VCAT referrals in the spotlight in long-running building case

01 September 2023

The long-running saga of Thurin v Krongold has seen another issue regarding VCAT’s jurisdiction recently answered by the Victorian Court of Appeal.

In issue

  • On 17 August 2023, the Court of Appeal in the Supreme Court of Victoria delivered its decision in Krongold v Thurin [2023] VSCA 191. After an earlier decision had determined that VCAT does not have jurisdiction to hear cases where matters of federal law are raised, such as those involving the Competition and Consumer Act 2010 and Insurance Contracts Act 1984, the Court of Appeal has now addressed further issues arising from this significant decision.
  • The primary questions of law in issue before the Court of Appeal this time centred around the referral of a proceeding from VCAT to a court under section 77 of the VCAT Act, including whether those referred proceedings commenced afresh once transferred.

The background

In 2006, Krongold Constructions (Aust) Pty Ltd (‘Krongold’) was engaged by Lisa and David Thurin (‘Thurin’) to demolish their Toorak home and build a new house.

Subsequently, Thurin alleged certain defects in the building works and in December 2017, they appointed an expert to establish the extent and value of those defects. Following receipt of the expert’s advice, Thurin claimed loss and damage of $3,583,437.88 against Krongold, which it declined to pay.

Thurin commenced proceedings in VCAT in May 2018. In its defence, Krongold claimed that any loss and damage suffered by Thurin was apportionable against certain parties, as they had breached the Australian Competition and Consumer Act 2010 (or the Trade Practices Act 1974, as it was then) and were therefore concurrent wrongdoers within the meaning of s24AH of the Wrongs Act 1958 (Vic). Krongold sought orders to join these parties to the proceeding.

The proceeding ultimately was transferred to the Victorian Supreme Court in order to determine whether VCAT had jurisdiction to hear these federal law claims.

Previous decision

In October 2022, the Court of Appeal delivered its decision in Thurin v Krongold Constructions (Aust) Pty Ltd VSCA 226, determining that VCAT did not have jurisdiction to hear proceedings involving federal law.

Issues before Court of Appeal

Following its decision confirming that VCAT lacked jurisdiction to hear cases involving federal law, the Court of Appeal recently addressed issues arising from VCAT’s power to refer these cases to a court under section 77 of the VCAT Act.

The decision

In summary, the Court of Appeal determined that:

  • A proceeding commenced in VCAT that is referred under section 77 continues in the court of referral without the need for fresh proceedings to be issued.
  • In proceedings which are referred to a court by VCAT, the limitations period remains the same as it was when the matter was issued in VCAT. Specifically, the Court of Appeal said that a referral under section 77 does not constitute an ‘action’ within the context of the 10-year limitation period in the Building Act 1993.
  • If a party is invalidly joined by VCAT due to the existence of federal law matters, the referral to a court does not retrospectively fix the invalid joinder.

Implications for you

This decision is a further reminder that VCAT cannot hear matters in which federal law issues are raised.

Whilst this decision provides some clarity regarding the process of referral from VCAT under section 77, and the consequent limitations issues which may transpire, it leaves open the possibility of problems arising regarding parties that were invalidly joined, including limitations issues.

Given these issues, we recommend keeping jurisdiction and limitations issues in mind in any VCAT cases you are involved in.

Krongold v Thurin [2023] VSCA 191

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