited nature of the appeal.[8]

20 The question whether the Tribunal has jurisdiction to make the orders under appeal is a question of law for the purpose of s 148.[9] In Muto v Department of Planning and Community Development,[10] Nettle AP and Neave JA held:

The question whether the tribunal had jurisdiction to make the relevant orders is a question of law. Further, the applicant's failure to raise that issue below does not prevent Councillor Muto arguing on appeal that the Tribunal lacked jurisdiction to make the orders and that as a consequence the orders made are of no effect. As Nettle and Redlich JJA observed in Morris v Riverwild Management Pty Ltd (ACN 070 089 860), leave to appeal on a point not taken below should seldom be granted but:

[w]here it involves a point of jurisdiction, and it appears from the face of the proceedings that the court or tribunal from which the appeal is brought lacked jurisdiction, it is appropriate to grant leave so that the position may be regularised.[11]

21 In Marshall v Emergency Services Superannuation Board (No 2),[12] Cavanough J observed that where the Tribunal makes a decision beyond jurisdiction:

such a decision would otherwise be of no force or effect in law. And it would be erroneous for this Court to act by reference to factual findings, legal pronouncements or exercises of discretion on the part of a tribunal that had no jurisdiction at all, or for this Court to remit a matter to a tribunal for further hearing and determination if the tribunal would have no jurisdiction to further hear and determine it.

22 In CPA Australia Ltd v Storai,[13] the Court found that the Tribunal did not have jurisdiction to hear a claim under the Australian Consumer Law. The Court allowed the appeal, set aside the relevant orders of the Tribunal, and declared that the Tribunal did not have jurisdiction to hear the claim.

23 The Tribunal held that it had jurisdiction to hear and determine the VCAT proceeding.[14]

In Thurin, that [sic] the Court of Appeal confirmed that the Tribunal, not being a 'court of a State' for the purposes of s.77(iii) of the Constitution or within the meaning of s.39(2) of the Judiciary Act, is incapable of exercising judicial power in respect of any 'matters' in ss.75 or 76 of the Constitution.

Accordingly, if the jurisdiction of the Tribunal was still in issue, it would be necessary for the Tribunal to hear submissions from the parties as to whether any of the issues referred to by Arch and the Lloyd's Underwriters constituted matters forming part of the controversy that had be [sic] determined by exercise of the judicial power of the state of Victoria.

However, in this proceeding the question of jurisdiction has been determined long ago. The Tribunal has accepted jurisdiction in respect of all matters, heard evidence on all maters [sic] and received submissions on all matters. Findings have been made and published in respect of defects which involved determining all the claims made against the Builder, the Building Surveyors, the Fire Engineers and the Draughtsman and the other respondents. Findings have also been made regarding the liability of the first and second joined parties.

If the Tribunal has erred in assuming jurisdiction in this proceeding, that is a matter for an appeal. The Tribunal cannot now reopen the question of jurisdiction.[15]

25 Likewise, in the insurance reasons, the Tribunal held:

I have in the [initial reasons] found that as I have accepted jurisdiction and published a determination involving findings regarding the existence and the cost to rectify defects it is too late for me to re-open the issue of jurisdiction. That is a matter for an appeal court.[16]

26 The Tribunal is a creature of statute and its jurisdiction 'derives entirely from statute'.[17] It has no inherent jurisdiction and cannot acquire jurisdiction by conduct or consent of the parties or by a party's waiving or failing to take the jurisdictional point.[18] The 'first duty' of the Tribunal is to identify whether or not it has jurisdiction.[19] The Tribunal has the authority to rule on its own jurisdiction[20] and must not proceed with a matter in which it has no jurisdiction.[21]

27 In Re Boulton: ex parte Construction, Forestry, Mining & Engineering Union,[22] Kirby J said:

Every court or tribunal in this country must, where objection is taken to its jurisdiction, determine that objection as a preliminary question. If it has no lawful jurisdiction it may not assume that it has and it ought not to pretend that it has.[23]

28 Following recent decisions of the High Court[24] and the Victorian Court of Appeal,[25] it is now well established that the Tribunal does not have jurisdiction to hear and determine a proceeding involving the exercise of judicial power in relation to a federal subject matter.

