Wrongs Act Contribution Claims and VCAT Jurisdictional Issues. - VCAT Barrister

There have beenongoing issues at VCAT resulting from certain limits to its jurisdiction. I recently wrote a post here relevant to the exercise by the Tribunal of ACL jurisdiction. That does not address the ongoing issues with the Statute of Limitations and contribution claims under the Wrongs Act. However, a legislative fix to those problems is now working its way through Victorian Parliament.
The Justice Legislation Amendment Act 2023 (Vic) (AmendmentAct) introduced amendments to several Victorian Acts to improve the operation of the Victorian justice and legal systems. It amended the following four Acts:
1. the Victorian Civil and Administrative Tribunal Act 1998 (Vic)
1. the Wrongs Act 1958(Vic)
1. the Limitation of Actions Act 1958(Vic)
1. the Domestic Building Contracts Act 1995(Vic)
The amendments were necessitated by jurisdictional issues raised by recent decisions including:
1. Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226 (Thurin)
1. Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233 (Vaughan)
1. Krongold v Thurin [2023] VSCA 191 (Krongold)
1. 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.
The issues arose from findings by the Court and VCAT that the Limitation of Actions Act does not apply to VCAT.
1. The Justice Legislation Amendment Act 2023 (Vic) and Section 73 amended the definition of Court in s 3 of the Limitation of Actions Act so that it will reads action includes any proceeding in a court of law or in VCAT;
  1. In section 3(1) of the Limitation of Actions Act 1958 , in the definition of “action” , after “law” insert “or in VCAT”.
  1. This has restored the normal operation of the Limitation of Actions Act to proceedings in VCAT.
Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226. On 20 October 2022, the Victorian Supreme Court, Court of Appeal decided that the VCAT did not have jurisdiction to hear a domestic building dispute involving a matter rising under Commonwealth legislation.
1. This decision is significant for a number of reasons including that it effectively limits the scope of VCAT’s jurisdiction for domestic building disputes.
David and Lisa Thurin (Owners) engaged Krongold Constructions (Aust) Pty Ltd (Builder) to demolish their house in Toorak, Victoria, and build a new residence (Works).
1. The Works were major domestic building works within the meaning of the Domestic Building Contracts Act 1995 (Vic).
1. Several disputes arose from the Works being undertaken under the contract including that the Owners alleged that defective pipes were used.
1. On 31 October 2017, the Owners commenced a proceeding in the Supreme Court of Victoria against Swan Hardware & Staff Pty Ltd (Swan Hardware) and Plumbing Plus Bathroom Kitchen Laundry Pty Ltd (Plumbing Plus). The Owners claimed that Swan Hardware imported allegedly defective materials into Australia and contravened the Trade Practices Act 1974 (Cth) (TPA) by supplying materials to the Builder’s plumbing contractor.
1. The Owners commenced a proceeding in VCAT against the Builder seeking to enforce an expert determination that the Owners suffered loss and damage of $3.5 million that the Builder refused to pay.
1. The Builder served points of defence disputing the Owner’s claims. The Builder then filed points of counterclaim and relevantly argued that any loss and damage suffered by the Owners was apportionable to Swan Hardware on the basis that they had breached the implied warranty of fitness for purpose in section 74B of the TPA.
1. In August 2018, VCAT made an order that joined Swan Hardware to the proceeding.
1. In May 2019, the Builder commenced a proceeding in the Supreme Court of Victoria against Swan Hardware. The Builder claimed against Swan Hardware under the TPA and made additional allegations under the TPA for defective goods and misleading and deceptive conduct. The Builder argued that VCAT lacked jurisdiction to hear the matter because the matter was one of federal jurisdiction. The Builder also argued that VCAT could not refer the matter to the Supreme Court pursuant to section 77 of the VCAT Act.
On referral from the judge at first instance, the Victorian Court of Appeal considered several issues relating to VCAT’s jurisdiction.
1. The Court of Appeal held that where a Commonwealth law is relied on as the source of a claim or defence asserted in the course of a proceeding, the proceeding is one ‘arising under’ a law of the Commonwealth within the meaning of section 76(ii) of the Constitution. Therefore, it is enough that the claim or defence be ‘genuinely in controversy and that it give rise to an issue capable of judicial determination’.
