The recent decision of the Court of Appeal in the Victorian Supreme Court in Thurin v Krongold Constructions (Aust) Pty Ltd  VSCA 226 has determined that hearing, interpreting or applying federal matters such as the Competition and Consumer Act 2010 (Cth) and the Insurance Contracts Act 1984 (Cth), is outside of the jurisdiction of the Victorian Civil and Administrative Tribunal (VCAT).
Given that VCAT has primary jurisdiction over domestic building disputes in Victoria, and that such federal matters are the subject of these types of disputes, this decision is likely to cause delays because VCAT will need to refer these matters to an appropriate forum to resolve a federal jurisdictional dispute.
In 2006, David and Lisa Thurin (the Thurins) engaged the first respondent, Krongold Constructions (Aust) Pty Ltd (Krongold) to demolish their Toorak home and build a new residence. These works constituted major domestic building works within the meaning of the Domestic Building Contracts Act 1995 (Vic). Subsequent plumbing and irrigation works performed by various subcontractors were alleged to be defective.
The Thurins commenced a proceeding in VCAT against Krongold. Krongold’s defence alleged, amongst other things, that the subcontractors had breached the Australian Consumer Law (the then Trade Practices Act 1974 (Cth) (TPA)) and hence were concurrent wrongdoers within the meaning of s 24AH of the Wrongs Act 1958 (Vic). Krongold subsequently sought orders to join the subcontractors as third parties to the proceedings.
The Appeal: Decision of the Victorian Supreme Court of Appeal
The appeal addressed three key questions:
- What qualifies as a sufficient basis for bringing a proceeding in a federal jurisdiction
The Court stated that the mere fact a party was incorporated under the Corporations Act 2001 (Cth) (Corporations Act) was not a sufficient connection to bring the matter within federal jurisdiction.
This is because where the only connection with a law of the Commonwealth is the party’s legal capacity to sue or be sued, then the party’s capacity is merely an incidental consideration.
- Does VCAT have jurisdiction to consider claims raised under the TPA?
In conjunction with the above, the Court held that once Commonwealth law is relied on as the source of a claim or defence (i.e. the apportionment claim under the TPA raised in the VCAT proceeding), the matter then becomes a federal matter.
As a federal matter, VCAT lacks the jurisdiction to determine the matter. Subsequently it was determined that VCAT further lacked the power to make an order joining third parties.
- Can VCAT refer federal matters to an appropriate forum under the VCAT Act?
After the Court decided the above two questions, they considered VCAT’s power to refer a proceeding to a more appropriate forum where it would efficiently resolve the matter in dispute, under s77 of the VCAT Act.
The Court gave s77 its full meaning and noted that VCAT could still transfer a proceeding even where VCAT lacked jurisdiction because a federal claim had been raised.
The Victorian Supreme Court of Appeal held that VCAT, which has primary jurisdiction over domestic building disputes in Victoria, can no longer hear domestic building disputes involving the interpretation or application of federal legislation. As a result, VCAT will refer these matters to a more appropriate forum to hear these federal claims.
This article was written by Paul Graham, Partner, Tara Nelson, Senior Associate and Nick Jarrett, Law Graduate.