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The Victorian Civil and Administrative Tribunal (‘VCAT’), pursuant to Section 57 of the Domestic Building Contracts Act 1995 (VIC) (‘the DBCA’) is chiefly responsible for the resolution of domestic building disputes. If a proceeding relating to a domestic building dispute is commenced in a jurisdiction other than VCAT, where that action could be heard by VCAT, then the court must stay the proceeding when a party to the proceeding applies for same. It follows that, for some decades, VCAT has been the jurisdiction in which virtually all domestic building disputes have been heard initially in Victoria.

However, in recent times during the COVID-19 pandemic, VCAT has been overwhelmed with an increasingly huge volume of cases, which has led to delays in disputes advancing or being resolved in that jurisdiction, particularly in the Building and Property List.[1] This has been noted on the VCAT website. The delays can been burdensome upon litigants, as the ‘carrying costs’ of litigation can be substantial. The introduction of VCAT as the chiefly responsible jurisdiction was premised on the idea of promoting swift, cost-effective and less formal resolution of domestic building disputes.

It appears that given the recent delays at VCAT, Courts have increasingly recognised that these objectives are not being met – cue the decision of Uber Builders and Developers Pty Ltd v MIFA Pty Ltd & Anor [2021] VCC 1677 (‘Uber’), which was delivered by the County Court only 2 months after a case relating to similar considerations, Impressa Construction v Oxford Building [2021] VCC 1146.

An ‘Uber’ Decision

The decision of Uber came about in the context of a building contract entered into between Uber Builders (the builder) and MIFA (the principal) for the construction of residential apartments including basement carpark and a commercial space. Towards the end of the contract, a dispute arose in respect of delay of practical completion and whether Uber was entitled to an extension of time, amongst other things.

Uber had applied to the County Court of Victoria for declarations in respect of these disputed issues. The claim made by Uber for compensation was just shy of $180,000, which in the construction sector is a fairly modest amount. The defendant MIFA advised the County Court that it would apply pursuant to Section 57 of the DBCA for a stay of the proceedings at the County Court, and for the matter to be dealt with in VCAT. Uber opposed the application for stay.

As noted above, it has been accepted generally amongst practitioners of construction law that domestic building disputes must go to VCAT to be resolved at first instance. But there has been flexibility afforded by a certain approach taken to interpreting the words ‘could be heard at VCAT’ in section 57(2)(a) of the DBCA.

The Words: ‘Could be heard by VCAT’

In Uber Builders, both parties agreed the dispute was a domestic building dispute, but it was not agreed whether or not the proceeding ‘could be heard by VCAT’. The crux of the argument in Uber was that due to the COVID-19 pandemic and the related substantial backlog of cases at VCAT, that the matter ‘could not be heard by VCAT’ essentially due to its ‘under-resourcing’.[2]

The test arising from the words in Section 57(2)(a) was said by Her Honour Justice Burchell to be a practical one, consistent with the objects of the provision being “to enable disputes involving domestic building work to be resolved as quickly, as efficiently and as cheaply as is possible having regard to the needs of fairness.”[3] The whole idea of having VCAT responsible for domestic building disputes was in recognition of the fact that disputes involving domestic building work are specialised, where timely resolution is critical, and where the costs of highly formalised legal proceedings may outweigh the benefits – “less formal proceedings are more likely to reach the heart of the matter than the full panoply of the law.”[4]

The practical realities at play in both Uber Builders and Impressa Construction were that in the COVID-19 pandemic era, if a stay was granted under s 57 and the matter sent to VCAT, the parties would end up having their matter heard at a far later date than if the matter simply remained in the County Court.[5] Her honour noted that “the next available date for a multi-day hearing is approximately 14 months away.”[6]

These delays, and the potential prejudice that would follow, would seemingly undermine the very purpose of the introduction of VCAT as the ‘chiefly responsible’ jurisdiction for domestic building dispute resolution. When reading into the significance of the word ‘could’ in ‘could be heard by VCAT’, it was not inappropriate to have regard to temporal considerations and costs, amongst other things, particularly when regard was had to the purpose of the legislation.

Her honour remarked:

The apparent purpose of the legislation, therefore, is that the plaintiff has a choice of jurisdiction as between VCAT and the County Court. That choice is inconsistent with a plaintiff being forced into VCAT merely because VCAT has concurrent jurisdiction over the dispute. Parties can consent to jurisdiction as it is uncontroversial that this court may hear and determine a ‘domestic building dispute’. Section 57 is only triggered by an application of a party to the action made before the court has heard any oral evidence concerning the dispute itself.[7]

Conclusion

It follows that it is not necessarily entirely accurate to say that VCAT has exclusive jurisdiction for the resolution of domestic building disputes. Where considerations of swiftness, efficiency and cost-effectiveness dictate that a proceeding will be dealt with more quickly and cost-efficiently in a jurisdiction other than VCAT, then it will be unlikely that a section 57 application for stay will be granted. Indeed, if this application is made belatedly or in circumstances where there is no real and genuine reason for the party to have the matter sent to VCAT, such an application may cut against the grain of certain overarching obligations under the Civil Procedure Act 2010 (Vic).

The decisions in Uber Builders and Impressa Construction highlight the importance of improving efficiency in judicial processes. A paper that looks at the ways court costs and hearing times can be reined in, is in a paper delivered by Kim Lovegrove at Society of Construction Law New Zealand’s annual conference.

By Justin Cotton, Director, and Jordan Davies, Law Graduate, Lovegrove & Cotton – Construction and Planning Lawyers

[1] See Uber Builders and Developers Pty Ltd v MIFA Pty Ltd & Anor [2021] VCC 1677, [37].

[2] See Impressa, [45]; Uber, [27].

[3] See DBCA, s 4; Impressa, [46].

[4] DBCA, Second Reading Speech.

[5] See Impressa, [47].

[6] Uber, [37].

[7] Uber, [35].