Tenant seeks to overturn VCAT’s exclusive jurisidiction

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s 10 of the Commercial Arbitration Act 2011 was pronounced after the commencement of the 2003 Act and, by implication, repealed the provisions of the RLA that gave exclusive jurisdiction  concerning retail tenancy disputes to VCAT.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It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied.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.

  1. #1 by George Konidaris on October 10, 2012 - 4:59 pm

    Hi Robert

    In relation to your post below, I need to correct a couple of things for you.

    Subway as franchisor and as a lessor under a document held to be a sublease but labeled a licence agreement, tried to oust VCAT’s Retail Tenancy dispute jurisdiction by claiming that its sub tenant (and franchisee) under its sublease (the Irelands), should arbitrate the lease dispute pursuant to an arbitration clause in its franchise agreement.

    Subway claimed that the dispute was a franchise dispute and not a retail tenancy dispute and so the dispute resolution provisions of the Franchise Agreement took priority over the RLA.

    Subway argued that the occupancy agreement labeled a “licence agreement” between it and the Irelands was at law a licence agreement and not a lease (hence the RLA did not apply) and that if the document was deemed a lease, the arbitration clause under the franchise agreement should take priority over the provisions of the RLA pursuant to the provisions of the Commercial Arbitration Act.

    If you would like any further information, please let me know as I am involved in this matter.

    The decision is relevant on 2 counts. Firstly the interrelationship between The RLA and the Commercial Arbitration Act. It means that a franchisee can bring a dispute to VCAT and avoid the arbitration provisions of the franchise agreement if the dispute relates to a lease. This is the point you make in your blog but importantly, the arbitration clause was not in the lease but in the franchise agreement with a party that is not a party to the lease.

    Secondly, a licence agreement was held to be in substance, a lease distinguishing a full court of appeal decision that held that a similar licence agreement was not a lease under a franchise agreement.


    George Konidaris


    • #2 by Robert Hay Property Law Barrister on October 10, 2012 - 5:23 pm

      Thank you George. George is correct that the arbitration clause was contained in a separate document (ie the franchising agreement). A party cannot avoid the Act through the mechanism of a document separate from the the lease because s 94 of the 2003 Act provides that such a provision is void. Except for the error concerning the source of the arbitration clause the post is correct because in the post I was not trying to address the issue of whether the agreement between the parties was a lease or a licence. The argument about the Commercial Arbitration Act was only relevant if the agreement was a lease.

  2. #3 by Sam Hopper on October 10, 2012 - 6:03 pm

    Reblogged this on Sam Hopper Barrister and commented:
    My friend Robert Hay has added a post on his blog about an interesting case that considered whether an arbitration clause could oust VCAT’s jurisdiction under the Retail Leases Act 2003 (Vic). I have reblogged the post for readers here.

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