Outside VCAT’s jurisdiction

Recent decisions have raised concerns about VCAT and its viability as an effective forum for domestic building dispute resolution.

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VCAT was established to provide fair, efficient and affordable justice to the Victorian community. Recent decisions such as Thurin v Krongold Constructions 120221 VSCA 226 Thurin) and Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) 120231 VCAT 233 (Vaughan) have raised concerns about VCAT’s future viability as an effective forum for dispute resolution.

The Thurin Earthquake

Thurin confirms that VCAT lacks jurisdiction to hear and determine disputes involving federal statute, including the Competition and Consumer Act 2010 (Cth). The decision  ighlights the potential risk of any VCAT determination made regarding federal statute.

Consequences for building disputes: Thurin

Thurin has led to  rocedural issues for applicants to VCAT. The Domestic Building Contracts Act makes VCAT the default forum for dornestic building disputes, and a court must stay any action brought it if it’S Within VCAT•s jurisdiction. Yet any domestic building dispute dealing with an Australian Consumer Law (ACL) clam cannot be heard at VCAT.

There is a risk of proceedings bounced from one forum to another due to these jurisdictional boundaries. For example, a person may initially apply to VCAT with an action of breach of contract but discover the matter requires the ACL to be escalated to a court.

The ACL is common in cases where detects are found after the purchase of an off the plan property. The corporate structures of the vendor and builder may limit or entirely mitigate against an action in breach of contract or negligence. necessitating recourse to the “misleading and deceptive” provision of the ACL.

The second earthquake: Vaughan

The case of Vaughan considered a question whether VCAT had jurisdiction to hear claims based on the Wrongs Act ‘958 (Vicl, particularly claims ot proportionate liability, It was held that VCAT was excluded from deciding the amounts owing by a person because it is not a court. This decision limits VCAT’s ability to hear Claims arising from a set of issues.

Considered together, Vaughan and Thurin mean that a regular VCAT construction dispute is now only able to be partially heard at VCAV The ACL and proportionate liability issues have to heard in a Victorian court.

Gwen that many current VCAT matters with these issues are households. the Situation is disastrous. VCAT can no longer deliver fair, efficient and affordable justice.
What to do?

Wave a wand: Retrospective legislation

In 2021. the Victorian parliament amended the VCAT Act to preserve the legality of previous VCAT decisions on federal matters by giving them the force of an order of the Magistrates’ Court.

Parliament did not extend this logic to all future VCAT decisions, possibly due to concerns about constitutional challenges. Perhaps federal parliament could intervene to grant VCAT federal jurisdiction. However, this option seems in breach of constitutional principles.

Making VCAT a court

Victorian parliament could legislate to make V T a court (as defined by chapter 3 of the Constitution), Queensland parliament has done this for OCAT. A challenge to OCAT being a court has been rejected by the Queensland Court of Appeal in Owens v Menzies [2013] 2 Qd R 327.

This decision hasn’t been reviewed by the High Court, The High Court has, however, decided on a similar matter in Lane v Morrison [2009] HCA 29 (Lane). The Lane decision abolished the Australian Military Court which had replaced the Defence Force Magistrate and Court Martial system for reasons comparable to the current VCAT situation. Lane highlights the difficulty in transitioning a tribunal to a court.

VCAT and QCAT composed differently

Further, VCAT and OCAT are composed differently: QCAT is a court of record and VCAT is established as a tribunal. In Merignage v Interstate Enterprises Pty Ltd [2020] VSCA 30 it was decided that for a tribunal to be considered a “court” it must exercise judicial power. Just because a exercises state judicial power does not
automatically make it a court. For a body to be considered a court, it must comply with Chapter 3 Of the Constitution. VCAT does not currently comply. A Chapter 3 Court is composed of judges. VCAT would need to reconstitute and grant its new judges tenure.

Small hope: ACL as Victorian law?

The ACL and Fair Trading Act 2012 (Vic) states that the ACL applies as a law of Victoria and may not require disputes to go directly to court.

Even with the Thurin decision binding on VCAT. pleadings could be amended to reference the ACL as a law of Victoria

Urgent action needed

The current situation is frustrating for domestic building litigants currently caught in a web of forums. The legal community must urge parliament to provide clarity for these parties. The “fix” isn’t obvious, requiring substantial resources. The bleak reality is that currently there’s no easy relief for domestic building litigants.

Andrew Blair is a barrister Harriet Warlow-Shill is a partner of Warlows Legal and member of the LIV Building and Construction Committee.

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