Jurisdiction and limitation changes at VCAT

The effect of these rulings is that until legislative intervention or a superior court decision:

1. Limitation periods do not apply to certain statutory claims in VCAT
2. VCAT has no jurisdiction to deal with matters involving an issue arising under federal legislation, including the Competition and Consumer Act 2010 (Cth) and Insurance Contracts Act 1984 (Cth)
3. VCAT has no jurisdiction to deal with claims for contribution under Part IV of the Wrongs Act 1958 (Vic) (the Wrongs Act).

Practitioners should carefully consider and take into account these jurisdiction and limitations issues when advising clients about the appropriate place to commence legal proceedings.

Practitioners should also remain alert for further developments. It is anticipated there may be legislative changes to address the issues raised by these judgments, although to date, none have been announced.

This article explores each of the decisions, along with some key risk issues for practitioners to consider when advising clients in existing or soon to be commenced litigation.

In the case of Steedman v Greater Western Water Corporation [2023] VCAT 128 (Steedman), VCAT held that it was bound by one of two conflicting decisions of the Supreme Court of Victoria that limitation periods imposed by the Limitations of Actions Act 1958 (Vic) (the Limitations Act) do not apply to a statutory claim brought in VCAT.

The two (unrelated) Supreme Court decisions considered in this case were:

1. Lanigan v Circus Oz & Ors [2022] VSC 35 (Lanigan) where Justice McDonald found the six-year limitation period under the Act did not apply to proceedings in VCAT, as VCAT is not a ‘court of law‘ for the purposes of the definition of ‘action‘ in s 3(1) of the Limitations Act. The proceeding related to a statutory claim under the Equal Opportunity Act 2010 (Vic).
2. Ajaimi v Giswick Pty Ltd [2022] VSC 131 (Ajaimi), where Justice Osborne found the six-year limitation period did apply to proceedings in VCAT, as the definition of ‘action’ in s 3(1) of the Limitations Act is not limited to proceedings in court and would extend to VCAT. The Ajaimi proceeding related to a contractual claim.

In Steedman, VCAT found it was bound to follow Lanigan (applying the doctrine of precedent) and a statutory claim brought by the applicant homeowner under the Water Act 1989 was not statute barred and could be maintained in VCAT, despite the expiry of a six-year limitation period.

However, the Tribunal also indicated it considered the six-year limitation period for contractual claims would apply to proceedings brought in VCAT, relying on the decision in Ajaimi.

Steedman confirms that for now, VCAT is currently a potential unique pathway for historical statutory claims.

Practitioners need to understand this potential consequence of the decision and be wary of incorrectly advising clients that a statutory claim is statute barred, or that a limitation defence is available. Practitioners should also keep an eye out for changes to the law in this area through anticipated legislative intervention, or decisions by a superior court.

The Court of Appeal of the Supreme Court of Victoria in the case of Thurin v Krongold Constructions [2022] VSCA 226 (Thurin) has found that, despite long standing practice to the contrary, VCAT lacks jurisdiction to hear and determine matters considering federal legislation.

The decision has had significant consequences for existing cases in VCAT with matters involving federal legislation being struck out and referred to other courts.

Thurin involved a domestic building dispute between property owners and a construction company, Krongold, that was contracted to build a new residence. The owners alleged that certain plumbing and irrigation works carried out were defective. An expert was appointed under the building contract to determine the dispute, finding that the owners had suffered loss and damage of about $3.58 million. The owners commenced a proceeding in VCAT seeking to enforce the expert determination.

Krongold, by way of defence and counterclaim, pleaded that any loss or damage suffered by the owners was apportionable. In particular, that certain contractors and/or suppliers had breached the Australian Consumer Law (the then Trade Practices Act 1974 (Cth)) and were concurrent wrongdoers within the meaning of s24AH of the Wrongs Act.

It was contended that VCAT lacked jurisdiction to consider federal legislation and that the matter should be referred to the Supreme Court.

VCAT referred questions of law concerning its jurisdiction to the Court of Appeal, including whether the fact a respondent was incorporated under the Corporations Act 2001(Cth) brought the matter within federal jurisdiction. The Court confirmed that:

• VCAT cannot hear matters involving federal claims and defences. As soon as a federal issue is pleaded, the issue is beyond the remit of VCAT.
• A matter is not in federal jurisdiction merely because the defendant is incorporated under the Corporations Act.
• VCAT still has power to transfer a matter involving federal legislation to the Supreme Court, even though it lacks jurisdiction.

