Owners Corporation 1 Plan No. PS707553K, Andrew Michael Markovics, Robert Charles Barker, Karen Adrienne Barker, Tamara Briggs, Corvette 64 Pty Ltd (ACN 156 004 241), Suzanne Godfrey, Bindy Aviva Cohen, Leon Britbart, Leonard Harold Swidler, Jack Gutman, Tracy Majman

Owners Corporation 1 Plan No. PS707553K v Shangri-La Construction Pty Ltd (No 3) (Building and Property) [2022] VCAT 1385

1. It is determined that no matter has arisen in proceeding BP 125/2019 and proceeding BP 1352/2022 involving Commonwealth law that would prevent the Tribunal from having jurisdiction in relation to the proceedings.
2. There shall be a Directions Hearing via Zoom at 9.00am on Thursday 8 December 2022 to further consider and, if possible, determine the following matters:
   1. whether the Tribunal should, pursuant to section 77 of the Victorian Civil and Administrative Tribunal Act 1998, refer the proceedings to a more appropriate forum;
   2. Shangri-La's application dated 1 December 2022 and all outstanding matters arising from the decision of the Tribunal on 28 November 2022;
   3. the future determination of the outstanding applications dated 19 October 2022, 24 October 2022 and 26 October 2022.
3. Liberty to apply by email to the chambers of the Vice President (bcl@countycourt.vic.gov.au) upon giving reasonable notice to all other parties.
4. Costs reserved.

1. The Tribunal must decide as a preliminary issue whether matters involving Commonwealth law have arisen in proceeding BP125/2019 ("the proceeding") and proceeding BP1352/2022 ("the Kromidellis proceeding") that would prevent the Tribunal having jurisdiction to deal with these proceedings. The matters of Commonwealth law arise from claims based on the Australian Consumer Law and an insurance claim that may involve issues under the Insurance Contracts Act 1984 (Cth).

1. On 13 October 2022, following my dismissal of Shangri-La's application dated 6 October 2022 that the Kromidellis proceeding be heard together with the proceeding, I made orders requiring the parties to file and serve further written submissions relating to the costs of the application and an earlier application dated 5 August 2022.
2. In response to these orders, Shangri-La, in written submissions dated 21 October 2022, argued that a jurisdictional issue had arisen in the proceeding. The issue was whether Shangri-La's defence and its contribution claims relating to the second and third joined parties ("the surveying parties") and the fourth and fifth joined parties ("the fire services parties") of having "engaged in misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law" raised matters of federal law for which VCAT lacked the capacity to deal with.
3. Shangri-La relied upon the recent decision of the Victorian Court of Appeal in Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226 ("Thurin") delivered on 20 October 2022.
4. A directions hearing was fixed for 4 November 2022 to consider the jurisdictional issue and other outstanding interlocutory matters. In advance of the hearing, Shangri-La filed further written submissions dated 3 November 2022. In those submissions, Shangri-La raised a further jurisdictional issue. On 8 December 2021, Shangri-La had applied to join Arch Underwriters of Lloyd's (Australia) Pty Ltd ("Arch") as a party. Shangri-La claimed that Arch had refused to indemnify Shangri-La pursuant to a professional indemnity contract of insurance that, it alleged, was governed by federal legislation, namely the Insurance Contracts Act 1984 (Cth).
5. After submissions from the parties, and at their request, the directions hearing was adjourned to 24 November 2022 and a timetable fixed for the filing and service of further written submissions. Shangri-La was directed to provide copies of all documents relating to Shangri-La's application in 2021 to join Arch as a party to the proceeding.
6. As a result of these orders, written submissions were filed which addressed the following matters:
   1. the factual circumstances of the proposed claim by Shangri-La against Arch, and the joinder application in 2021;
   2. whether a matter the subject of federal jurisdiction had been raised in the proceeding resulting in VCAT lacking the capacity to deal with it;
   3. whether the Tribunal should strike out the proceeding and refer the matter to a more appropriate forum.

Legal principles and the decision of the Court of Appeal in Thurin

1. In Thurin, the Court of Appeal stated in paragraphs 46 - 55 and 111 that the following principles should be applied in circumstances such as the present to determine whether the Tribunal lacks jurisdiction by reason of the matters raised:
   1. the Tribunal has no power in respect of "a matter arising under a law made by the Commonwealth Parliament";
   2. "a 'matter', as a justiciable controversy ... encompasses all claims within the scope of the controversy";
   3. a matter includes "controversies which might come before a Court of Justice [although] it is identifiable independently of proceedings brought for its determination";
   4. "there must be an 'immediate right, duty or liability to be established by the determination of the Court'"
   5. "the controversy that the Court is being asked to determine [must be] genuine, and not an advisory opinion divorced from a controversy";
   6. it is "enough that the claim or defence be genuinely raised, and not incapable on its face of legal argument";
   7. "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";
   8. "a 'matter' is a controversy [which] encompasses all claims within the scope of the controversy, whether or not these claims are ultimately established"; and
   9. "where the 'very subject' of the dispute is something that owes its existence to a Commonwealth law, then the dispute will be a 'matter arising' under that law, even if the cause of action is founded in a State law or the Common Law".
2. Thurin involved a proceeding commenced at VCAT relating to a major domestic building contract entered into in 2006. The applicants alleged against the builder that "defective pipes were used in internal plumbing works". The builder pleaded in its defence that any damages the applicants might recover were apportionable amongst other parties, including Swan Hardware, the supplier of the pipes. The builder also made an alternative claim for contribution.
3. Upon a reference from the Tribunal, the Court of Appeal determined that "the making of apportionment and contribution claims against Swan Hardware in the VCAT proceeding, invoking alleged contraventions of the TPA [Trade Practices Act 1974 (Cth)], means that the VCAT proceeding involves a matter arising under [the] law of the [Commonwealth] Parliament [and] brought the VCAT proceeding into federal jurisdiction" (paragraphs 49 and 50).

