Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226

Jeanette Barbaro  |  Isobel Carmody  |  Morsaal Aimaq

Key takeout

The Supreme Court of Victoria has confirmed that the Victorian Civil and Administrative Tribunal (VCAT) does not have jurisdiction to hear and decide matters arising under Commonwealth laws as these are matters in federal jurisdiction.  Parties in Victoria seeking to rely on claims and defences arising under the Australian Consumer Law (especially in domestic building disputes, which in Victoria are ordinarily heard in VCAT) must carefully consider whether the relevant claim or defence arises and choose the appropriate forum accordingly. There are two considerations:

• Under the federal legislation, the Competition and Consumer Act 2010 (Cth) (CCA) – VCAT will not have jurisdiction; or
• Under the Victorian legislation, the Australian Consumer Law and Fair Trading Act 2012 (Vic) – VCAT will have jurisdiction.

Where a proceeding in VCAT involves a matter arising under federal laws, VCAT cannot hear the matter but can refer that proceeding to the Supreme Court of Victoria.

Facts

The owners of a house engaged a builder to perform major domestic building works within the meaning of the Domestic Building Contracts Act 1995 (Vic) (DBCA), including demolition of the house and construction of a new residence.  The owners and builder ended up in dispute over alleged defects in those works.  

The owners commenced proceedings in VCAT seeking to enforce a disputed expert determination that awarded an amount payable from the builder to the owners for the alleged defects.  The builder’s defence at VCAT included claims for apportionment (or, alternatively, contribution) from third parties (being the builder’s subcontractors). This was on the basis of claims made by the builder for breaches of an alleged duty owed to the builder and most critically, under the predecessor legislation to the CCA, the Trade Practices Act 1974 (Cth) (TPA).   The builder asserted that VCAT had no jurisdiction over claims brought under the CCA / TPA, as they are federal Acts.  VCAT referred a number of questions of law relating to its jurisdiction to hear the matter to the Supreme Court of Appeal for determination.

Decision

The court held that:

• VCAT did not have jurisdiction to hear and determine the proceeding due to the reliance of one of the parties on a claim arising under the (federal) TPA, and therefore involved a matter in federal jurisdiction;
• the mere reason that a party to the proceeding is a corporation incorporated under the federal Corporations legislation does not mean that the matter is one in federal jurisdiction, as there is a distinction between a Commonwealth law that is ‘lurking in the background‘ or an ‘incidental consideration’, and one which provides a cause of action or ground of defence; and
• notwithstanding that the proceeding involves a matter in federal jurisdiction, VCAT retains the jurisdiction to refer the matter to the Supreme Court of Victoria.  

The Commonwealth parliament has invested ‘the several courts of the States‘ with federal jurisdiction, subject to certain exceptions and conditions, by the Judiciary Act 1903 (Cth).  The Commonwealth parliament is empowered to do so by s 77(iii) of the Constitution.  However, VCAT is not a ‘court of a State‘ within the meaning of s 77(iii) of the Constitution, and therefore has not been invested with federal jurisdiction by the Commonwealth.  

The power of the Victorian parliament to confer jurisdiction on VCAT is also limited – it is unable to confer the relevant judicial power on a body other than a ‘court of the State‘, and so is similarly incapable of investing VCAT with federal jurisdiction.  Therefore, the conferral of jurisdiction on VCAT to hear domestic building disputes by the DBCA (which was enacted by the Victorian parliament) must be read down so as to deny VCAT jurisdiction in respect of federal matters.

CCA / TPA claims are matters arising under a federal law.  Therefore:

• once the federal claims in respect of the subcontractor were raised by the builder, the matter the subject of the VCAT proceeding came within federal jurisdiction and thereafter VCAT did not have jurisdiction to hear and determine the proceeding; and
• making an order joining a third party to the VCAT proceeding on the basis of a CCA / TPA claim would bring VCAT into federal jurisdiction, and so any such order would be void.

Accordingly, VCAT lacked jurisdiction to hear and determine the proceeding because it included matters that came within federal jurisdiction.