Litigating in VCAT? Beware the foreign defendant

Introduction

VCAT derives its extensive but precisely defined “original jurisdiction” to determine disputes from numerous statutes, including the Residential Tenancies Act 1997 (Vic), Retail Leases Act 2003 (Vic), Domestic Building Contracts Act 1995 (Vic) and the Australian Consumer Law.  But what does “jurisdiction” mean?

This legislation provides VCAT with jurisdiction over the subject matter of various commonplace disputes, so that, for example, VCAT has the power to hear and decide a Retail Leasing dispute over retail premises situated in Victoria or a domestic building work dispute over building work carried out on a home in Victoria.

 However, while this subject matter jurisdiction provided by legislation will prompt litigants to approach VCAT to resolve their disputes, there is an important but occasionally overlooked qualifier in that VCAT must also have jurisdiction over “the person” of the defendant in the proceeding in order to exercise its subject matter jurisdiction over the dispute.

Case example

 In Apollo Marble and Granite Imports Pty Ltd v Industry + Commerce (Civil Claims) [2008] VCAT 2298 (14 November 2008), VCAT drew a clear distinction between “jurisdiction over subject matter” and “jurisdiction over the person”.  VCAT confirmed that jurisdiction over the person is contingent upon valid service of process. Service of process is the formal procedure by which a party is given notice of legal proceedings in a manner recognised by law, thereby making them amenable to a court or tribunal’s jurisdiction.

In Apollo Marble. VCAT reaffirmed the orthodox principle that service is the foundation of personal jurisdiction and that, unless a defendant is amenable to service by some other means (that is, capable of being validly served within Australia), VCAT cannot exercise authority over a person who cannot be served.

As a statutory tribunal, VCAT possesses no inherent jurisdiction (like a court) and may only exercise powers expressly conferred on it by legislation. In that context, VCAT held that there is no statutory provision, either in the Victorian Civil and Administrative Tribunal Act 1998 (Vic) or the VCAT Rules, authorising service of initiating process outside Australia.

Section 140 of the VCAT Act was found to deal only with the manner of service, not its territorial reach, and does not permit service abroad. Nor could such a power be implied from the extra-territorial operation of the enabling legislation. The Tribunal therefore emphasised that subject-matter jurisdiction, even if extra-territorial, does not remove the need for valid service to establish jurisdiction over the person. Importantly, powers to order substituted or alternative service address only the manner of service and do not extend the Tribunal’s territorial reach or permit service outside Australia

Accordingly, where a defendant is located outside Australia and cannot be validly served within Australia, VCAT is incapable of exercising jurisdiction, irrespective of any subject matter jurisdiction it has over the dispute. In those circumstances, the proceeding must instead be brought in a court with rules permitting foreign service.

The facts in Apollo Marble illustrate the principle: An Australian company commenced a proceeding in VCAT seeking declaratory relief in respect of an alleged debt arising under the Fair Trading Act 1999 (Vic), which provides for VCAT’s jurisdiction to “hear and determine…a consumer and trader dispute”. The claim was brought against an entity described as “Industry + Commerce”, which was a foreign company with no registered office, place of business, or other presence in Australia. Industry + Commerce had no identifiable address within Australia at which it could be served, and there was no evidence that it carried on business locally or had any representative within the jurisdiction. Industry + Commerce was therefore entirely overseas and had no physical presence in Australia.

In that circumstance, VCAT had no “jurisdiction over the person” of Industry + Commerce, and could not determine the dispute despite having subject matter jurisdiction under the Fair Trading Act.  

Conclusion

 The key question then, when considering whether to commence proceedings in VCAT, is whether the intended defendant is based in Australia and if they can validly be served. If they are based entirely abroad, and have no presence in Australia, you will have to commence proceedings in a court with the power to authorise service of process outside Australia.  

How Sharrock Pitman Legal can help?

If you are in the export or import business, it makes good sense to ensure that your contracts are well drafted by legal experts , especially if you are trading with suppliers located beyond Australia's borders.

When things go wrong and disagreements arise, seek legal advice at the earliest opportunity. Our Disputes & Litigation team has extensive experience advising Australian businesses and business owners in disputes with corporations based overseas.

Please do not hesitate to contact us if we can assist your business. Contact us on 1300 205 506 or email sp@sharrockpitman.com.au.

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The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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