VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
residential tenancies DIVISION
residential tenancies LIST	
VCAT REFERENCE NOS. R2020/18697& R2020/19346	
CATCHWORDS	
Burns v Corbett - Meringnage v Interstate Enterprises Pty Ltd – Residential Tenancies Act 1997 – Victorian Civil and Administrative Tribunal Act 1998 – ss 60, 60A, 109 – with the landlords resident in New South Wales and the tenants resident in Victoria, does VCAT have power to remove and join parties to the proceeding and order one party to pay another parties costs?	
APPLICANTS (R2020/18697) & RESPONDENTS (R2020/19346)	Rami Hazou & Olivia Curtis	
RESPONDENTS (R2020/18697) & APPLICANTS (R2020/19346)	Derrick Burgess & John Davey	
WHERE HELD	Melbourne	
BEFORE	Deputy President I. Proctor	
HEARING TYPE	Hearing by telephone	
DATE OF HEARING	7 October 2020	
DATE OF ORDERs & written reasons	7 December 2020	
CITATION	Hazou v Burgess (Residential Tenancies) [2020] VCAT 1371	
Order
1.	The tenants’ applications:
a)	That the landlords be removed as parties in this proceeding;
b)	The agents for the landlords be joined as parties in this proceeding; and
c)	the landlords’ agents be ordered to pay the tenants’ costs in this proceeding 
are refused.

Ian Proctor
Deputy President			
APPEARANCES:		
For Landlords: 	Ms S. Munroe, Real Estate Agent	
For Tenants:	Mr J. Davey, Solicitor	
Reasons
1	On 16 June 2020, the landlords, Mr Hazou and Ms Curtis, represented by real estate agents Jas H Stephens (Vic) Pty Ltd (the Agency), made an application to VCAT under sections 548 and 549(2)(j) of the Residential Tenancies Act 1997 (RT Act), as amended by COVID-19 emergency legislation against the tenants, Mr Derrick Burgess and Mr John Davey. This became VCAT proceeding R2020/18697 (the Landlords’ Application).
2	The landlords sought termination and possession orders ending the tenancy agreement with the tenants on the basis that the rented premises was to be sold within 60 days and the landlords were experiencing financial hardship due to loss of income due to the COVID-19 pandemic.
3	By a letter dated 16 June 2020 from HERM Legal & Migration Services (HERM Legal) to the landlords, the tenants asserted the Landlords’ Application was vexatious and without proper basis and advised the tenants would seek that the landlords pay the tenants’ legal costs, then estimated at $5,000, and intended to seek compensation of over $9,000. Mr John Davey, one of the tenants, was the principal solicitor of HERM Legal.
4	On 19 June 2020, VCAT received from HERM Legal a VCAT application by Mr Burgess and Mr Davey. The application was made under section 452 of the RT Act. They sought orders that the landlords produce a written tenancy agreement executed by both tenants on 11 May 2020, a declaration that a tenancy agreement was entered into on 5 May 2020 which would continue until 20 July 2021 and orders that the landlords pay Mr Burgess’ legal costs in the application.  This became VCAT proceeding R2020/19346 (the Tenants’ Application).
5	On 25 June 2020, VCAT received a letter from HERM Legal advising it acted for the tenants in the Landlords’ Application, seeking that the Landlord’s Application be dismissed and that the landlords pay the tenants’ legal costs. 
6	By letter dated 30 June 2020 to the landlords’ agent, the tenants advised the landlords that the costs sought by Mr Burgess would be $7,468.95. By then, a VCAT hearing was scheduled in the Landlord’s Application on 15 July 2020. 
7	On 1 July 2020, VCAT scheduled a hearing of the Tenants’ Application on 30 July 2020.
8	On 9 July 2020, the landlords withdrew the Landlords’ Application, advising they intended to sell the property with the tenancy continuing. 
9	In VCAT’s Residential Tenancies List, an applicant may withdraw an application, without VCAT first giving leave for the withdrawal. VCAT retains the power, after withdrawal, to make costs orders under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act).
10	When the application was withdrawn, VCAT advised the parties it had cancelled the 15 July 2020 hearing. 
11	By email dated 15 July 2020, the tenants objected to the withdrawal of the proceeding, seeking that their costs application be heard. That day, VCAT refused to schedule a costs hearing, relevantly recording in chambers orders (not at a VCAT hearing):
The tenant has objected to the withdrawal of the proceeding on the basis that they seek their costs incurred in defending the proceeding.
…
In reviewing the request for costs, it has become apparent that the landlords reside in New South Wales, being the address the tenants provided on the tax invoice for their legal fees ...
As the matter relates to residents in different states, and following the decision in Meringnage v Interstate Enterprises Pty Ltd [2020] VSCA 30 (25 February 2020), the Tribunal does not have jurisdiction to hear the matter. The Tribunal therefore has no power to hear any application for costs.
In the circumstances the request for a costs hearing will be refused, and the application remains marked as withdrawn.
The Tribunal further notes that the tenants [have] made application in proceeding R2020/19346, and this matter is currently listed for hearing on 30 July 2020. That hearing will be cancelled and that proceeding struck out on the basis of the Tribunal lacking jurisdiction to hear the matter
12	VCAT struck out the Tenants’ Application and cancelled the 30 July 2020 hearing.
13	On 21 July 2020, the tenants objected to being prevented from being heard on their cost applications, on the basis that they wished to seek an order that the landlord’s agents who are resident in Victoria, rather than the landlord, pay costs. In order to ensure natural justice, hearings in both applications were scheduled on 7 October 2020, with the delay due to the COVID-19 emergency.