Chapter III of the Constitution

29 Chapter III of the Constitution is entitled 'The Judicature'. Section 71 of the Constitution provides that the judicial power of the Commonwealth shall be vested in the High Court, in such other federal courts as the Parliament creates, and in such other courts as the Parliament invests with federal jurisdiction. To the extent that the courts of the States are invested with federal jurisdiction by the Parliament of the Commonwealth, those courts thereby become part of the federal judicature established under Ch III of the Constitution.[26]

30 Section 75 of the Constitution provides for the original jurisdiction of the High Court and states:

In all matters:

(i) arising under any treaty;

(ii) affecting consuls or other representatives of other countries;

(iii) in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party;

(iv) between States, or between residents of different States, or between a State and a resident of another State;

(v) in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth;

the High Court shall have original jurisdiction.[27]

31 Section 76 enables the Parliament to make laws conferring additional original jurisdiction on the High Court, including on any matter arising under any laws made by the Parliament. It provides:

The Parliament may make laws conferring original jurisdiction on the High Court in any matter:

(i) arising under this Constitution, or involving its interpretation;

(ii) arising under any laws made by the Parliament;

(iii) of Admiralty and maritime jurisdiction;

(iv) relating to the same subject-matter claimed under the laws of different States.[28]

32 Under s 77 of the Constitution, the Parliament is empowered to make laws with respect to matters mentioned in ss 75 and 76.[29] Section 77 provides:

With respect to any of the matters mentioned in the last two sections the Parliament may make laws:

(i) defining the jurisdiction of any federal court other than the High Court;

(ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States;

(iii) investing any court of a State with federal jurisdiction.[30]

33 As stated by their Honours Kiefel CJ, Bell and Keane JJ in Burns, the term 'jurisdiction', as it is used in the context of Ch III of the Constitution, is concerned with the exercise of adjudicative authority for the purpose of 'quelling controversies about legal rights and legal obligations through ascertainment of facts, application of law and exercise, where appropriate, of judicial discretion'.[31] That function is the characteristic function of the courts, albeit that, under the constitutions of the States, adjudicative authority may be vested in organs other than those recognised as courts within Ch III of the Constitution.[32]

34 Sections 38 and 39 of the Judiciary Act 1903 (Cth) ('Judiciary Act') were enacted pursuant to ss 77(ii) and (iii) of the Constitution.[33] As stated by the Court in Meringnage, the power of State courts to determine any of the matters falling under federal jurisdiction in the exercise of State judicial power is removed from those courts, pursuant to s 39(1) of the Judiciary Act, and under s 39(2) of the Judiciary Act State courts are invested with federal jurisdiction to determine those matters within their own limits as to locality, subject matter, or otherwise.[34] Section 39 relevantly provides:

(1) The jurisdiction of the High Court, so far as it is not exclusive of the jurisdiction of any Court of a State by virtue of section 38, shall be exclusive of the jurisdiction of the several Courts of the States, except as provided in this section.

(2) The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it [...]

35 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 (which includes any matter arising under any laws made by the Parliament), is an exercise of federal jurisdiction.[35]

36 The Tribunal is not a 'court of a State' for the purposes of s 77(iii) of the Constitution or within the meaning of s 39(2) of the Judiciary Act.[36] Moreover, the State Parliament is incapable of conferring on a body other than a 'court of a State' judicial power in respect of any 'matters' in ss 75 or 76 of the Constitution.[37] As the High Court explained in Burns v Corbett:

Chapter III of the Constitution provides for the authoritative adjudication of matters listed in ss 75 and 76 by federal courts and by State courts co-opted for that purpose as components of the federal Judicature. The provisions of Ch III exhaustively identify the possibilities for the authoritative adjudication of matters listed in ss 75 and 76. Adjudication by an organ of State government other than the courts of the States is not included within those possibilities and is therefore excluded from them.[38]

37 The meaning of 'matter' in the context of Ch III of the Constitution was confirmed in Palmer v Ayres:[39]

A "matter", as a justiciable controversy, is not co-extensive with a legal proceeding, but rather means the subject matter for determination in a legal proceeding - "controversies which might come before a Court of Justice" (emphasis added). It is identifiable independently of proceedings brought for its determination and encompasses all claims made within the scope of the controversy. What comprises a "single justiciable controversy" must be capable of identification, but it is not capable of exhaustive definition. "What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships".