Shangri-La's defence and claims under the Australian Consumer Law

1. Shangri-La is a builder. In about 2016, it constructed apartments presently occupied by the applicants ("the owners"). It is alleged by them that the construction was defective, including by the installation of flammable external cladding. Shangri-La has joined a number of further parties including the surveying parties and the fire services parties.
2. Shangri-La's current defence in the proceeding is dated 5 August 2022. In paragraph 25, it pleads, in relation to the surveying parties, that they are "liable to the [owners] for engaging in misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law". A similar allegation is made in paragraph 27 of the defence against the fire services parties. The defence also included allegations against Mr Kromidellis, who is also a building surveyor.
3. Shangri-La claims the surveying parties, the fire services parties and Mr Kromidellis are all concurrent wrongdoers. Alternatively, if apportionment were not available, Shangri-La claims contribution from these parties. When Shangri-La was refused leave to join Mr Kromidellis as a party to the proceeding, Shangri-La commenced the Kromidellis proceeding.
4. In Shangri-La's claim for contribution against the surveying parties, it is alleged that each of them "was engaged in trade and commerce:

(i) until 31 December 2010, within the meaning of the Fair Trading Act 1999 (Vic); > > (ii) since 1 January 2011, within the meaning of the Australian Consumer Law".

5. Shangri-La also claimed that the second joined party had failed to comply with "statutory warranties...implied by ss 60 and 61 of the Australian Consumer Law and/or sections 32J and 32JA of the Fair Trading Act 1999 (Vic)". Shangri-La's claims against the fourth joined party are similar, although it also relied upon statutory warranties "implied by section 74(1) and (2) of the Trade Practices Act 1974 (Cth)" and alternatively, since 1 January 2011 under the Fair Trading Act and the Australian Consumer Law.
6. Further, Shangri-La pleaded in its claim that by "the Certificate of Fire Design [the fire services parties] represented that the fire design solutions were appropriate, complete" and compliant. Shangri-La alleged that the fire services parties thereby "engaged in misleading and deceptive conduct in breach of" section 18 of the Australian Consumer Law and/or section 52 of the Trade Practices Act 1974 (Cth)".
7. In the Kromidellis proceeding, Shangri-La alleged that Mr Kromidellis is liable "for engaging in misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law" by reason of representations that:
   1. the building was suitable for occupancy, at the time he issued an Occupancy Permit;
   2. he had not conducted a final inspection prior to the issue of an Occupancy Permit.

