Lack of VCAT resourcing no longer grounds for resisting a stay

Mooney & Anor v Fanissa Pty Ltd [2024] VCC 1032

Practitioners should reconsider bringing actions under the Domestic Building Contracts Act 1995 (Vic) (DBCA) in a forum other than VCAT.

In recent years, parties to domestic building disputes have opted to commence proceedings in the County Court, citing the delays experienced by VCAT and relying on Impresa Construction v Oxford Building [2021] VCC 1146 (Impresa); Uber Builders and Developers Pty Ltd v MIFA Pty Ltd & Anor [2021] VCC 1677 (Uber). 

The circumstances of VCAT’s backlog have ameliorated sufficiently, such that parties to a domestic building dispute should commence their proceedings in VCAT, or risk a successful stay application under s 57 of the DBCA if they commence in an alternative forum.

In Mooney, the work was domestic building work, the litigants were parties to a domestic building contract and the builder owed the warranties implied by s 8 of the DBCA.  Citing a desire to avoid VCAT’s backlog, the plaintiff commenced proceedings in the County Court.  The defendant brought an application to stay the proceedings under s 57 of the DBCA.  The Court determined that the criteria in s 57(2) were satisfied and stayed the proceedings: [3].

The Court made the following observations in respect of s 57(2) of the DBCA (at [3]):

• When applying s 57, the test is not whether the Court or VCAT is more appropriate, better suited, more efficient of quicker.  That analysis is applicable under s 77 of the DBCA;
• Section 57 requires only an analysis of the subject matter of the action, VCAT’s jurisdiction and the stage the proceeding has reached in the Court.

Of note, the Court did not say that the analysis under s 57 required an evaluation of VCAT’s backlog or other indicators of capacity, though the Court appeared to accept that this may be relevant if VCAT’s lack of capacity meant that it could not hear the dispute.

Section 57 provides that, if a person starts an action arising wholly or predominantly from a domestic building dispute [in a Court], then the Court must stay the action on the application of a party if the action could be heard by VCAT and the Court has not heard any oral evidence concerning the dispute itself: [5].

Kirton J stated at [6]: “On its face, there is little room for debate amount the meaning of s 57(2)”.  However, more recently, the ‘third’ prerequisite has become the subject of judicial consideration, namely: whether an action ‘could be heard’ by VCAT (as was the issue in Impresa and Uber): [9].

Her Honour set out the history of the DBCA and the Domestic Building Tribunal, which was later merged into VCAT: [11]-[18].

Her Honour then discussed examples of superior Courts directly considering s 57, at [20]-[33].

Kirton J referred to the decision of Burchell J in Uber. In that case, Burchell J considered whether the test in s 57(2)(a) imports case management considerations of the kind she earlier identified in Impresa.  Burchell J held that case management considerations of the kind identified in Impresa are imported into a construction of s 57(2)(a): Uber at [29].

Importantly, Kirton J did not disagree with Burchell J’s determination that case management concerns may be imported into a construction of s 57(2)(a): [40].  Instead, Kirton J considered that the “question now is whether that situation [viz VCAT’s resourcing] has changed and whether VCAT’s capability to hear the present case, having regard to case management considerations, is still a relevant factor in the interpretation of s 57(2)(a)”: [42].

Her Honour found that the case management considerations that arose in 2021 were no longer relevant today: [43].  For example, a 3-day hearing, once all interlocutory steps are completed and the matter is ready for hearing, would be expected to have been allocated a hearing date within 6-9 months: [45].

Reference was also made to the recent decision of Woodward J in Plunkett v Portier Pacific Pty Ltd [2024] VCAT 205 (Plunket), in particular, to comments that the substantial backlogs in VCAT “still exist today”. 

However, Kirton J emphasised the distinction between the test under s 77 and s 57.  In contrast to s 57, s 77 involves different considerations to determine whether another forum — such as the Supreme Court or the County Court — would be ‘more appropriate’ than VCAT; those considerations include (at [49]):

1. In respect to civil proceedings not in VCAT’s exclusive jurisdiction, where the claims and counterclaim significantly exceed the Magistrates’ Court’s $100,000 jurisdictional limit or exceed the County Court’s historical limit of $500,000;
2. Where the hearing, including closing submissions, is estimated to last 10 days or longer;
3. Where the proceeding involves multiple parties;
4. Where the proceeding would benefit from case management by a single judicial officer;
5. Where the proceeding has a history of frequent interlocutory applications; and
6. Where the proceeding involves novel points of law or particularly complex and detailed facts.

 Whilst the absence of the above factors may be an indicator that the proceeding is capable of being dealt with by VCAT, they are not factors relevant in determining a stay application under s 57. Only a consideration of the case management capabilities of VCAT is relevant in this regard: [51].

As the matter was a domestic building dispute and it did not involve a federal matter, the only question in Mooney was whether, having regard to case management considerations, VCAT is capable of hearing the action.  The Court concluded that, as VCAT’s recourses have improved since 2021, there was no reason to find that VCAT could not hear the proceeding: [71]. 

The Court reiterated (at [79]) that the word ‘must’ in s 57(2) is imperative, and that as a result, the Court was obliged to stay the proceeding.   

The proceeding was stayed under s 57(2) and costs were ordered to be costs in the proceeding. The Court (at [81]) made no criticism of the plaintiff for commencing proceedings in the Court at the time they did, no doubt on the basis of the decisions in Impresa and Uber.