The requirement that, for there to be a "matter", there must be an "immediate right, duty or liability to be established by the determination of the Court" reinforces that the controversy that the court is being asked to determine is genuine, and not an advisory opinion divorced from a controversy, and, further, that only a claim is necessary. A matter can exist even though a right, duty or liability has not been, and may never be, established.[40]

38 Similarly, in Re Wakim; Ex Parte McNally,[41] the High Court held:

What is a single controversy "depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships" . There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts", notwithstanding that the facts upon which the claims depend "do not wholly coincide". So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are "completely disparate", "completely separate and distinct" or "distinct and unrelated" are not part of the same matter.[42]

39 In Thurin, the Court of Appeal explained that a 'matter' is a controversy, being the subject matter of a dispute which may be litigated in a legal proceeding. It encompasses all claims made within the scope of the controversy, whether or not those claims are ultimately established.[43]

40 Importantly, in Thurin, the Court of Appeal held that the making of the apportionment and contribution claims in the proceeding before the Tribunal, invoking alleged contraventions of the Trade Practices Act 1974 (Cth) ('TPA'), meant that the proceeding involved a matter arising under any law of the Parliament.[44] The making of those claims brought the whole of the proceeding into federal jurisdiction.[45] The Court of Appeal held that this was because:

(a) where a Commonwealth law is relied on as the source of a claim or defence asserted in the course of a justiciable controversy, the controversy is one 'arising under' a law of the Commonwealth within the meaning of s 76(ii) of the Constitution.[46] For that purpose, it is enough that the claim or defence be 'genuinely in controversy and that it give rise to an issue capable of judicial determination'; that is, it is 'enough that the claim or defence be genuinely raised and not incapable on its face of legal argument';[47]

(b) the point at which a claim formed part of a controversy between persons was not determined by when the issue is formally joined between those persons in legal proceedings articulating the claim, but by when, as a matter of fact, the claim is made as between those persons. As such, it is possible for a claim to enter into a controversy, including one already in the course of litigation, by being the subject of notification or dispute between the parties;[48]

(c) the identification of a 'matter' in federal jurisdiction does not depend on the form taken by the proceedings in question.[49] The 'matter' is not co-extensive with any legal proceeding but is the subject matter for determination in a legal proceeding or 'controversies which might come before a Court of Justice'.[50] The 'matter' might, therefore take shape before the issues have been delineated in pleadings at all, for example in correspondence between the parties;[51] and

(d) since the claims form part of the matter as soon as they are raised, the question of jurisdiction arises and must be answered as at that point. Once the TPA claims were raised, the matter the subject of the proceeding came within federal jurisdiction. The Tribunal thereafter lacked jurisdiction to hear and determine it.[52]

41 Similar observations have been made in determining whether federal jurisdiction is attracted. In Moorgate Tobacco Co Ltd v Philip Morris Ltd,[53] the High Court held that:

The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. So too federal jurisdiction is attracted if the court finds it necessary to decide whether or not a right or duty based in federal law exists, even if that matter has not been pleaded by the parties. But the converse is not true. If a federal matter is raised on the pleadings federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds.[54]

42 In Tucker v The State of Victoria,[55] the Court of Appeal explained that:

In other words, if the matter involves an asserted right or duty based on a federal statute, then a federal question arises in a way that, by definition, is not incidental. That is so, even if the court need not decide whether the asserted right or duty is established. The same issue can equally be posed in the language used in LNC Industries, namely, whether the matter involves an asserted right or duty that owes its existence to a federal statute.[56]

43 Since 2012, the Australian Consumer Law has been in force under s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) and, in relation to the conduct of corporations, under s 131 of the Competition and Consumer Act 2010 (Cth). Prior to that time, consumer law was found in State legislation in the Fair Trading Act 1999) (Vic) and in Federal legislation (until 31 December 2010, in the TPA and from 1 January 2011, in the Competition and Consumer Act).[57]

44 In the VCAT proceeding, several parties raised claims invoking the provisions of the TPA, each involving federal jurisdiction. They are outlined below.

45 By their points of claim dated 15 March 2017, the owners made claims against Nicholson Wright for breaches of warranty under s 74 of the TPA. These claims were maintained by the owners in their further amended points of claim dated 21 May 2021. At the hearing on 7 June 2021, it was alleged by the owners that Nicholson Wright was engaged to provide building surveying services and that it breached the statutory warranties implied into its retainer when performing some of those services. Those services included the appraisal drawings and designs, the issue of the building permits, monitoring of construction works, inspections and the issue of the occupancy permit.