Submissions - Whether the Australian Consumer Law (Victoria) is in issue

1. Shangri-La submits that the proceeding involves a matter arising under a Commonwealth law, and as a consequence the Tribunal has no jurisdiction to determine the proceeding.
2. The owners' counsel, Mr Philpott, submitted that as Shangri-La's defence "only makes reference to 'section 18 of the Australian Consumer Law' [a] question therefore arises as to what the Australian Consumer Law is". Mr Philpott made an analysis of the relevant legislation from which he concluded that, "where the Builder simply pleads the Australian Consumer Law, without the concluding "(Victoria)", the pleaded reference can be read as the Australian Consumer Law (Victoria)".
3. The owners submit that, "in all the circumstances:
   1. the Australian Consumer Law (Victoria) applies to the parties and facts in this proceeding; and
   2. the unparticularised reference in the Builder's pleadings to Australian Consumer Law must be construed as a reference to the Australian Consumer Law (Victoria);
   3. the Tribunal is therefore vested with the relevant jurisdiction to hear and determine this proceeding".
4. Mr Philpott's legislative analysis involves a number of steps in the process. For clarity, I have added some other matters in the analysis, including from other parties' submissions, in the summary which follows:
   1. the Commonwealth promulgated the Australian Consumer Law by enacting the Competition and Consumer Act 2010 (Cth);
   2. the scheme of the legislation is that of a "dual Commonwealth and State and Territory regime, reflective of the differing constitutional powers of the different governments";
   3. the Competition and Consumer Act 2010 (Cth) anticipates that as part of the "regime", a participating State would enact the Australian Consumer Law in precisely the same form, but as its own State law;
   4. the Australian Consumer Law and Fair Trading Act 2012 (Vic) governs the Australian Consumer Law that became a Victorian law;
   5. section 12 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) sets out the jurisdictional basis for the Australian Consumer Law (Victoria) by making it applicable to a person (including a corporation) having a connection with Victoria, including by "carrying on business", being "ordinarily resident" or being a corporation "incorporated or registered" in Victoria;
   6. section 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides that the Australian Consumer Law is a law of Victoria and "may be referred to as the Australian Consumer Law (Victoria)";
   7. section 13 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides that, a "reference in any instrument to the Australian Consumer Law is a reference to the Australian Consumer Law of any or all of the participating jurisdictions... except so far as the contrary intention appears in the instrument or the context of the reference";
   8. the definition of "instrument" in section 6(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) includes a "pleading in...a legal or other proceeding".
   9. by section 224 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), "VCAT or any court of competent jurisdiction may hear and determine a cause of action arising under any provision of the Australian Consumer Law (Victoria)."
5. The owners' submissions were supported by the State of Victoria. The fire services parties' written submissions were not supportive. Whilst submitting that Shangri-La's claims against them had few merits, the fire services parties "cannot sensibly submit" that the claims were "not genuine...and incapable on its face of legal argument". They submitted that there was no case law that counsel could find, or "anything in the legislation, State or Federal, that says, if a provision in the ACL (Vic), applies the ACL (Cth) does not".
6. The written submissions concluded that, "In the circumstances, refusing the jurisdictional challenge on the basis that the Tribunal should construe bare references to the Australian Consumer Law to be references to the Australian Consumer Law (Victoria) rather than the Australian Consumer Law (Cth) seems fraught". Nevertheless, at the subsequent directions hearing the fire services parties' counsel, Mr Mullen said that he fully supported Mr Philpott's submissions on this matter.

Submissions - Does State law relate to individuals, Federal law to corporations?

1. Division 2 of the Competition and Consumer Act 2010 (Cth) is headed "Application of the Australian Consumer Law as a law of the Commonwealth". Section 131 provides that "Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions...by corporations". This appears to provide the jurisdictional basis for the Australian Consumer Law as Commonwealth law.

1. In Thurin at paragraph 3, the Court of Appeal stated that, "Since 2012, the relevant consumer law has been the Australian Consumer Law, given effect by s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) and, in relation to the conduct of corporations, by s 131 of the Competition and Consumer Act 2010 (Cth)".
2. Shangri-La's counsel, Dr Wolff, submitted that these statutory provisions meant that, "A reference to an ACL [Australian Consumer Law] claim by an individual refers to a State version [of the legislation]; a reference [to an ACL claim] by a corporation to the federal version [of the Australian Consumer Law]".
3. In support of this submission, Dr Wolff referred to the decision of Barrett v Maracaca Pty Ltd [2020] NSWSC 440 at [18] where, in a passage, Lindsay J referred to "...misleading and deceptive within the meaning of section 18 of the Australian Consumer Law, applicable to corporations pursuant to section 131 of the Competition and Consumer Act 2010 (Cth), and to individuals pursuant to sections 28 and 32 of the Fair Trading Act 1987 NSW". These latter provisions are in the same terms as sections 8 and 12 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).
4. The fire services parties' submissions (which first referred to this authority) described the passage in the judgment as an "example" of, "The traditional shorthand comment in the caselaw that the Australian Consumer Law (Cth) generally applies to the conduct of corporations and the Australian Consumer Law (Vic) generally applies to contraventions by individuals". Dr Wolff, in later submissions, described the statement, without further citation of authority, as the "generally accepted position that the Australian Consumer Law (Cth) applies to the conduct of corporations, whereas the Australian Consumer Law (Vic) applies to individuals".
5. However, what Lindsay J was doing in the quoted passage in the judgment was framing a question for determination by the Court and was not purporting to articulate a legal principle of general application. Section 32 of the Fair Trading Act 1987 (NSW) broadens the jurisdiction of the Australian Consumer Law (NSW), just as section 12 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) does, by their specific application to corporations incorporated or registered in Victoria and to [corporate] "persons" with residential, business or other sufficient "connection" with the State. It is, however, clear that, in certain circumstances, the Australian Consumer Law (Cth) can have application to individuals.
6. In Walker v Sell [2016] FCA 1239 ("Walker"), Bromwich J at paragraphs 77 to 85 discussed the interaction of the State and Commonwealth legislation in the context of the jurisdiction of the Federal Court to deal with a proceeding in which he found that the Australian Consumer Law (Victoria) was the operative law. The learned judge outlined the history of the legislation and the way in which the Commonwealth and the Victorian Australian Consumer Laws interact. At paragraph 81, he said, "The practical effect of the dual scheme is to overcome what would otherwise be jurisdictional gaps. The true value is the practical effect of having a single national scheme cast in identical terms".