14	With the tenants, the Agency and the landlords present by telephone, I heard the tenants’ joinder and costs applications. 
15	With the tenants conceding that under Burns v Corbett and Meringnage, VCAT could not make costs orders against the landlords who were resident in New South Wales, they sought orders from VCAT:
a	Removing the landlords as respondents in the Tenants’ Application (the removal application);
b	Replacing them with the Agency and an employee of the Agency, Ms S. Munro as respondents (the joinder application); and
c	Scheduling the hearing of the costs application that the new respondents pay Mr Burgess’ legal costs of $7,468.95 (the costs application).
Decision
16	The tenants’ removal application, joinder application and costs application must be refused. With the tenants and the landlords resident in different states, VCAT does not have jurisdiction to decide the disputes between them and any related disputes between them in this VCAT proceeding.
17	In Bennett v Depke (Residential Tenancies) [2020] VCAT 942, VCAT summarised the law as decided in Burns v Corbett and Meringnage, as it effects VCAT and parties before it:
Section 71 of the Constitution provides that the judicial power of the Commonwealth is vested in the High Court, in such other federal courts as Parliament creates, and in such other courts as Parliament invests with federal jurisdiction.
Section 75 of the Constitution confers original jurisdiction on the High Court in certain types of ‘matters’, relevantly in this case, in all matters “between residents of different States”.
Section 77 of the Constitution provides that the Commonwealth Parliament may vest the jurisdiction described in section 75 in a court of a State and in any other federal courts. Subsection 39(2) of the Judiciary Act 1903 (Cth) … vests jurisdiction under section 75 of the Constitution in the courts of States within the limits of the State Courts’ jurisdictions. This jurisdiction is also otherwise vested in other federal courts.
As legal disputes between individual residents of different states fall within section 75 of the Constitution, those disputes may only be resolved by a court of a State (or a federal court). In Burns v Corbett … the High Court noted that a State cannot confer jurisdiction on a body to resolve such disputes, if that body is not a court of a State – “a State law purporting to authorise an agency of the government of a State other than a court to determine, for example, a dispute between residents of different States would be invalid” (see paragraph 43).
As stated in Krause v Williams [2020] VCAT 479 (17 April 2020), this limitation applies to any type of legal dispute between individuals who are resident in different states, even if a non-court body would otherwise have jurisdiction to deal with such a dispute under a State law. 
The issue of whether VCAT is a court of a State for the purpose of section 77 of the Constitution was decided by the Victorian Court of Appeal in Meringnage v Interstate Enterprises Pty Ltd … The Court of Appeal found that VCAT was not a court of a State. As the dispute in that case fell within the matters defined in section 75 of the Constitution, the dispute was required to be determined through federal jurisdiction, that is by a federal court or a court of a State and could not be determined by VCAT.
…
As to when the issue of residency becomes relevant, cases to date suggest that residency is determinative at the time of the institution of proceedings and is not defeated by an apparent change of residency thereafter (see Geoffrey Lindell, Cowen and Zines’s Federal Jurisdiction in Australia (The Federation Press, 4th ed, 2016) at p143).
18	In Burns v Corbett, Kiefel CJ, and Bell and Kean JJ, said (at [2]):
a State law that purports to confer jurisdiction with respect to any of the matters listed in ss 75 and 76 of the Constitution on a tribunal that is not one of the courts of the States is inconsistent with Ch III of the Constitution, and is, therefore, invalid.
19	To the extent that a state law invalid, it is to be ‘read down’ such that the law is otherwise valid, for example as between residents of the same state.
20	In this case, with the landlords resident in New South Wales and the tenants resident in Victoria, to the extent that either the RT Act and/or the VCAT Act purports to confer jurisdiction to exercise judicial power on VCAT, that legislation is invalid.
21	Here, the tenants’ joinder and costs applications call upon VCAT to make orders traditionally made in the exercise of ‘judicial power’, described in Meringnage (at [105]):
VCAT is empowered to make orders traditionally made in exercise of judicial power. Parties at VCAT are ‘able to obtain a binding, authoritative and curially enforceable judgement independently of the consent of the person against whom [a] complaint [has] been sought.
22	Through the RT Act, the Victorian Parliament ‘purports to confer jurisdiction’ (the term used in Burns v Corbett) on VCAT.
23	The Landlords’ Application was made under section 548 and 549(2(j) against the tenants, with VCAT having jurisdiction to make termination and possession orders under section 549 of the RT Act. The Tenants’ Application was made under section 452 against the landlords with VCAT having jurisdiction to make orders under section 472 of the RT Act. 
24	VCAT’s jurisdiction to remove and join parties and to make costs orders, is conferred under sections 60A, 60 and 109 of the VCAT Act respectively.
25	Where parties are resident in different states at the time of application to VCAT, to the extent sections 60A, 60 and 109 purport to confer jurisdiction on VCAT to amend an application by removing or joining parties or make cost orders in relation to existing proceedings, they are invalid. Only a court of a State (or a federal court) can be given the power to make such orders.
26	VCAT has no jurisdiction to make the removal, joinder and/or costs orders the tenants seek. Therefore, their removal, joinder and cost applications are refused.
27	There is no need to address the various other issues discussed during hearing submissions, which otherwise would have required consideration.
28	For completeness, I comment that where VCAT has jurisdiction in a proceeding under the RT Act, it is extremely rare for the Tribunal to make a costs order under section 109 of the VCAT Act, departing from the general rule that each party bears their own costs.

Ian Proctor
Deputy President