Thurin & Vaughan Constructions Sorted: Victorian Parliament Paves Way For Contribution Claims To Be Heard In VCAT

Recent decisions discussed below determined that VCAT does not have jurisdiction to hear and determine any proceeding involving the exercise of judicial power in relation to a federal matter or contribution claims brought under Part IV of the Wrongs Act 1958. The passing of the Justice Legislation Amendment Act 2023 (Vic) last week by the Victorian Parliament means that Part IV contribution claims can now be determined by VCAT. In this article, we look at how amendments to the VCAT Act and the Wrongs Act 1958 are expected to impact clients.

Introduction

Since the decision of Thurin & Anor v Krongold Constructions (Aust) Pty Ltd & Ors,^[1] domestic building disputes in VCAT have been in a state of flux. This decision confirmed that VCAT does not have jurisdiction to hear any proceeding involving an exercise of judicial power in relation to a federal matter. Where a proceeding involved claims (or defences) under federal legislation such as the Insurance Contracts Act 1984 and the Australian Consumer Law (the Competition and Consumer Act 2010 Cth) parties were applying to VCAT to have the matter referred to a Judicial Member so the proceeding could be struck out and referred to a Court.

Debate ensued between parties about whether a federal matter had been or would be invoked. Confusingly, misleading and deceptive conduct claims made under the Australian Consumer Law did not necessarily invoke a federal matter^[2] but defences pleaded to such claims did.^[3]

Many proceedings the subject of transfer application were transferred to the County Court of Victoria. Some applications for transfer are still pending.

To confuse matters further, in Vaughan Constructions Pty Ltd v Melbourne Water Corporation,^[4] his Honour Justice Delany in his role as an Acting Member of VCAT, held that VCAT does not have jurisdiction to determine claims for contribution brought pursuant to Part IV of the Wrongs Act 1958. This decision was delivered in circumstances where VCAT had been determining claims brought under Part IV of the Wrongs Act 1958 for years. The decision relied upon the absence of a definition of ‘court’ in Part IV. Vaughan Constructions further upended cases in the Building and Properly List in VCAT with parties uncertain about whether they would be time barred from commencing or pursuing (upon the transfer of a proceeding) a third party proceeding in the County Court, if the 10 year limitation period under s134 of the Building Act 1993 had expired.

Those practising in the area of domestic building disputes will be breathing a sigh of relief this week with the passing by the Victorian Parliament of the Justice Legislation Amendment Act 2023 (Vic) (JLA).

Of key importance for domestic building disputes are the following amendments:

• the definition of ‘Court’ in the Wrongs Act 1958 has been expanded to include VCAT, allowing VCAT to hear contribution claims made under Part IV of that Act thus addressing the decision in Vaughan;
   
• The Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) has been amended such that where a proceeding has been transferred to a court by the Tribunal under s77(3) of the VCAT Act, the court now has the power to extend any limitation period that applies in relation to the matter in certain circumstances.

 Contribution Claims

The JLA amends the Wrongs Act 1958 in 3 ways:

First, s.23A(3) is amended to include the following definitions;

• Court includes VCAT;
• Judgement, in relation to VCAT, includes decision, order and declaration; and 
• The existing definition of writ now includes an “application to VCAT”

Second, the JLA amends s 24(2) and (2B) to substitute “proceeding” for “trial”

Third, the JLA includes transitional provisions to validate decisions, orders or declarations made by VCAT under Part IV before the commencement of the JLA, operating as if the amendment were in place at the time of the decision, order or declaration was made. Importantly, these curative provisions do not apply where:

• The relevant order was quashed, overturned or reverse by the County Court, or the Supreme Court (including the Court of Appeal) before the commencement date on the ground that VCAT had no jurisdiction to make a decision, order or declaration in respect of contribution under Part IV; and
   
• The relevant order is the subject of an appeal or a review which includes the ground that VCT had no jurisdiction to make a decision, order or declaration in respect of contribution under Part IV that been commenced but not determined before the commencement date (10 October 2023).

Parties will now be able to make claims for contribution under Part IV of the Wrongs Act 1958 in VCAT. It is anticipated that those matters which were awaiting referred by a Judicial Member under s77 because a contribution claim was pleaded in the matter, will remain in VCAT.

Transfers under the VCAT Act to a Court

By insertion of the new section 77(4), the JLA provides courts with the power to extend the limitation period that applied to the commencement of a proceeding, to allow the proceeding (involving a federal matter) to be commenced and determined. This will apply to cases which have been transferred from VCAT to a Court pursuant to s77(3) of the VCAT Act.

For the limitation period to be extended, the Court must be satisfied that^[5]:

• the proceeding involves the same subject matter as a proceeding in the Tribunal that was struck out on grounds that included that the Tribunal lacked jurisdiction to resolve controversies involving federal subject matter;
   
• the late commencement of the proceeding is attributable to additional steps the persons were required to take to have it determined by the court because the Tribunal proceeding was struck out;
   
• it is fair and reasonable to extend the limitation period.

In addition, the JLA expands the class of VCAT members who can exercise powers under s77(1) and 77(3) from a judicial member (only) to now include presidential members and a senior member who has been an Australian lawyer for not less than 5 years.

The requirement for judicial members to hear and determine applications under s77 has created delays in proceedings. This amendment is expected to make it quicker and easier for VCAT to transfer proceedings to a Court where application is made under s77.

Amendments to Domestic Buildings Contracts Act 1995 (Vic)

Where a proceeding is commenced in the Supreme Court, the County Court or the Magistrates’ Court which involves a domestic building dispute, section 57 of the Domestic Building Contracts Act 1995 (DBCA) required the Court to stay such an action (subject to requirements in section 57(2)(a) and (b) being met).

The JLA has amended the DBCA to qualify VCAT’s priority jurisdiction over domestic building disputes, where the court has reasonable grounds to consider that the action raises or may raise in the future, a federal matter (federal legislation).

In practical terms this will mean there is little utility in applying for a stay in a domestic building dispute proceeding which has been brought in a court, if the proceeding involves or is likely to involve a claim or defence invoking federal legislation.

What can clients expect?

The amendments are expected to bring greater efficiency to the Building and Property List in VCAT. This List has been plagued by delays and uncertainty since COVID and the Court decisions in Thurin and Vaughan Constructions.

It is anticipated that the amendments to the VCAT Act and the Wrongs Act 1958 in particular, will enable VCAT to case manage proceedings in the list with more certainty and efficiency. This is very good news for our clients who underwrite risks in the domestic building space or who are contractors or other construction professionals involved in domestic building disputes.

The changes came into effect on 11 October 2023. 

[1] Thurin & Anor v Krongold Constructions (Aust) Pty Ltd & Ors [2022] VSCA 226 

[2] The ACL was adopted as Victorian law pursuant to section 12 of the Victorian Act: Australian Consumer Law and Fair Trading Act 2012 (Vic) 

[3] Contributory negligence defences pleaded under s137B and apportionment defences pleading under Part 6A of the Competition and Consumer Act 2010 (Cth) invoked federal legislation 

[4] Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233 

[5] For the full requirements set the new section 77(4) of the VCAT Act