This means that if parties have commenced a case in VCAT and federal issues arise, VCAT cannot continue to hear the case and orders will be made striking out the case. Parties will need to consider issuing a new case at the Magistrates’ Court (or another Court).

Practitioners are reminded that Part 3A of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) was introduced by the Victorian Parliament in 2021 to enable the Magistrates’ Court to determine proceedings which VCAT would have had jurisdiction to hear, but for federal subject matter. (Section 3A was originally introduced following the Court of Appeal’s decision in Meringnage v Enterprises Pty Ltd [2020] VSCA 30 that VCAT cannot hear certain types of cases where the parties are residents of different Australian States or Territories, or the Commonwealth of Australia is a party.)

Part 3A also allows the Magistrates’ Court to transfer appropriate cases involving federal matters to the County Court or Supreme Court in certain circumstances. Alternatively, parties may choose to issue a new proceeding directly in the County Court or Supreme Court (except if the case relates to a residential tenancy, in which case you can only apply to the Magistrate Court).

Following this ruling, parties in existing proceedings, or who are yet to commence proceedings, will need to consider the potential for claims and defences to incorporate Federal legislation and the appropriate forum to refer or commence proceedings. Choosing the wrong forum could have significant repercussions for litigant clients, including missed limitation periods, delay and increased costs being incurred when matters are struck out and transferred between forums.

In Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233, Justice Delany held that, notwithstanding VCAT’s long-standing practice to the contrary, the Tribunal lacks jurisdiction to determine claims for contribution under Part IV of the Wrongs Act.

By way of a refresher, Section 23B(1) of Part IV of the Wrongs Act provides that a person liable in respect of any damage suffered by another person may recover contribution from any person liable in respect of the same damage. By section 24(2) the amount of contribution recoverable from the wrongdoer is the amount found by a ‘court’ or jury to be just and equitable having regard to the extent of the person’s responsibility for the damage. The word ‘court’ is not defined in part IV.

In this (complex) building dispute, the respondent applied for the joinder of additional parties in relation to contribution claims it had pleaded. A proposed joined party opposed the joinder application, contending that the proposed contribution claim was not within VCAT’s jurisdiction.

This issue arose from a reference by the Court of Appeal in Thurin to the possibility that VCAT lacked such jurisdiction given the word ‘court’ is not defined in Part IV, although it is in other Parts of the Wrongs Act. Justice Delany agreed.

However, the Court of Appeal remarked that it is ‘clear‘ that apportionment claims may still be made in VCAT under Part IVAA (Proportionate Liability) of the Wrongs Act, which expressly defines ‘court’ to include a tribunal.

Therefore, litigants in VCAT who wish to pursue a contribution claim must commence a separate contribution proceeding in a court that has jurisdiction to hear that claim, while the primary claim remains in VCAT. Alternatively, they may elect to refer the case to a court that may determine the issues together.

• VCAT is not a court and the same rules will not always apply.
• For now, there is an inconsistent operation of limitation periods between VCAT and the courts with VCAT being a potential unique pathway for historical statutory claims. Practitioners should be wary of incorrectly advising applicant clients that a claim is statute barred when it can be maintained in VCAT, or incorrectly advising respondent clients that a limitation defence is available.
• VCAT’s jurisdiction to hear and determine claims is now more limited. The Tribunal cannot determine parties’ rights and liabilities under federal legislation or contribution claims under the Wrongs Act.
• Therefore, practitioners will need to carefully consider, for both existing and future proceedings, the potential for federal issues to arise, and whether there might be claims for contribution. Getting this wrong may result in significant cost consequences and delay with the proceeding (or part) being relisted in a Court.
• If separate applications in different forums are justified, practitioners should bear in mind potential limitation periods.
• Practitioners need to keep an eye out for appeals and legislative reform which is anticipated following these decisions.

This article was prepared by Caroline Dew, Partner and Jonathan Markowitz, Senior Associate from Moray & Agnew and LPLC.