VCAT Lacks Jurisdiction Over Federal Matters

Introduction

In the recent decision of the Victorian Court of Appeal in Thurin v Krongold Constructions [2022] VSCA 226 (Thurin v Krongold), the majority held that the Victorian Civil and Administrative Tribunal (VCAT) lacks jurisdiction to hear and determine domestic building disputes involving the interpretation or application of federal legislation. The decision has significant consequences for how domestic building disputes are heard and determined in Victoria. Further, it also impacts on how matters involving the Competition and Consumer Act 2010 (Cth) and the Insurance Contract Act 1984 (Cth) are heard in Victoria.

Jurisdiction Over Domestic Building Works

VCAT has jurisdiction to hear and determine disputes that involve domestic building works under the Domestic Building Contracts Act 1995 (Vic) (Act).

Section 44 of the Act defines “domestic building works disputes” as including disputes between owners and builders in relation to “any matter relating to a domestic building contract or the carrying out of domestic building works.”

Background

The Applicants in Thurin v Krongold are homeowners who engaged Krongold Construction (Aust) Pty Ltd (Krongold) to demolish their house in Toorak and build a new residence. These works constituted domestic building works within the meaning of the Act.

After the works were completed, the Applicants alleged that defective pipes were used in the internal plumbing works and that the “internal plumbing works… bathroom works and other miscellaneous installations, were not properly carried out,” in accordance with section 8 of the Act. Further, the Applicants claimed that “the irrigation system and the lawn were not properly installed and were not fit for purpose.” 

In its defence, Krongold claimed that any loss or damage suffered by the Applicants was caused by the failure of other corporations involved in the project, such the pipe supplier. As such, Krongold argued that the Applicants’ claim was apportionable against other corporations under the Trade Practices Act 1974 (Cth) (TPA) (now the Competitions and Consumer Act 2010 (Cth)). In those circumstances, Krongold, a corporation itself, contended that VCAT lacked the jurisdiction to hear the matter on the basis that it was one of federal jurisdiction. Krongold further contended that VCAT could not refer the matter to the Supreme Court of Victoria, pursuant to section 77 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).  

After Krongold raised its defence under the TPA, the matter was referred to the Victorian Court of Appeal on a question of whether VCAT had the jurisdiction to hear matters which raised claims under federal statutes involving Australian Consumer Law.

Implications of Decision

The Court of Appeal held that VCAT lacks jurisdiction to hear and determine the dispute as it has no power to join parties to the case as concurrent wrongdoers on the basis that:

(a)   if a party raises a claim or defence under federal legislation, the entire dispute becomes a federal matter;

(b)   under Chapter III of the Australian Constitution, only federal courts and state courts are empowered to hear federal matters; and

(c)   VCAT is a tribunal, not a court, and as such is not empowered to hear cases which concern federal legislation.

As a result of the Court of Appeal’s decision in Thurin v Krongold, VCAT’s jurisdiction to hear and determine domestic building disputes has been significantly reduced. Further, litigating parties will need to ensure that their respective claims and defences in a VCAT proceeding are consistent with the Court of Appeal’s decision.

If you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 9521 7956 or chris@urbanlawyers.com.au.