County Court Raises the Question – Is It Time for a Review of Resourcing for Domestic Building Disputes?

In Impresa Construction v Oxford Building [2021] VCC 1146, Judge Burchell of the Victorian County Court considered whether there was a “Domestic Building Dispute” where a stay must be made under section 57 of the Domestic Building Contracts Act 1995 (Vic) (‘the Act’) and proceedings referred to the Victorian Civil and Administrative Tribunal (VCAT). Judge Burchell held to not stay proceedings on grounds that there was no “Domestic Building Dispute” because the contract was a Contract between a Builder and Contractor which does not fall within the Act. Her Honours Judgment maintains the position that only Domestic Building Contracts between Building Owners and Builders can fall within the Act as a Domestic Building Contract. The remarks of her Honour about whether a proceeding “Could be Heard” in VCAT as a policy were particularly important and highlight the current under-resourcing and issues faced with the VCAT in hearing domestic building disputes.

Background

Under section 57 of the Domestic Building Contracts Act 1995 (Vic) (‘the Act’) where an action arises wholly or predominantly from a “Domestic Building Dispute” and it is listed in the Supreme Court, the County Court or the Magistrates Court, except in limited circumstances, the Court must stay any such action on the application of a party to the action if the action could be heard by the Victorian Civil and Administrative Tribunal and the Court has not heard any oral evidence.

With the County Court having just had the unsuccessful Judicial Mediation Conference on 24 June 2021, and a trial due to be re-listed on 7 March 2022 with a 4 day estimate, the Builder applied to stay the County Court proceedings on the basis that there was a “Domestic Building Dispute”. The two arguments raised by the Builder came from the section 54 definition of Domestic Building Dispute which is defined to be a dispute or claim which can include a Builder and Subcontractor and in relation to a “Domestic Building Contract” or the carrying out of “Domestic Building Work” also defined under the Act.

Was there a domestic building contract?

A domestic building contract under section 3 of the Act means a contract to carry out, or to arrange or manage the carrying out of domestic building work other than a contract between a builder and a subcontractor other than a contract between a Builder and a Sub-Contractor.

The contract in question had a Subcontractor and the Builder, but unusually also included the Proprietor and the Director of the Proprietor as guarantors and because of their inclusion it was questioned if this contract was a domestic building contract.

On analysis of the Contract as a whole, her Honour found the contract was between a builder and a subcontractor and the intention of the joining of the Proprietor and Director of Proprietor appeared to be for the purpose of security only which did not change the substance of the contract and therefore there was no domestic building contract.

Was there domestic building works?

The Builder also argued that the words of section 54 of the Act are disjunctive and relate to a dispute or claim arising in relation to either a domestic building contract or the carrying out of domestic building work. It was argued the works fall within domestic building work as contemplated under section 5 of the Act, which involve the manufacturing and construction of structural elements of four townhouses and one office and no exclusions under section 6 of the Act apply.

Her Honour held with some guidance from Stephens v Cameron that the Act only applies to Domestic Building Contracts, which are contracts other than a contract between a builder and sub-contractor. Therefore the Builder also failed and the mandatory and exclusive jurisdiction of VCAT was not enlivened.

Policy “Could be Heard” in the VCAT

Whilst not argued by parties, her Honour raised that it may be open to a party to argue section 57(2)(a) of the Act cannot be satisfied because of the current under resourcing of the VCAT, meaning there is cause to question whether a proceeding “could be heard” in the VCAT on a policy that the overarching purpose of the Civil Procedure Act is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute”.

The VCAT is facing 2,295 annual initiations without any additional VCAT Members being added, and in a “bittersweet” moment the under resourcing comes as Deputy President C. Aird is retiring, who has worked tirelessly to improve efficiencies and case management procedures since 2004.

Her Honour raised a number of key under-resourcing issues that demonstrate the public policy of section 57 of the Act may be “frustrated” including:

  • Time lines do not apply;
  • VCAT will contact the parties 8 – 10 weeks from initiation with the proposed next steps;
  • Current listings hearings fixed from October 2021 are being vacated and presumably refixed in priority of new initiations to ensure that adjournment hearings are heard within a reasonable timeframe; and
  • Where Interlocutory hearings are being fixed some 8 months into the future,

All subvert the purpose of both the Act and the CPA to enable timely and cost-effective dispute resolution.

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