Submissions - Pleading deficiencies, references to Trade Practices Act 1974

1. Mr Kromidellis submitted that Shangri-La's proportionate liability defence was liable to be summarily dismissed or struck out as it is arguable that it is not a claim "genuinely raised and ... incapable on its face of legal argument" because the applicants' claims against Shangri-La are not "apportionable" for the purposes of Part IVAA of the Wrongs Act 1958, and Shangri-La's counsel had conceded that matter during the hearing on 16 September 2022.
2. Both the surveying parties and the fire services parties also raised in their submissions what they described as "deficiencies" in Shangri-La's pleadings and the fact that the claims against them were "poorly pleaded and liable to be struck out". Both sets of parties have applications addressing this matter that have yet to be heard and determined.
3. A matter of significance, in relation to the fire services parties, is the reference to the Trade Practices Act 1974 (Cth) in Shangri-La's contribution claim pleadings. This has particular relevance as the Act was part of the Commonwealth law that led the Court of Appeal in Thurin to reach its conclusion of lack of jurisdiction.
4. The fire services parties submitted that "the references to the TPA [Trade Practices Act] were included in the APOC [Shangri-La's Amended Points of Claim against the fourth and fifth joined parties dated 5 August 2022] as a result of the use of an outdated precedent, and as such, [Shangri-La] will not press any reliance on the TPA to found its claims, or that the Tribunal would readily find that such reliance is 'incapable on its face of legal argument', and therefore would not found a successful jurisdictional challenge".
5. In support of this submission, Mr Mullen, referred to the date of the "retainer" of those parties in February 2015, and the later "fire engineering report", which founded any claims against them. Those documents were well after the commencement of "the Commonwealth and State iterations of the ACL", and the concept of "implied warranties" being retained in the legislation. In those circumstances, the reference to the Trade Practices Act "must be incorrect [and] this claim must fail at law and any revised version of it will likely fail too".
6. In my view, I should accept that any matter raised by Shangri-La based on the Trade Practices Act 1974 (Cth) is incapable of argument and does not attract the same considerations as applied in Thurin.

Determination in respect of the Australian Consumer Law matter

1. I have determined that, in relation to the matters raised by Shangri-La, in its defence and claims for contribution based on the Australian Consumer Law, they were not articulated as claims under Commonwealth law, but rather in reliance upon State law. As a consequence, the Tribunal has jurisdiction in respect of these matters.
2. I accept the submission of the owners, and as articulated by the State of Victoria, that "it is clear that the allegations made by [Shangri-La] in the proceeding engage the Australian Consumer Law as it is picked up and applied as a law of Victoria and not the Australian Consumer Law as it operates within federal jurisdiction. That circumstance invokes State, and not federal, jurisdiction".

Can federal law arise by simple assertion as in this case?

1. Dr Wolff submitted that Shangri-La could simply assert that it raised defences and made claims in the present proceeding pursuant to the Australian Consumer Law (Cth) and not the Victorian law. Dr Wolff submitted that, "What matters is what Shangri-La wishes to plead, and what Act Shangri-La wishes to rely on". He stated that, by its submissions, Shangri-La had "provided that clarification [and] there could be no further dispute about which Act (Federal or State) applies".
2. The owners submitted that, "the Builder has not identified any provision of the Act [Australian Consumer Law and Fair Trading Act 2012 (Vic)] which would allow it to elect which piece of legislation it seeks to rely on, nor has the Builder identified any principle of the common law which would permit such an exercise. The Builder has also not identified what shortcomings exist in the Victorian legislation for which it needs to rely on the Commonwealth legislation".
3. The State of Victoria submitted that Shangri-La "is not entitled to choose to apply the federal scheme in circumstances where the relevant factual substratum engages the Victorian statute".
4. I would reject Shangri-La's submission by reason of the analysis of the present matters before the Tribunal and my finding that Shangri-La's defences and contribution claims are based upon the Australian Consumer Law (Victoria), a State law. The fact that these matters may have been separately litigated under the Australian Consumer Law (Commonwealth) does not, in my view, derogate from the fact that for almost four years the matters have been litigated, quite properly and lawfully, in the Tribunal.
5. Further, I note that this has been done, not only by reason of the State legislation, but also in accordance with the scheme of the Competition and Consumer Act 2010 (Cth) which envisages a "dual Commonwealth and State or Territory regime reflective of the different constitutional powers of the different governments" and that when considering questions of jurisdiction, "the pathway for the application of Australian Consumer Law is of critical importance" (Walker at paragraphs 78 and 83).
6. Further, section 140H of the Competition and Consumer Act 2010 (Cth), provides that, "This Act is not intended to exclude the operation of any application law to the extent that the application law is capable of operating concurrently". By section 140, "application law" means "a law of a participating jurisdiction that applies the applied Australian Consumer Law, either with or without modifications, as a law of the participating jurisdiction...".
7. In my view, the relevant provisions of the Australian Consumer Law and Fair Trading Act 2012 (Vic), which have been discussed in these reasons, would be capable of "operating concurrently" and there is no necessity in relation to this matter, as there was in Thurin that, "The conferral of jurisdiction on VCAT by the State Parliament is therefore required to be read down so as to deny VCAT judicial power in respect of any such matter" (paragraph 45).

Could the pleadings be amended to clarify whether federal law applies?

