Thurin v Krongold Constructions (Aust) Pty Ltd [2024] VSC 42

Nikki Miller | Isobel Carmody | Morsaal Aimaq

Key takeout

The Supreme Court of Victoria has confirmed that it has the power to extend limitation periods for commencement of proceedings (including building actions) where a proceeding initially commenced in VCAT has been struck out due to VCAT’s inability to resolve controversies involving federal subject matter.  This follows amendments made in October 2023 to the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act). 

Facts

This case forms part of a series of decisions regarding a claim under the Trade Practices Act 1974 (Cth) and VCAT’s jurisdiction (or lack thereof) to hear and decide claims arising under Commonwealth laws that are matters of federal jurisdiction. 

In 2022 the Victorian Supreme Court of Appeal held that, while VCAT did not have jurisdiction to hear and determine claims involving Commonwealth law, VCAT could refer matters to the Supreme Court under section 77 of the VCAT Act.  See our 2022 case note: VCAT’s jurisdiction on federal laws clarified   – Construction Law Made Easy.

In 2023 the Court of Appeal decided that a referral by VCAT invokes the jurisdiction of the Supreme Court without the need for a fresh or new initiating process because a referral does not constitute bringing of an action. Therefore the referral does not need to be made before the expiry of relevant limitation periods.  However, the Court of Appeal also held that the claims against the architect and supplier of pipes did not form part of the matter referred to the Supreme Court under the VCAT Act as VCAT lacked jurisdiction to join those parties as respondents to the initial VCAT proceeding in the first place.  See our 2023 case note: Court of Appeal rules on referrals to the Supreme Court out of VCAT – Construction Law Made Easy.

In late 2023 the Justice Legislation Amendment Act 2024 (Vic) amended section 77 of the VCAT Act so that if VCAT refers a matter to the Supreme Court due to its lack of jurisdiction to determine matters involving federal subject matter, the Supreme Court can extend a limitation period that applies to the commencement of a proceeding in relation to that matter.

The court must be satisfied of the following:

1. the proceeding involves the same subject matter as a proceeding in the Tribunal that was struck out on the ground that the Tribunal lacked jurisdiction to resolve controversies involving federal subject matter;
2. the late commencement of the proceeding is attributable to the additional steps required to have the matter determined by the court because the Tribunal proceedings were struck out; and
3. it is fair and reasonable to extend the limitation period.

This latest 2024 decision from the Supreme Court addresses:

• whether the amended section 77 confers jurisdiction on the court to join the architect and supplier of pipes as parties to the proceeding;
• whether the court should do so; and
• whether sections 134 and 134A of the Building Act prevent the court from making orders under section 77 in relation to building matters.

Decision  

The Supreme Court held that it did have the power to extend limitation periods in this matter and that it should exercise that power to extend the relevant limitation periods.

The parties disagreed as to how the power to extend limitation periods in amended section 77 should be construed.  The architect contended that the part of the section requiring that ‘the proceeding involves the same subject matter as a proceeding in the Tribunal‘ (emphasis added) before the power to extend limitation periods is enlivened should be read narrowly. This would mean that the jurisdiction of the court to extend the limitation period is limited to the extent of the ‘matter’ as validly referred by VCAT.  The architect argued that the power to extend limitation periods in that section did not extend to claims against third parties that had been invalidly joined to the initial VCAT proceeding, as the claims against those parties did not properly form part of the ‘matter’ referred to the court.  

The court disagreed and was satisfied it had jurisdiction under section 77 to extend the limitation period provided the other requirements set out in that section were met (and held that they were met in this case).

In coming to its decision, the court:

• emphasised that in interpreting a piece of legislation, a construction that would promote the purpose or object underlying that legislation is to be preferred to a construction that would not promote that purpose and object; and

• considered the meaning of the word ‘matter’ and the phrase ‘in relation to that matter’, concluding that they conveyed the subject matter of the controversy between the parties – that is, the controversy that has been brought before VCAT, whether or not there is jurisdiction for VCAT to hear it.

The court considered that the purpose of the amendments to the VCAT Act in relation to limitation periods was to confer on the court the jurisdiction to extend limitation periods so as to preserve the rights of parties to a proceeding initially commenced in VCAT where federal jurisdiction is invoked and VCAT cannot validly determine the matter. 

The court noted that if it had accepted the architect’s submissions that the power to extend the limitation period in section 77 applied only to ‘matters’ which had been validly referred to the court, section 77(4)(b) (which requires that the person seeking the extension of the limitation period is doing so because they are late in commencing a fresh proceeding in relation to the matter within federal jurisdiction that VCAT could not determine) would have been left with ‘no work to do‘. 

As held by the Court of Appeal in the 2023 decision, no fresh initiating process is required where a matter is validly referred by VCAT to the court.

The requirements to enliven the power to extend the limitation period set out in section 77 were satisfied – namely:

1. the subject matter of the proceeding in the court relating to the architect and supplier of pipes involved the same subject matter as the initial proceeding in VCAT against those parties. The allegations as to the installation of defective pipes in the two proceedings were the same;

• the initial VCAT proceeding had been struck out on the basis that it was a matter in the federal jurisdiction. It was plain that the VCAT proceeding was struck out because VCAT lacked the power to resolve the relevant controversy, and there was no other ground or reason why that proceeding had been struck out;

• the late commencement of the proceedings against the architect was due to the additional steps required to have the relevant claim determined by the court, resulting from the fact that the VCAT proceeding was incompetent due to matters of federal jurisdiction being raised; and

• it was fair and reasonable to extend the limitation period. This was demonstrated by both parties being well prepared for trial, the architect had fully and actively participated in the VCAT and court proceedings, the jurisdictional challenges were not the fault of either party, and the plaintiffs had acted promptly in seeking the extension of the limitation period. It is highly desirable and in the interests of justice that parties against whom claims are made by other parties remain in the dispute and the architect could not show any particular prejudice it suffered as a consequence of the delay in commencement of proceedings.

The architect also argued that the language of sections 134 and 134A of the Building Act 1993 (Vic) are expressed to apply the 10 year limitation ‘despite anything to the contrary… in any other Act of law‘, therefore excluding building actions from any power to extend the applicable limitation period under section 77 of the VCAT Act.  The court observed that the amended provisions of the VCAT Act were more specific and more recent than section 134 of the Building Act 1993 (Vic). The power to extend limitation periods under section 77 of the VCAT Act was clearly intended to apply to matters such as this one – including domestic building matters.