46 By their amended points of claim dated 19 September 2018, the owners relied on the statutory warranties in s 74 of the TPA in their claims against Simco and alleged that both Simco and Mr Simenko engaged in misleading and deceptive conduct in contravention of s 52 of the TPA. These claims were pleaded in the amended points of claim dated 19 September 2018 and maintained in further amended points of claim dated 21 May 2021. It was alleged by the owners that Simco was engaged to provide fire safety engineering services in relation to the Willansby Apartments, including assessing, reporting and designing fire design solutions and that Mr Simenko, as agent for Simco, carried out those services (which included the preparation of a report and certificate of compliance in October and November 2009). Again, the owners relied upon the statutory warranties implied in Simco's retainer. Alternatively, the Owners alleged that in producing the report and certificate of compliance in October and November 2009, Simco and Mr Simenko engaged in misleading and deceptive conduct in contravention of s 52 of the TPA by representing that the fire design solutions were appropriate, complete and otherwise complied with all relevant provisions of the applicable legislation, including the Building Code of Australia ('BCA').

47 By their further amended points of claim dated 21 May 2021, the owners made claims against The Silver Arc for misleading and deceptive conduct in contravention of s 52 of the TPA. These claims were first made in the further amended points of claim. Similar allegations were made by Shangri-La against The Silver Arc.

48 By their amended points of defence dated 16 April 2018, Nicholson Wright and Mr Tsaganas raised an apportionment defence on the basis of alleged misleading and deceptive conduct on the part of Simco and Mr Simenko in contravention of s 52 of the TPA. These claims were introduced by the second and third respondents' amended points of defence dated 16 April 2018 and maintained, albeit with minor modification, through each iteration up to the second and third respondents' second further amended points of defence dated 3 June 2020. Nicholson Wright and Mr Tsaganas alleged that in about October 2009, Nicholson Wright engaged Simco on behalf of 30 Willansby Street Pty Ltd to provide certain fire safety engineering services in similar terms to those alleged by the owners. It was alleged that Mr Simenko carried out those services as agent for Simco. For the purposes of their apportionment defence, Nicholson Wright and Mr Tsaganas alleged that, if the owners' claims are proven, then any loss or damage was caused by Simco's or Mr Simenko's misleading and deceptive conduct pleaded in similar terms to the owners' allegations.

49 By their points of claim against fourth and fifth joined parties dated 5 June 2018, Nicholson Wright and Mr Tsaganas raised claims for contribution against Simco on the basis of alleged misleading and deceptive conduct in contravention of s 52 of the TPA. These allegations largely mirror the allegations in their defence.

50 By its amended points of defence dated 8 August 2018, Shangri-La raised an apportionment defence to the owners' claims. That defence was made on the basis of alleged misleading and deceptive conduct on the part of Simco and Mr Simenko in contravention of s 52 of the TPA. That defence relied upon the allegations raised by Nicholson Wright and Mr Tsaganas in their defence and, later, also the matters raised by the owners in the amended points of claim dated 19 September 2018. That defence was first raised in Shangri-La's amended points of defence dated 8 August 2018 and was the subject of minor amendments in its further amended points of defence dated 14 December 2018.

51 Likewise, by its points of claim against the respondents dated 8 August 2018, Shangri-La raised a claim for contribution against Simco and Mr Simenko on the basis of alleged misleading and deceptive conduct in contravention of s 52 of the TPA relying upon the matters alleged by Nicholson Wright and Mr Tsaganas in their defence.

52 Also, by its points of claim against the respondents dated 8 August 2018, Shangri-La raised a claim for damages against the Silver Arc for misleading and deceptive conduct in contravention of s 52 of the TPA. Shangri-La alleged that, in September 2009, The Silver Arc prepared a set of construction issue architectural drawings and specifications for the Willansby Apartments. It alleged that by issuing those drawings and specifications, the Silver Arc made false and misleading representations as to their compliance with the BCA and their sufficiency for use in construction, which representations were relied upon by Shangri-La, causing it loss and damage.

53 Finally, by its points of defence to the applicants' further amended points of claim dated 27 May 2021, The Silver Arc raised an apportionment defence on the basis of alleged breaches of warranty by Simco and Mr Simenko under s 74 of the TPA and for misleading and deceptive conduct on the part of Simco and Mr Simenko in contravention of s 52 of the TPA, in both cases relying upon the allegations made by the owners in their further amended points of claim against the respondents dated 21 May 2021.