1. Dr Wolff further submitted that, "Shangri-La clearly wishes to rely on the federal version of the Australian Consumer Law. If that requires an amendment of the pleading, then such an amendment would be unlikely [to] be denied in circumstances where a clarification of the pleading is clearly required".
2. I reject the submission that Shangri-La might simply amend its present pleadings to clarify that the defences were raised and claims were made pursuant to the Commonwealth legislation. I can see no reason why the Tribunal would entertain such an application. The present defence and claims by Shangri-La have, as their underpinning, the State legislation which operates precisely as the federal legislation does. Shangri-La would suffer no real prejudice if it were not permitted to amend.
3. On the other hand, I note that this litigation was commenced in the Tribunal in January 2019, Significant costs have been incurred by the parties in pursuing the interlocutory steps since then and, on a number of occasions, Shangri-La has been criticised by the Tribunal for its failure to comply with orders and its general tardiness. In the circumstances, there would be substantial reasons for allowing the present articulation of Shangri-La's claims, which do not involve federal jurisdiction, to run their course.

1. Shangri-La filed "proposed points of claim against the first and eleventh joined party" dated 20 November 2021. Arch was the proposed first joined party and "Certain underwriters at Lloyd's subscribing to policy number P0003310P12017AAUI" was the proposed eleventh joined party ("Underwriters").
2. Shangri-La claimed indemnity in respect of the applicants' "claims in the proceeding and [its] liability" pursuant to the insurance policy against Arch and/or the Underwriters.
3. The insurance policy was alleged to be a "claim-made" policy and the claims by the applicants was said to have been made during "the policy period from 6 August 2017 to 6 August 2018". The proposed points of claim pleaded that one of the "express and written terms" of the policy was that "the insured must give to Underwriters as soon as practicable, notice in writing of any claim made against the insured and must upon request give to Underwriters such information as underwriters may reasonably require to investigate the matter so reported".
4. In support of the application, Shangri-La's solicitors, Mr Prior, swore an affidavit which stated that on the basis of information and belief that, "in early August 2018, Rita Shaya, an employee of [Shangri-La] notified CCM Insurance, that [Shangri-La] had been notified of a claim".
5. Mr Prior said that:

"It is not clear to me on the information that I have currently to determine whether Arch has made a decision that no cover is available for the allegations in this matter, or whether they are yet to make a decision".

1. Mr Prior exhibited a letter from Arch to CCM Insurance Group dated 24 July 2019 referring to the "claims history as at 24/07/2019", "Insured: Shangri-La Construction Pty Ltd" and noting "design and construct" Policy no. for the "policy period...06/06/2017-06/06/2018".
2. The letter states:

"According to our records, Underwriters have not received any notification of circumstances or claims from the aforementioned insured, except as attached/ below. However, if you are aware of any matter(s) having been reported to our office under the above insurance, please provide details and we shall undertake further searches".

1. The letter listed a number of claims but none related to the building at 290 Hawthorn Road Caulfield.
2. Two affidavits were filed by Arch. One of Arch's solicitors, Christine Westlake, swore on 25 October 2021 that she was instructed by Arch that:
   1. it had "conducted a search of its records and has been unable to locate any notification of the claims the subject of this proceeding before Arch was served with the joinder application on 8 October 2021";
   2. as a consequence of not receiving any notification, Arch had not undertaken any of the usual investigations it would ordinarily do after receiving notice of a claim against an insured;
   3. on 8 October 2021, Arch's solicitors had requested Mr Prior to supply a number of relevant documents but had not received copies of the documents asked for;
   4. suggested to Mr Prior that, on the basis of the documentation exhibited to his affidavit, "the proper respondent is not Arch but rather "Certain Underwriters at Lloyd's subscribing to Policy No. P0003310P12017AUI";
   5. that "Arch Issued the insurance policy exhibited to Mr Prior's affidavit as an authorised agent for Arch Syndicate 2012 at Lloyd's"; and
   6. invited Shangri-La to withdraw its application to join Arch to the proceeding.
3. An attached email, referred to an authority which "may assist you to understand why [Underwriters are] the relevant underwriters that ought to be joined and not the underwriter's agent".
4. A further attached email stated that, "It is Arch's position that it is inappropriate to join Arch to the proceeding and it is, in any event, premature to join Arch or the Underwriters to the proceeding in circumstances where Shangri-La had, until recently, failed to notify the claim to Arch, Shangri-La has yet to cooperate with Arch in the provision of information relating to the claim and Arch has yet to make any decision in relation to policy response".
5. A further affidavit was filed, sworn by one of Arch's solicitors, Katie Kyung, on 7 December 2021. The affidavit deposed to matters, including the following:
   1. "Arch was not notified of the claim made against Shangri-La in the proceeding in August 2018...Arch was not aware of this proceeding until service of the joinder application... on 8 October 2021";
   2. despite repeated requests, Shangri-La's solicitors had not provided copies of documents requested by Arch's solicitors which would enable the investigation and assessment of the claims to proceed;
   3. in proceeding BP 359/2017, the solicitors act for Arch and "Certain Underwriters at Lloyd's subscribing to policy number P0003310P12016AUO". That proceeding comprises both "the applicant's building case and Shangri-La's insurance case";
   4. The trial of that proceeding "commenced on 7 June 2021 and was adjourned part heard on 15 July 2021". The trial re-commenced and had by 7 December 2021 "sat for a total of 38 hearing days and was expected to be complete in March or April 2022" after 50 hearing days, and prior to the trial, multiple interlocutory applications and hearings.
6. Written submissions by Shangri-La's counsel Dr Wolff dated 25 October 2021 refer, at paragraphs 12 to 21, to the application to join Arch. At paragraph 16, Dr Wolff stated that, "Arch has acted either on its own behalf or as an authorised agent as demonstrated by the documents contained in Exhibit DJP1 at page numbers as indicated below:
   1. Arch Certificate of currency for the period of insurance 6 August 2017 to 6 August 2018 at pages 6 to 7;
   2. Arch Insurance Policy Wording for Professional Indemnity Contract of Insurance Design and Construction Civil Liability at pages 8 to 21; and
   3. Arch insurance document dated 24 July 2019 showing "Claims History as at 24/07/2019" at pages 22 to 23".
7. At paragraph 18, Dr Wolff stated:

"any argument by Arch that it should not be joined as it may 'only' have been an agent is misconceived. Our view of policy documents makes it far from clear whether Arch signed the documents as agents or as principal:

All Certificates of Currency are issued by Arch Underwriting at Lloyd's (Australia) Pty Ltd on the basis that any Policy referred to in the Certificate of Insurance can be legally cancelled at any time for non-payment of premium".

1. Written submissions signed by Mr Briggs of counsel dated 25 October 2021 were filed on Arch's behalf. In paragraph 6, Mr Briggs stated that "Arch objects to its joinder to this proceeding on the basis that:
   1. the joinder is premature, in that it is not clear what the issues between it and Shangri-La are, or will be; and
   2. in any event, Arch is not the proper respondent".
2. The submissions at paragraph 7 described the claim in the proposed pleading as seeking "specific performance of an obligation to indemnify under the relevant policy of insurance". At paragraph 8, it is noted that, "the proposed pleading fails to plead that Shangri-La notified the claim to Arch and does not plead that Arch has refused to indemnify it or that it is otherwise in breach of its obligations under the policy".
3. In paragraphs 12 and 13, it was submitted that, "until such time as Arch has been provided all relevant information and has made a determination as to [various] matters... it is impossible to know what issues are in dispute between Arch and Shangri-La. It is therefore premature to join Arch or Underwriters to the proceeding".
4. Paragraph 11 of the submissions referred to section 13 of the Insurance Contracts Act 1984 (Cth) in the context of "obligations of utmost good faith" requiring an insured to provide information in relation to a claim. Paragraph 15 of the submissions referred to section 93 in Part VII of the Insurance Act 1973 (Cth) which provides for Lloyd's to be represented by "an individual resident in Australia and appointed by Lloyd's as the agent of Lloyd's".
5. Submissions in paragraphs 16 to 27 repeated matters raised in earlier email correspondence from Arch's solicitors to Shangri-La's solicitors about the nature of the relationship between Arch and the Lloyd's syndicate, "Arch Syndicate 2012", described in the insurance policy as the "Underwriter". Condition F1 of the policy limited "each subscribing Underwriter's obligation "solely to the extent of his or her individual subscription".
6. The Certificate of Currency was signed by "Arch Underwriting at Lloyd's (Australia) Pty Ltd for and on behalf of Syndicate 2012 at Lloyd's...". It was submitted that, "the policy is granted and the Underwriters subscribing to it are bound to it (severally and not jointly) by Arch acting as agent for a disclosed principal".
7. In the hearing of the Tribunal on 9 December 2021 before Senior Member Farrelly, the discussion concerning the joinder of Arch is at the following pages of the transcript:
   1. from page 3 (line 30) to page 6 (line 6), where the Senior Member indicated that he considered the application as premature for the reasons advanced by Mr Briggs, and the desirability of adhering to the trial date fixed for 16 May 2022. The Senior Member also referred to the on-going hearing of a building case involving Shangri-La and an insurance case involving Arch and Shangri-La.
   2. from page 27 (line 5) to page 32 (line 12), the Senior Member discussed the issues with Dr Wolff earlier referred to in the hearing. At page 31, (line 7), the Senior Member said, "just for the purposes of today and this proceeding, I'm going to make a note that it might be reinstated. But just so you know, if this comes back to me to reinstate the joinder, I will probably say no. Not because you won't have an arguable claim against the insurer, but I want this proceeding to go ahead...".
   3. Dr Wolff at page 31 (line 17) stated that, "By way of background, I suspect that one of the big factual disputes in this matter will arise out of the role that the insurance broker, a company called CCM, played, because I suspect that the evidence will show that my client certainly informed CCM of the claim and relied on them to notify Arch...There is consequently a distinct possibility that once all the evidence has been exchanged between us and Arch, we find that we may not have a claim against Arch but have a claim against CCM...I wish to advise the Tribunal that there is a scenario where I come before you again and make a joinder application against CCM based on similar facts".
   4. from page 47 (line 3) to page 49 (line 3), where the matter of Arch's costs of the joinder application including a wasted hearing day on 26 October 2021, was discussed. Mr Briggs sought indemnity costs and Dr Wolff conceded a costs order on a standard basis.
   5. at page 51 (line 90), the Senior Member said, "I am going to order the respondent [Shangri-La] to pay the costs of the insurer JPI and joined party 11 of, and in respect of, the application to join them and I'm going to make it on a standard basis on the Supreme Court Scale".
8. In Shangri-La's written submissions dated 3 November 2022, Dr Wolff set out in pages 2 to 7 and 10 to 12 his characterisation of the claim against Arch raised in the joinder application in late 2021, as a matter the subject of federal jurisdiction.
