Victorian Court of Appeal clarifies VCAT referral procedure

The appeal court’s decision in Krongold Constructions (Aust) Pty Ltd v Thurin is the latest instalment in a long running building dispute between the Thurins and Krongold, a builder. We wrote on the first decision of the court earlier this year, in which it held that VCAT has no jurisdiction to hear and determine matters arising under Commonwealth law. 

The decision provides greater certainty that the process of referral by VCAT to a court, where a federal matter has been raised, does not mean that the parties to building disputes are put 'back to square one' in a proceeding. 

Even so, parties and potential parties to building disputes should continue to carefully consider potential jurisdiction and limitation period issues when commencing or defending a claim, to facilitate the most certain, efficient and cost-effective resolution of a dispute.

The Court of Appeal’s recent decision clarifies that:

• where a proceeding is struck out or referred by VCAT to a court because VCAT lacks jurisdiction to hear the matter, a party is not required to re-commence fresh proceedings in court to continue the proceeding. Instead, the proceeding continues in the jurisdiction of the court referred to. The court may then make such orders as required to present the issues in a form appropriate to the court's decision;
• VCAT’s striking out or referral of a proceeding to a court does not mean that a new building action is brought for the purpose of the 10-year limitation period to commence building actions under section 134 of the Building Act 1993 (Vic). In practice, this means there is no consequence if the 10-year limitation period for claims in the proceeding had expired at the time it was struck out or referred to a court;
• if third parties have been invalidly joined to a VCAT proceeding due to the raising of federal matters, the joinder of those parties to the proceeding will not be validated when the proceeding continues in court; rather, if a party seeks to join third parties to the referred court proceeding, a new application needs to be made and the court will determine the application in accordance with conventional principles relating to joinder of parties.

Co-written by Jordan Davies of Pinsent Masons.