54 If the owners' claims were not apportionable, The Silver Arc raised in that same pleading a claim for contribution against Simco and Mr Simenko on the same basis.

55 The claims involving alleged contraventions of the TPA were matters which arose under a law of the Parliament requiring the exercise of judicial power. From the time that the first TPA claim was raised, the proceeding was within federal jurisdiction.

56 In Thurin, the Court of Appeal held one of the consequences of VCAT's lack of jurisdiction to hear and determine the claims made in that case was that it lacked power to order that one of the parties (Swan Hardware) be joined as a party to the proceeding.[58] In Thurin 2, the Court of Appeal explained that the first step that a tribunal should take is to confirm whether or not it has jurisdiction. It may exercise 'some powers that are incidental to that process which do not involve the exercise of federal jurisdiction'.[59] However, an order joining a party is not of that kind. The Court of Appeal held:

In our opinion, an order joining a party is not of that kind. It is not an incident of the power to determine jurisdiction but a power conferred on the premise that the body has jurisdiction. The effect of an order for joinder is to bring the party before the tribunal as part of its adjudicative function. In the context of the VCAT proceeding, it was an exercise of judicial power.[60]

57 The invalidity of the joinder order also infected the later steps taken by the Tribunal to refer the matter under s 77 of the VCAT Act. The Court of Appeal held:

Once it is recognised that the order for joinder was not validly made because it involved the invalid exercise of federal judicial power, s 77 could not validly operate on the premise that the order was valid. In other words, s 77 cannot, as a matter of legislative power, give legal effect to an invalid exercise of federal judicial power. To do so would render hollow the constitutional restriction. To treat Casper and Swan Hardware as parties to the VCAT proceeding for the purposes of the referral would not merely be to proceed on a factual premise, but would purport to give effect and attach legal consequences to an invalid act. Section 77 cannot validly produce that consequence.[61]

58 The claims involving federal subject matter were made before the Tribunal made orders joining Arch or the appellants. As a result, the Tribunal's joinder of Arch and the appellants to the proceeding under s 60 of the VCAT Act was invalid.

59 In response to the decisions in Thurin and Vaughan, the Victorian Parliament passed the Justice Legislation Amendment Act 2023 (Vic) ('JLA Act').[62] This amended Pt 3A of the VCAT Act.[63]

60 Pt 3A of the VCAT Act deals with claims in the Tribunal involving federal subject matter. Relevantly, it validates certain decisions of the Tribunal that are invalid because they were made without jurisdiction. The legislation does not apply in all cases.

61 The Statement of Compatibility explains that the intention behind the validating amendments was to ensure that past Tribunal decisions made under the previously understood scope of the Tribunal's jurisdiction are effective.[64] It notes that:

there was a widespread assumption and honest belief that VCAT had jurisdiction to determine 'indirect' federal law matters. The curative provisions are therefore considered an appropriate response given the high volume of past decisions made in good faith but which are now invalid.[65]

62 The Second Reading Speech recognised the problems that arose following the decision in Thurin, explaining that the amendments are designed to 'preserve the rights and liabilities of parties involved in previous VCAT decisions which are no longer valid due to the matters having an "indirect" connection to federal law_'_.[66] It notes further that:

[t]he Part 10 retrospective validation amendments have been included as they are considered an appropriate response in this context given the high volume of past decisions which are now invalid on the basis of the recent findings that VCAT lacks the required jurisdiction. Commentary from the legal profession regarding Krongold and Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) demonstrates that the profession views these decisions as having effectively reduced the previously-understood scope of VCAT's jurisdiction in a significant way. The Bill will provide litigants with certainty, avoid the need for litigants to spend additional time and money having their disputes re-heard at courts, and avoid the risk of the courts receiving an influx of applications to re-hear previous VCAT matters.[67]

63 The validating amendments are found in ss 57F, 57G and 57H of Pt 3A of the VCAT Act. Section 57F states:

(1) By force of this section, the rights and liabilities of all persons are deemed to be, and always to have been, the same as if -

(a) in relation to a proceeding in which an invalid Tribunal decision was made, any decision, order or declaration in the proceeding had been made by the Magistrates' Court in accordance with this Part as if this Part had been in operation at the time of the invalid Tribunal decision; and

(b) the decision, order or declaration referred to in paragraph (a) were valid orders of the Magistrates' Court in relation to such a proceeding.