1. In this case, once the federal claims in respect of Swan Hardware were raised in the Builder’s defence dated 5 August 2018, the matter the subject of the VCAT proceeding came within federal jurisdiction. As a consequence, VCAT lacked jurisdiction to hear and determine that issue. The Supreme Court decided that VCAT lacked power to order that Swan Hardware be joined as a party to the VCAT proceeding.
1. The Court of Appeal rejected the Builder’s submission that VCAT did not have jurisdiction to hear any dispute involving a corporation as a party. The Court of Appeal confirmed that the case authorities make it clear that if a Commonwealth law is ‘lurking in the background’, or merely an ‘incidental consideration’, then the matter will not be one arising under the Commonwealth law. As such, if the sole connection with a Commonwealth law is that one or more of the parties to the dispute is a corporation incorporated under the Corporations Act, this does not mean that VCAT does not have jurisdiction to hear the matter.
1. The Court of Appeal also held that VCAT had jurisdiction to refer part or all of the VCAT proceedings to the Supreme Court of Victoria under section 77 of the VCAT Act.
The jurisdiction held by VCAT to determine domestic building disputes is significantly limited by the decision in Thorun. In that respect, if any party during a VCAT proceeding raises a matter involving Commonwealth law, such as a claim for misleading and deceptive conduct under the Australian Consumer Law, it is likely that VCAT does not have jurisdiction to hear the matter. If so, a party may apply for the matter to be transferred from VCAT to a suitable Court.
1. This means that a party that responds to a claim in VCAT involving Commonwealth law may be able to apply for the matter to be referred to a Court to avoid VCAT. This might be done either to obtain a strategic benefit or in an attempt to delay proceedings (i.e. as a defensive action). This situation may arise if a party is joined to a proceeding and if, following such joined, one or more party ventilates a claim under Commonwealth legislation.
1. Further, a party that has brought a claim in VCAT which involves a claim arising under Commonwealth law must consider this jurisdictional issue and evaluate whether VCAT is the proper forum or not. If not, what Court has jurisdiction to hear and determine the matter.
1. Given the threshold to determine whether a Commonwealth law is relied upon as the source of a claim and/or defence, a judgment call must be made by litigants presently in VCAT proceedings as to whether VCAT remains the proper jurisdiction to hear their matter or whether the matter ought to be referred to an appropriate forum.
Also of note is the decision of VCAT in Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233.
1. In this case Justice Delany in VCAT decided that VCAT did not have jurisdiction to determine claims for contribution under Part IV of the Wrongs Act due to the fact that VCAT is not a ‘court’. In this respect, section 24 of the Wrongs Act requires that, in proceedings for contribution under section 23B, the amount of contribution recoverable shall be such as may be found by the jury or by the Court.
1. Parties presently in VCAT, with actions involving claims for contribution under the Wrongs Act, must therefore consider bringing a separate action, for that claim, in a court or seek to refer the VCAT proceeding to a suitable Court that may determine these issues.
1. Justice Delany, sitting as a judicial member of VCAT in Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233, held that VCAT also did not have jurisdiction to hear and determine contribution claims under Part IV of the Wrongs Act 1958 (Vic).
In the decision of Owners Corporation 1 Plan No. PS707553K v Shangri-La Construction Pty Ltd (No 3) (Building and Property) [2022] VCAT 1385, his Honour Judge Anderson, sitting as a Vice President of VCAT, considered whether a reference in VCAT pleadings to ‘Australian Consumer Law’ without a reference to whether the state or Commonwealth version of that statute was being invoked should be construed as a reference to the Victorian statute.
1. The Vice President concluded at [37] and [38] that such a claim was in fact articulated under the Victorian statute.
1. Essentially these matters questioned whether the Tribunal has jurisdiction in any particular case, and a reference to a statute in VCAT pleadings must always be read in its particular context, these decisions combined suggest that VCAT has jurisdiction to hear and determine an ACL claim that either refers to the Victorian version of the ACL or does not identify which version of the ACL is relied upon.
These cases had a significant impact on a large number of building and construction cases in the Building and Property list at VCAT, many of which involve claims for contribution from contractors and sub-contractors.