9. Shangri-La's solicitor, Mr Prior, swore a further affidavit on 3 November 2022. The affidavit principally dealt with the State of Victoria's application dated 26 October 2022 to join in the proceeding as a party and to join Obaid Naqebullah as the 12th joined party to the proceeding.
10. Mr Naqebullah is, and at all relevant times has been, a director of Shangri-La. Section 137F(3) of the Building Act 1993 (Vic) confers upon the State of Victoria "a statutory cause of action against the officers of any corporate entity responsible for an act or omission which requires the undertaking of cladding rectification works in circumstances where persons in a like position to the Applicants have no, and continue to have no, right of action".
11. Submissions by the State of Victoria on 26 October 2022 noted that this is a subrogated right afforded to the State of Victoria because "Cladding Safety Victoria" (CSV) had paid amounts to the first applicant and its members in respect of cladding rectification work ... in relation to the installation or use of any non-compliant external wall cladding product, or other building work, that required the cladding rectification work to be undertaken".
12. Mr Prior stated in his affidavit sworn 3 November 2022 that he did not at that time "hold instructions to represent Mr Naqebullah in his personal capacity if he were to be joined in this proceeding". Mr Prior did, however, refer to a number of matters of which Mr Naqebullah had informed him, including that:
    1. "he intends to vigorously defend the proceeding" (paragraph 13);
    2. "he intends to obtain independent legal representation should he be joined" (paragraph 14);
    3. he will "instruct his solicitors to claim under his insurances, including making application to join his professional indemnity insurer if it refuses to indemnify him and take over the running of the matter" (paragraph 16(d));
    4. he will "instruct his solicitors and counsel to challenge the jurisdiction of VCAT in this proceeding" (paragraph 16(e));
    5. "he will further raise claims that the Underwriters of the Policy breached the utmost good faith provisions of the applicable insurance policy in their denial of indemnity to Shangri-La" (paragraph 17);
    6. "he will also plead that the Underwriters of the Policy breached section 13 of the _Insurance Contracts Act 1984 (_Cth) by any refusal to indemnify him, a claim that is independent of the applicable policy" (paragraph 18);
    7. "he will also plead that any notification delay, in light of section 54 and section 13 of the Insurance Contracts Act 1984 (Cth), does not entitle the Underwriters of the applicable policy to deny indemnity" (paragraph 19);
    8. that "even if he is not personally joined to the hearing", but "the application for joinder of the State is granted, he will" do all the matters referred to in paragraphs (a) to (d) above (paragraph 23).
13. Mr Prior further stated in paragraph 25, that on 3 November 2022 his office notified the solicitors for Arch "of the State's claim against Mr Naqebullah, and of Mr Naqebullah's claim against various Underwriters under Lloyd's policy number P0003310P12017AU1 and P0003310P12018AU1".
14. In his written submissions dated 3 November 2022, Dr Wolff repeated matters I have previously summarised from the documents filed prior to the hearing on 9 December 2021. In addition, Dr Wolff noted a number of provisions of Policy no. P0003310P12017AU1 that referred to federal legislation, including Chapter 7 of the Corporations Act 2001, the Trade Practices Act 1974 and the Insurance Contracts Act 1984.
15. Dr Wolff made the following submissions:
    1. "a determination of any contractual dispute between Shangri-La and [Arch] was always likely to involve a determination of matters under the Insurance Contracts Act 1984 (Cth)" (paragraph 10), including sections 8, 11, 12, 13, 14, 15, 28, 52, 54, 58 and 76 (paragraph 11);
    2. Arch had "itself relied on federal provisions in paragraph 11 of its submissions dated 25 October 2021 [where it stated] Contracts of insurance attract obligations of the utmost good faith, including on the insured [Insurance Contracts Act 1984 (Cth) s. 13]. Further, Shangri-La is under an express duty to cooperate with Arch in the provision of information in relation to the claim. To date, it has failed to do so";
    3. the VCAT proceeding "involves a matter arising under a law of the Parliament within the meaning of s.76(ii) of the Constitution, and hence a matter in federal jurisdiction, by reason of the reliance by Shangri-La in the VCAT proceeding on a claim under the (Cth) and by the reliance of [Arch] on the (Cth). The consequences must be the same [as in ]. VCAT lacked jurisdiction to hear and determine the proceeding".
16. Dr Wolff further submitted in paragraph 57 that, "should the joinder of Obaid Naqebullah be allowed, it would invariably lead to a claim by him against the Underwriters of the Policy. That is so because the Policy defines the 'Insured' (page 2 of the Policy, defined terms) as "... directors ... (of) the legal entity specified in the schedule and employees thereof ...".
17. Dr Wolff informed the Tribunal at the hearing on 24 November 2022 that no further steps had been taken by Shangri-La in relation to the claim it asserted it had against Arch or any other party in relation to the claims-made insurance policy.