(2) A right or liability conferred, imposed or affected by subsection (1) is exercisable or enforceable, and is deemed to have always been exercisable or enforceable, as if it were a right or liability conferred, imposed or affected by a valid order of the Magistrates' Court made under this Part, including any right to seek review of, or appeal against, the order, whether in accordance with section 57C(3)(j) or (4) or otherwise.

64 Section 57G is concerned with the status of things that parties have done in purported compliance with an invalid Tribunal order. Section 57G states:

(1) Any act or thing done or omitted to be done before, on or after the commencement of this Part under or in relation to a right or liability conferred, imposed or affected by section 57F -

(a) has the same effect, and gives rise to the same consequences, for the purposes of any written or other law; and

(b) is deemed to have always had the same effect, and given rise to the same consequences, for the purposes of any written or other law -

as if it were done, or omitted to be done, to give effect to, or under the authority of, or in reliance on, a valid order of the Magistrates' Court made under this Part.

65 These validating amendments apply to what is termed an 'invalid Tribunal decision'. That term is defined by s 57A as:

a decision, order or declaration, or purported decision, order or declaration, made on or before the date on which the [JLA Act] receives the Royal Assent by the Tribunal in any proceeding determined by exercising judicial power involving federal subject matter which is invalid only because of that reason.

66 The validating amendments apply only to those decisions made before the JLA Act received the Royal Assent on 10 October 2023.

67 One exception to the validating amendments is found in s 57I(3), which provides:

Sections 57F, 57G and 57H do not apply if an appeal or a review which includes the ground that the Tribunal has no jurisdiction to exercise judicial power to resolve controversies involving federal subject matter has been commenced but not determined after 10 August 2021 and before or on the date on which the [JLA Act] receives the Royal Assent.

68 The Explanatory Memorandum to the legislation that introduced Pt 3A noted that this was to ensure that parties who have commenced such an appeal 'may continue with their proceeding unaffected by these sections'.[68]

69 This exception applies in the present case. Pt 3A excludes the validating amendments from applying to matters involving a current appeal or review that includes a jurisdictional ground where that appeal or review was commenced but not determined after 10 August 2021 and before or on 10 October 2023. This proceeding was commenced on 31 May 2023 and was undetermined as at 10 October 2023. It is within the exception in s 57I(3).

70 The appellants have established that the Tribunal had no jurisdiction when it published the defects reasons and the insurance reasons and made consequential orders.

(a) granting leave to appeal;

(b) allowing the appeal;

(c) setting aside the defects reasons, the insurance reasons and the Tribunal's orders published in those reasons; and

(d) declaring that the Tribunal did not have jurisdiction to hear the VCAT proceeding.

CERTAIN UNDERWRITERS AT LLOYD'S SUBSCRIBING TO POLICY NUMBER P0003310PI2016AU0

SHANGRI-LA CONSTRUCTION PTY LTD (in liquidation) (ACN 130 534 244)

MOHAMMAD PACHA trading as K & P RENDERING TEXTURE FINISHING

HAMZAIE HAFIZULLAH trading as K & P RENDERING TEXTURE FINISHING

R & S KNOWLES SUPER ADMIN PTY LTD (ACN 124 224 086)

ARCH UNDERWRITING AT LLOYD'S (AUSTRALIA) PTY LTD (ACN 139 250 605)

[1] [2023] VCAT 501.

[2] [2023] VCAT 502.

[3] [2022] VCAT 1499.

[4] [2022] HCA 38; (2022) 406 ALR 632.

[5] [2022] VSCA 226; (2022) 407 ALR 187.

[6] [2023] VCAT 233.

[7] [2010] HCA 24; (2010) 241 CLR 320.

[8] Ibid 331-332 [18]-[20] (French CJ, Gummow and Bell JJ) (footnotes omitted).

[9] Johnson v Director of Consumer Affairs Victoria [2011] VSC 595 [42]; Muto v Department of Planning and Community Development [2013] VSCA 85; (2013) 38 VR 293, 298 [21]. See also Republic of Turkey v Mackie Pty Ltd (2021) 64 VR 467.

[10] [2013] VSCA 85; (2013) 38 VR 293.

