Justice Legislation Amendment Act 2023

Executive Summary

The Justice Legislation Amendment Act 2023 (Vic) (Amendment Act) has been introduced by the Victorian Government to amend a variety of Acts. On 10 October 2023, the Amendment Act passed both houses of Parliament and received Royal Assent.

Part 10 of the Amendment Act, entitled ‘VCAT-related amendments’, incorporates amendments to the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act), the Wrongs Act 1958 (Vic) (Wrongs Act), the Limitation of Actions Act 1958 (Vic) (Limitation of Actions Act) and the Domestic Building Contracts Act 1995 (Vic) (Domestic Building Contracts Act) in response to recent court decisions.[1] The effect of those court decisions, in Thurin v Krongold Constructions (Aust) Pty Ltd[2] (Thurin) and Vaughan Construction Pty Ltd v Melbourne Water Corporation (Building and Property)[3] (Vaughan) was to declare that VCAT’s jurisdiction to deal with certain matters was limited.

Decisions impacting VCAT’s jurisdiction

In Thurin the Court found that the Victorian Civil and Administrative Tribunal (VCAT) did not have jurisdiction to deal with matters arising under Federal law, whether directly or indirectly.[4]

In Vaughan it was found that the Tribunal did not have power to deal with contribution claims under Part IV of the Wrongs Act and contributory negligence claims.[5]  As a result, parties wishing to have those claims dealt with needed to consider whether to initiate a separate action in a court, or to apply to have the entire VCAT proceeding transferred to a court.

The effect of these decisions was to throw into disarray many cases currently before the Tribunal awaiting determination and to cast doubt over past Tribunal decisions that were based on matters that the courts declared VCAT lacked jurisdiction to deal with. 

Justice Legislation Amendment Act 2023 (Vic) (Amendment Act)

Legislative intent of the Amendment Act

In the Second Reading Speech[6], on 31 August 2023, the impact of these decisions impacting VCAT’s jurisdiction was referred to as follows:

“…Commentary from the legal profession regarding [Thurin and Vaughan] demonstrates that the profession views these decisions as having effectively reduced the previously understood scope of VCAT’s jurisdiction in a significant way. The [Act] will provide litigants with certainty, avoid the need for litigants to spend additional time and money having their disputes re-heard at courts, and avoid the risk of the courts receiving an influx of applications to re-hear previous VCAT matters...”[7]

It was said that the Amendment Act would implement several reforms to minimise delay and clarify uncertainties faced by litigants in affected VCAT matters. For example, it was said that the reforms would:

• Expand the class of VCAT members who can make orders to transfer federal jurisdiction matters to a court for determination.
• Provide courts with power to extend the limitation period for federal jurisdiction matters referred to them by VCAT.
• Empower the courts to continue to hear domestic building matters that would otherwise be transferred to VCAT and that would prevent matters being “passed back” to VCAT.
• Empower courts to continue hearing domestic building matters that would otherwise be transferred to VCAT where an assessment has been made that the action may result in federal subject matter being raised in the future.[8]
• Clarify that the Limitation of Actions Act does apply to VCAT proceedings, and VCAT has jurisdiction to make rulings on contribution claims and contributory negligence claims under the Wrongs Act.
• Preserve the right and liabilities of parties involved in previous VCAT decisions on claims which were unknowingly made without jurisdiction.[9]
• Preserve rights and liabilities of parties involved in previous VCAT decisions which are no longer valid due to matters having an ‘indirect’ connection to federal law.

Legislative response to Thurin

The Amendment Act seeks to address the jurisdictional uncertainty created by the Thurin decision by, amongst other things:

• Substituting the definition of invalid Tribunal decision in s 57A(1) of the VCAT Act, to reference decisions (or purported decisions) made by the Tribunal before the Amendment Act received Royal Assent in “any proceeding determined by exercising judicial power involving federal subject matter which is invalid only because of that reason.”[10]

The amendment seeks to address the uncertainty over VCAT’s federal matter jurisdiction, highlighted in Thurin, via section 57F(1) of the VCAT Act. In that section the rights and liabilities of all persons are deemed to be the same as if, in relation to proceedings involving invalid Tribunal decisions, those decisions had been made by the Magistrates’ Court, under Part 3A of the VCAT Act, as if that part had been in force at the time of the invalid Tribunal decision.

