The Victorian Court of Appeal has clarified the jurisdictional boundaries of VCAT. Its decision in Krongold v Thurin  VSCA 191 helps to enshrine a principle that matters concerning federal law must (at the moment at least) be referred by VCAT to another court.
The Thurins engaged Krongold in 2006 to construct a new home in South Yarra. These works constituted major building works under the Domestic Building Contracts Act 1995 (Vic). After completion of the works, the Thurin’s alleged that there were defects.
As part of the expert determination process initiated by the Thurins, Richard Manly KC was appointed to determine the extent of the defects. He found that the Thurins had suffered loss and damage of $3,583,437.88. Krongold denied this and refused to pay. The Thurins commenced a VCAT proceeding seeking to have the tribunal enforce the expert determination findings. As part of its defence, Krongold claimed that any loss or damage suffered by the Thurins was apportionable to a number of subcontractors, including MDG Plumbing, Swan Hardware, and Casper Architecture and Design. Krongold claimed these parties had breached the Australian Consumer Law and were concurrent wrongdoers within the meaning of s 24AH of the Wrongs Act 1958 (Vic). Krongold sought orders from the Tribunal joining these parties to the proceeding.
First hearing – Thurin v Krongold Constructions  VSCA 226
Did VCAT have jurisdiction to hear the matter or should it refer the matter to another Victorian Court?
The Court held that VACT did not have the jurisdiction to determine the matter given it contained claims made pursuant to federal law. It ordered the matter be referred from VCAT to another Court. The Court’s reasons included the following:
- if a party raises a bona fide claim or defence under federal legislation, the entire dispute becomes a “federal matter”;
- under the Australian Constitution, only federal “courts” and state “courts” are empowered to hear “federal matters”; and
- VCAT is not a “court” and therefore is not empowered to hear cases concerning federal legislation.
On appeal, the Court considered three main questions, namely:
- whether a referral of a proceeding to the Supreme Court pursuant to section 77 of the VCAT Act 1998 (Vic) invokes the jurisdiction of the Court and whether the filing of a fresh initiation process is necessary;
- whether the Thurin’s were barred by the limitation periods present in ss134 and 134A of the Building Act 1993 (Vic); and
- whether Casper Architecture and Swan Hardware can be successfully joined to the referred Supreme Court Proceedings.
In relation to point (a), the Court of Appeal held that the referral of the proceeding, pursuant to section 77 of the VCAT Act 1998 (Vic), from VCAT to the Supreme Court was valid and no fresh initiating process, such as a writ or originating motion, was necessary to enliven the jurisdiction of the Supreme Court to hear the referred proceeding.
Regarding point (b), the Court of Appeal found that the referred proceeding was not barred by the 10-year limitation period imposed by the Building Act 1993 (Vic), as the making of a referral under s77 of the VCAT Act 1998 (Vic) does not represent a new action being ‘brought’ and the date that the initial claim was brought to VCAT is the relevant date in respect of the Building Act limitation periods.
In respect of point (c), the Court of Appeal held that the invalid joinder of Casper Architecture and Swan Hardware (given the application of federal jurisdiction matters) was not retrospectively validated by the section 77 referral. This means that both parties would need to be properly joined again and at that stage the relevant Court would deal with any limitation period arguments in accordance with ‘conventional principles relating to the joinder of parties’.
Krongold v Thurin – lessons learned
If your matter has any connection to federal law, VCAT does not have jurisdiction to hear it.
If there is federal law, a referral to a court pursuant to s77 of the VCAT Act 1998 (Vic) can be made.
The date of referral has no bearing on any limitation periods imposed by the Building Act 1993 (Vic).
The date that the action was initiated at VCAT will be used to determine whether the action was brought within the relevant time period.
This article was written by Theo Kalyvas, Partner and Fin Neaves, Associate.