[11] Ibid 298 [21], quoting Morris v Riverwild Management Pty Ltd [2011] VSCA 283; (2011) 38 VR 103, 109 [21] (citations omitted).

[12] [2022] VSC 122 [6] ('Marshall').

[13] [2015] VSC 442; (2015) 299 FLR 288.

[14] Insurance reasons, [40]; defects reasons [35]-[38].

[17] Director of Housing v Sudi [2011] VSCA 266; (2011) 33 VR 559, 564 [19] (Warren CJ).

[18] Krongold Constructions (Aust) Pty Ltd v Thurin & Ors (2023) 414 ALR 1, 23 [99] ('Thurin 2'); Marshall [6]; Champion v Rohrt [2016] VSCA 215 [46] citing PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; (2012) 247 CLR 240, 247 [16] (French CJ, Gummow, Hayne and Crennan JJ); Niebieski Zamek Pty Ltd v Southern Rural Water (No 3) [2003] VCAT 223 [41].

[19] Thurin [128]; Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Pty Co Ltd [1911] HCA 31; (1911) 12 CLR 398, 415 (Griffith CJ); Gaynor v Attorney-General (NSW) [2020] NSWCA 48; (2020) 102 NSWLR 123, 155 [130] (Leeming JA).

[20] Re Boulton: ex parte Construction, Forestry, Mining & Engineering Union (1998) 73 ALJR 129, 133 [21] (Kirby J); Thurin [128].

[21] Jacobsen v Whitehorse City Council [2000] VCAT 400 [17]; Bruce Henderson Architects Pty Ltd v Entertainment Development Group Pty Ltd [2004] VCAT 1356 [18].

[22] (1998) 73 ALJR 129.

[24] Burns v Corbett (2018) 265 CLR 304 ('Burns'); Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16; (2022) 276 CLR 216 ('Citta').

[26] Burns 329 [15] (Kiefel CJ, Bell and Keane JJ).

[27] Australian Constitution s 75.

[28] Australian Constitution s 76.

[29] See Thurin [42]; Burns [18].

[30] Australian Constitution s 77.

[31] Burns 330 [21], citing Rizeq v Western Australia [2017] HCA 23; (2017) 262 CLR 1, 23 [52]. See also Fencott v Muller (1983) 152 CLR 570, 608 (Mason, Murphy, Brennan and Deane JJ) ('Fencott'); South Australia v Totani [2010] HCA 39; (2010) 242 CLR 1, 63 [131] (Gummow J).

[33] Burns 331 [24]; Thurin 197 [43].

[34] Meringnage v Interstate Enterprises Pty Ltd [2020] VSCA 30; (2020) 60 VR 361, 372 [25] (Tate, Niall and Emerton JJA) ('Meringnage'); Burns 331 [25]; Thurin [43].

[36] Meringnage 372 [26], 387-388 [80] and 393 [98]; Qantas Airways v Lustig [2015] FCA 253; (2015) 228 FCR 148, 164-165 [68] (Perry J); Thurin 197 [44].

[37] Burns 325-326 [1]-[2]; Meringnage 372 [26]; Thurin 197 [44].

[39] [2017] HCA 5; (2017) 259 CLR 478 ('Palmer').

[40] Ibid 490-491 [26]-[27] (citations omitted).

[42] Ibid 585-586 [140] (citations omitted).

[46] Ibid [55] citing Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16; (2022) 276 CLR 216 [31] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ) ('Citta').

[47] Thurin [55] citing Citta [35].

[49] Thurin [58] citing Fencott 608; Palmer [26].

[50] Thurin [58] citing Palmer [26] (emphasis in original).

[53] [1980] HCA 32; (1980) 145 CLR 457.

[55] [2021] VSCA 120.

[60] Ibid 21 [90] (footnotes omitted).

[61] Ibid 21-22 [91] (footnotes omitted).

[62] The JLAA received the Royal Assent on 10 October 2023.

[63] See Explanatory Memorandum, Justice Legislation Amendment Bill 2023 (Vic) 1-2, 38-39.

[64] Victoria, Parliamentary Debates, Legislative Assembly, 16 August 2023, 2912.

[68] Explanatory Memorandum, Victorian Civil and Administrative Tribunal and Other Acts Amendment (Federal Jurisdiction and Other Matters) Bill 2021 (Vic), 10-11.