Determination in relation to the insurance matter

1. In relation to the claims against Arch and/or other Underwriters, the considerations are different to those regarding the Australian Consumer Law. In my view, there is not presently a "matter" or "justiciable controversy" involving federal law that has been identified. Accordingly, there is no "immediate right, duty or liability to be established by the determination of the Court". There is, as a consequence, no "genuine" matter or controversy.
2. The most the assertions amount to is that a person employed by Shangri-La may have in early August 2018, in unknown circumstances, notified Arch, or the broker CCM, that a claim covered by a claims-made insurance policy with Lloyd's Underwriters may have arisen. Further, there is a possibility that Mr Naqebullah (a Shangri-La director) who, if joined to the proceeding, may have a claim for insurance cover.
3. There is federal legislation governing insurance policies, including legislation with provisions relating to the process for making claims against Lloyd's Underwriters and the obligations of parties to contracts of insurance. However, at the present time, those matters are "divorced from a controversy" and do not "give rise to an issue capable of judicial determination" (Thurin at paragraph 55).
4. It cannot, in my view, be said in relation to the insurance issue, that "a Commonwealth law is relied on as the source of a claim or a defence that is asserted in the course of the controversy" (Thurin at paragraph 77), or that "the subject matter of the controversy, although not arising directly under a Commonwealth law, is sufficiently connected to a Commonwealth law so that it is properly characterised under that law, albeit indirectly" (Thurin at paragraph 79).
5. Further, in my view, the submissions regarding the insurance claims do not lead to the conclusion reached by the High Court in Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5 ("Hobart") (discussed in Thurin at paragraph 108). In Hobart, the subject matter "was so closely regulated by the [Commonwealth legislation] that the rights and obligations of the parties ... owed their existence to that legislation".
6. Also, I do not consider that the "very subject" of the dispute that Shangri-La has raised between itself and Arch or the Underwriters "owes its existence" to the Contracts Insurance Act 1984 or other Commonwealth legislation. The Commonwealth law may be "lurking in the background" or be merely an "incidental consideration" but is not a matter "arising under that law" (Thurin at paragraph 111).

1. It would therefore be inappropriate for the Tribunal, at this time, to accede to Shangri-La's submissions that it lacks jurisdiction in the two proceedings presently before it.
2. In reaching my conclusions, I have had regard to the determination in Thurin that the fact that parties to the VCAT proceeding are corporations (formed under federal law) is not "a sufficiency of connection between a federal law and the issues in dispute in the proceeding for the matter to have that character" (Thurin at paragraph 73).
3. Accordingly, I determine that no matter has arisen in proceeding BP 125/2019 or proceeding BP1352/2022 involving Commonwealth law that would prevent the Tribunal from having jurisdiction in relation to the proceedings.
4. The parties have requested that, whatever decision I reach on the jurisdictional issue, they should then be permitted to address further argument as to whether the Tribunal should, pursuant to section 77 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), refer the proceedings to a more appropriate forum, being either the Supreme Court or the County Court.
5. I note that this would still leave outstanding the following applications:
   1. the application dated 19 October 2022 by the fourth and fifth joined parties for the deletion of references to them in Shangri-La's defence and in its points of claim;
   2. the application dated 24 October 2022 by the second and third joined parties to dismiss Shangri-La's claims against them and for consequential orders;
   3. the application dated 26 October 2022 by the State of Victoria to be joined as an applicant and that Obaid Naqebullah be joined as a twelfth joined party;
   4. the application dated 1 December 2022 by Shangri-La for further orders regarding the decision concerning costs made by the Tribunal on 28 November 2022, including for a stay of execution on any order for costs.

1. It is determined that no matter has arisen in proceeding BP 125/2019 and proceeding BP 1352/2022 involving Commonwealth law that would prevent the Tribunal from having jurisdiction in relation to the proceedings.
2. There shall be a Directions Hearing via Zoom at 9.00am on Thursday 8 December 2022 to further consider and, if possible, determine the following matters:
   1. whether the Tribunal should, pursuant to section 77 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), refer the proceedings to a more appropriate forum;
   2. Shangri-La's application dated 1 December 2022 and all outstanding matters arising from the decision of the Tribunal on 28 November 2022;
   3. the future determination of the outstanding applications dated 19 October 2022, 24 October 2022 and 26 October 2022.
3. Liberty to apply by email to the chambers of the Vice President (bcl@countycourt.vic.gov.au) upon giving reasonable notice to all other parties.
4. Costs reserved.