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Justice Legislation Amendment Act 2023 (Vic) clarifies VCAT jurisdictional issues

15 November 2023

6 min read

#Construction, Infrastructure & Projects

Published by:

Jessica Xu

Justice Legislation Amendment Act 2023 (Vic) clarifies VCAT jurisdictional issues

The Justice Legislation Amendment Act 2023 (Vic) (Amendment Act) recently introduced amendments to several Victorian Acts to improve the operation of the Victorian justice and legal systems.

Part 10 of the Amendment Act addressed legal and procedural issues regarding the Victorian Civil and Administrative Tribunal’s (VCAT) jurisdiction to hear matters arising under federal law. It amended the following four Acts:

  • the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act)
  • the Wrongs Act 1958 (Vic) (Wrongs Act)
  • the Limitation of Actions Act 1958 (Vic) (LA Act)
  • the Domestic Building Contracts Act 1995 (Vic) (DBC Act).

The amendments were necessitated by jurisdictional issues raised by recent decisions including:

  • Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226 (Thurin)
  • Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233 (Vaughan)
  • Krongold v Thurin [2023] VSCA 191 (Krongold)
  • Steedman v Greater Western Water Corporation [2023] VCAT 128 (Steedman).

The amendments provide certainty about the jurisdiction of VCAT and the rights of parties in impacted proceedings, improving efficiency in the litigation process and reducing the need for litigants to spend additional time and money having disputes re-heard at courts.

This is particularly significant for existing and potential parties to domestic building disputes as VCAT has primary jurisdiction over these proceedings in Victoria.

The erosion of VCAT’s jurisdiction

Decisions in Thurin and Vaughan

In October 2022, VCAT in Thurin held that it did not have jurisdiction over proceedings that raise federal law subject matter. This required many VCAT proceedings to be referred to and re-listed in a Victorian court.

In March 2023, VCAT held in Vaughan that it did not have jurisdiction to determine contribution claims brought under Part IV of the Wrongs Act. This limited the proceedings that VCAT could hear as contribution claims are often featured in domestic building disputes. Read our analysis of Vaughan and its implications here.

Thurin and Vaughan overturned longstanding, albeit incorrect, practices at the Tribunal, disrupted many VCAT proceedings that were in progress or awaiting determination and led to the appeal of some recent VCAT determinations.

Decision in Krongold

In August 2023, Krongold considered the effect of a referral to a court under section 77 of the VCAT Act and its interaction with the limitation periods in sections 134 and 134A of the Building Act 1993 (Vic) (Building Act). The Victorian Court of Appeal determined that:

  • a section 77 referral invokes the jurisdiction of the court without the need for any further initiating process
  • the referral does not constitute an ‘action’ for the purposes of the Building Act limitation periods, therefore the referral does not have to occur within these limitation periods
  • where a joinder of a third party by order of VCAT is invalid because federal jurisdiction applies to the proceeding, the claim against that third party does not form part of the proceeding referred to the court.

Decision in Steedman

It was held that claims against a statutory authority under section 157 of the Water Act 1989 (Vic) (Water Act) were not subject to limitation periods under the LA Act. The decision also cast doubt over ‘comparable’ section 16 claims which deal with water damage claims caused by natural persons. The reasons for the decision were:

  • the limitation periods in the LA Act apply to ‘actions’ in a ‘court of law’. VCAT found, based on binding precedent in the earlier Supreme Court decision of Lanigan v Circus Oz & Ors [2022] VSC 35, that the meaning of 'action’ in the LA Act did not include proceedings under the Water Act in VCAT
  • in a secondary, non-binding but persuasive finding known as ‘obiter dictum’, that a claim under section 157 of the Water Act was not a claim in contract or tort under section 5(1)(a) of the LA Act, nor an action to “recover any sum recoverable by virtue of an enactment” under section 5(1)(d) of the LA Act.

Key reforms from the Amendment Act

The Justice Legislation Amendment Bill 2023 was introduced in the Legislative Assembly in August 2023. It built on previous reforms to the Victorian justice and legal systems in 2020. The amendments were largely uncontroversial, having been passed by both Houses of Parliament with minimal delay in early October 2023 and received Royal Assent on 10 October 2023.

The Amendment Act broadly addresses the jurisdictional uncertainty created by these recent decisions and implements reforms to improve efficiency within VCAT and the courts.

Response to Thurin and to Krongold

In response to the issues raised by Thurin, the Amendment Act, amongst other things:

  • expanded the class of VCAT members who can make orders to transfer proceedings dealing with federal jurisdiction matters to a court
  • empowered courts to extend the limitation period for proceedings dealing with federal jurisdiction matters that had been referred to them by VCAT
  • preserved the rights and liabilities of parties involved in previous VCAT decisions on claims which were unknowingly made without jurisdiction, with the rights and liabilities deemed to be the same as if the Magistrates’ Court of Victoria had made those decisions.

Further, because the DBC Act otherwise gives VCAT near exclusive jurisdiction over domestic building disputes, the Amendment Act permits Victorian courts to hear domestic building disputes if the action may raise a controversy involving federal subject matter in the future.

Response to Vaughan

The Amendment Act included VCAT in the definition of a ‘court’ under Part IV and Part V of the Wrongs Act, giving VCAT jurisdiction to determine contribution proceedings.

Response to Steedman

The Amendment Act clarified that an action in VCAT constituted an ‘action’ under the LA Act. However, the Amendment Act did not amend the LA Act to confirm if it had application to claims under section 157 or section 16 of the Water Act. Given the secondary finding in Steedman (see above), it remains arguable that such claims are not subject to the LA Act.

Effect of reforms

The jurisdictional issues from Thurin and Vaughan had led to significant uncertainty for litigants in deciding the appropriate forum to commence their claim. Existing litigants also faced considerable costs and delays as they were forced to have ongoing VCAT proceedings referred to courts.

With the exception of the limitations issue in Steedman, these reforms address the recent crisis. Litigants now have greater clarity as to whether their dispute can be heard in VCAT, and in most cases, the application of relevant limitation periods. It is hoped that the additional powers granted to VCAT and the courts will reduce delays and costs for litigants once the current backlog is cleared.

How can we help?
If you have any questions about these amendments and what they may mean for you, please get in touch with a member of our national Construction, Infrastructure & Projects team below.

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Jessica Xu

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