VCAT delays and under-resourcing no longer grounds to bypass VCAT’s chief jurisdiction over domestic building disputes

Executive summary

In recent years, resulting from pandemic-induced delays and under-resourcing in VCAT, the County Court in Impresa Construction v Oxford Building [2021] VCC 1146¹ (Impresa) and Uber Builders and Developers Pty Ltd v MIFA Pty Ltd & Anor [2021] VCC 1677² (Uber) set a precedent for parties to commence domestic building disputes in the County Court despite VCAT’s ‘chief jurisdiction’ under s57 of the Domestic Building Contracts Act 1995 (Vic) (the DBCA Act).

In Mooney & Anor v Fanissa Pty Ltd [2024] VCC 1032 (Mooney), the Court has overruled Impresa and Uber, and held case management considerations identified in those earlier cases are no longer relevant in deciding whether to stay a proceeding that could be heard in VCAT under s57 of the DBCA Act.

In Mooney, the County Court ordered the proceeding to be stayed under s57(2) of the DBCA Act. In doing so, it made no criticism against the plaintiff for commencing proceedings in the County Court as the decisions in Impresa and Uber were unchallenged at that time.

Background

Mooney (Plaintiff) engaged Fanissa Pty Ltd Ltd (Defendant) to supply and construct a concrete inground swimming pool and spa. The parties agreed the works were domestic building works under a domestic building contract and therefore the Defendant owed the implied warranties under s8 of the DBCA Act.

The Plaintiff alleged the swimming pool was defective and commenced proceedings in the County Court to ‘avoid the significant backlog in VCAT’.³ The Defendant brought an application to stay the proceedings under s57(2) of the DBCA Act.

What did the Court say about s57 having regard to VCAT’s backlog since 2021?

The prerequisites to a stay under s57 of the DBCA Act include:

• the action arises wholly or predominantly from a domestic building dispute;
• the Court had not yet heard any oral evidence; and
• the action could be heard by VCAT under the Subdivision.

The Court acknowledged the third prerequisite (s57(2)(a) of the DBCA Act) was subject to recent judicial consideration. Kirton J did not disagree with the determination in Impresa and Uber that case management concerns may be imported into a construction of s57(2)(a). Kirton J highlighted that those decisions were made at a time when VCAT was significantly under resourced. The question to be considered now, however, was “whether that situation has changed and whether VCAT’s capability to hear the present case, having regard to case management considerations, is still a relevant factor in the interpretation of s57(2)(a)”.⁴

What did the Court decide?

The first two limbs of s57 the DBCA Act were readily satisfied. With respect to the third limb, Kirton J held the case management considerations identified in Impresa and Uber no longer relevant in determining whether VCAT could hear the action. This is attributable to substantial improvements to the management of VCAT’s backlog since 2021, including the appointment of a significant number of new members and improved case management practices in VCAT’s building and property list.⁵ Her Honour noted the present case was precisely the type of claim that would benefit from VCAT’s less formal case management process.

Reference was also made to the factors determining whether another forum would be ‘more appropriate’ than VCAT under s77 of the VCAT Act, identified in Plunkett v Portier Pacific Pty Ltd [2024] VCAT 205 (Plunkett) (as referred to in our previous Critical Path article published in March 2024: Plunkett v Portier Pacific Pty Ltd (Civil Claims) [2024] VCAT 205 – HWL Ebsworth Lawyers). To this, Her Honour highlighted the distinction between the test under s77 of the VCAT Act and s57 the DBCA Act. The Court noted that whilst the absence of the factors identified in Plunkett are indicative of whether a matter is capable of being dealt with by VCAT, they are not relevant in determining an application for a stay under s57(2).⁶

The Court ultimately stayed the proceeding under s57(2). Kirton J emphasised that the word ‘must’ in s57(2) was ‘imperative’ to the Court’s obligation in granting the stay.⁷

Key takeaways

For litigants in a dispute that is wholly a domestic building dispute, it appears they no longer have the freedom to choose which forum to commence proceedings. Following Mooney, such a dispute must be commenced in VCAT without risk of being stayed.

This article was written by Theo Kalyvas, Partner, Chris Kipouridis, Associate, and Joseph Li, Solicitor.

¹ See our previous Critical Path article: https://hwlebsworth.com.au/domestic-building-disputes-and-delays-at-vcat-county-court-affirms-decision-to-bypass-vcat-jurisdiction/
² See our previous Critical Path article: https://hwlebsworth.com.au/vcat-delays-and-under-resourcing-foreshadow-overhaul-of-domestic-building-dispute-proceedings/
³ Para [2]
⁴ Para [42]
⁵ Paras [44] – [45]
⁶ Para [50],[70]
⁷ Para [79]