VCAT not bound to refer matters to arbitration

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On 17 October 2013 I posted a note about Subway Systems Australia Pty Ltd v Ireland [2013] VSC 550 which concerned a dispute between a franchisor and a franchisee. The franchise agreement contained an arbitration clause.  VCAT refused to refer the dispute to arbitration pursuant to s.8 of the Commercial Arbitration Act 2011 which provides that:

“A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when the submitting party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”

Justice Croft held that VCAT was not a “court” within the meaning of s.8 and therefore the dispute could be heard and determined in VCAT.

The decision is significant because many agreements, particularly franchising agreements, contain arbitration clauses. The effect of the judgment is that if a proceeding is commenced in VCAT concerning an agreement that contains an arbitration clause a party to that agreement cannot request the Tribunal to refer the matter to arbitration pursuant to s.8.  If the same proceeding were commenced in the Magistrates’ Court, the County Court or the Supreme Court, the Court could refer the proceeding to arbitration. According to Justice Croft this did not produce an absurdity because VCAT was intended to be a forum for speedy and inexpensive resolution of disputes.

Justice Croft noted that a party to a proceeding in VCAT could still apply under s.77 of the VCAT Act to have the matter referred to the arbitral tribunal on the basis that it was a more appropriate forum.

In the earlier post about Subway  the Commercial Arbitration Act 2011 was erroneously referred to as a Commonwealth Act; the reference should have been to a Victorian Act.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience. 

Tenant seeks to overturn VCAT's exclusive jurisidiction

Please note for members of the public or practitioners in the legal profession where English is your second language a translation key in all languages of the world is available on this blog to assist you. The plain English blog without translation facilities is located at http://roberthaypropertybarrister.wordpress.com

In Ireland v Subway Systems Australia Pty Ltd and Subway Realty Pty Ltd [2012] VCAT 1061 a tenant contended if an agreement (which it contended was a licence) was held to be a lease then the dispute had to be determined by an arbitrator pursuant to an arbitration clause and not by VCAT.  The arbitration clause was contained in the a document separate from the lease.

VCAT held that the agreement was a lease and therefore there was a "retail tenancy dispute" which, subject to the tenant's argument about the Commercial Arbitration Act, would be governed by the dispute provisions of the RLA. If the tenant's application had succeeded the whole regime of the dispute resolutions provisions in the RLA would have been displaced. The tenant argued that the arbitration clause should be given effect to because s 10 of the Commercial Arbitration Act 2011 was pronounced after the commencement of the 2003 Act and, by implication, repealed the provisions of the RLA that gave exclusive jurisdiction  concerning retail tenancy disputes to VCAT.  

The tenant contended that the word “court”  in s 10 of the Commercial Arbitration Act included the Tribunal. At [45] the Tribunal accepted that there was authority supporting the proposition that, in some cases, the reference to a “court” will include the Tribunal. The tenant contended that to construe the word “court” in the Commercial Arbitration Act to include the Tribunal would not create inconsistency between that Act and the RLA because the Commercial Arbitration Act was a later Act of Parliament which would, by implication repeal the inconsistent provisions of the RLA.  In rejecting the tenant’s contentions the Tribunal said:

 [50]       I do not accept that submission. In Goodwin v Phillips (1908) 7 CLR 1 at 10, Barton J adopted the following statement from Hardcastle on Statutory Law:

The court must be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together, before they can from the language of the later imply the repeal of an express prior enactment, i.e., the repeal must, if not express flow from the necessary implication.

[51]       Further, in Saraswati v R (1991) 100 ALR 193 Gaudron J stated the following;

It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support the implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other (at 204)

[53]         In my view, limiting the word court in s 10 of the Commercial Arbitration Act 2011 to mean the Magistrates’ Court, County Court or Supreme Court would not lead to any inconsistency between the two Acts and is a construction that is to be adopted, having regard to the authorities cited above. Accordingly, I do not accept the submission that the word court in the Commercial Arbitration Act 2011 includes the Tribunal. It simply cannot be the case that Parliament intended that the Commercial Arbitration Act 2011 and the RLA were to cover the same field of operation. The RLA is expressed elaborately and specifically details how retail tenancy disputes are to be resolved. The Commercial Arbitration Act 2011 says nothing about resolving retail tenancy disputes and is expressed in a general manner. In my view, that is another factor weighing against a finding that Parliament intended the provisions of the Commercial Arbitration Act 2011 to take precedence over the dispute resolution provisions of the RLA. Accordingly, I find that the word court in the Commercial Arbitration Act 2011 does not include the Tribunal and as a consequence, the Commercial Arbitration Act 2011 has no application in determining the present dispute.

My clerk can be contacted via this link http://www.greenslist.com.au/ if you wish to retain my services for any legal matter which is within the gamut of my legal experience.

 Author: Robert Hays Barrister subject to copyright under DMCA.