The definition of invalid Tribunal decision is fairly narrow, however, and may not be applicable if, for example, the VCAT proceeding that was not itself determined by the exercise of judicial power involving federal subject matter.

• Substituting s 57B(1)(c) of the VCAT Act, to clarify that persons who were parties to VCAT proceedings in which Orders were set aside on the ground that the Tribunal lacked jurisdiction to exercise judicial power to resolve controversies involving federal subject matter, may apply to the Magistrates’ Court to address those Orders made by VCAT in relation to its jurisdiction. Section 57C then grants the Magistrates’ Court powers to deal with such applications.[11]

• Substituting ss 77(2) and 77(4) of the VCAT Act, with the following effects:
  • The replacement section 77(2)[12] provides that an order under subsection (1) enabling the Tribunal to, at any time, make an order striking out all, or any part of a proceeding, if it considers the subject matter of the proceeding would be more appropriately dealt with by a tribunal (other than VCAT), a court or any other person or body, may be made on the application of a party or on the Tribunal’s own initiative. This will streamline VCAT’s processes by enabling the Tribunal to address jurisdictional issues without the need for an application.
  • The replacement s 77(4)[13] provides Courts with the power to extend limitation periods applying to the commencement of a proceeding, if the Court is satisfied that: the proceeding involves the same subject matter as the VCAT proceeding that was struck out on the grounds that included the limitation on VCAT’s federal subject matter jurisdiction; the late commencement of the proceeding in the Court is attributable to the additional steps that the party commencing it had to undertake because of the Tribunal proceeding being struck out; and it is fair and reasonable to extend the limitation period.
• Inserting a new s 77(5) into the VCAT Act, which expands the class of members who can exercise powers under ss 77(1) and 77(3) of the VCAT Act to include a presidential member and a senior member who has been an Australian lawyer for not less than five years.  This expansion in the powers of VCAT Members will improve efficiency in the making of s 77(1) Orders and enhance VCAT’s ability to strike out matters or refer matters to other persons or bodies where it is considered that the subject matter of the proceeding would be more appropriately dealt with by them.[14]

• Inserting a new s 57(2A) into Part 5 of the Domestic Building Contracts Act.[15] Section 57(2) of that Act provides that if a person starts an action arising wholly or predominantly from a domestic building dispute in the Supreme, County or Magistrates’ Court, the court must stay that action if the action could be heard by VCAT and the court has not heard any oral evidence. 

The new s 57(2A) gives the courts power to refuse to stay the proceeding if there are reasonable grounds to consider that the action may in the future raise a controversy involving federal subject matter that VCAT has no power to resolve. The new section is intended to prevent matters issued in the courts from being stayed and having to be transferred back to VCAT or re-litigated in VCAT. The amendment appears designed to ensure that proceedings in the courts are resolved quickly, efficiently, and as cheaply as possible and to minimise the transfer of cases on jurisdictional grounds.

• Amending s 57(3) of the Domestic Building Contracts Act to substitute the word “struck out” for “dismissed” to align with the language used in s 77 of the VCAT Act.[16]

Legislative response to Vaughan

The Amendment Act seeks to address the jurisdictional uncertainty created by the Vaughan decision by, amongst other things:

Amending definitions in s 23A(3) of the Wrongs Act (Part IV Contribution Claims) to include a definition of court to ensure that the term includes VCAT. The definitions are further expanded to extend the definition of judgment to include decisions, orders and declarations in relation to VCAT. There is also a new definition of writ which somewhat incongruously extends that term to include an application to VCAT.[17]

• Substituting the word “trial” for the word “proceeding” in s 24 of the Wrongs Act to reflect that Part IV is to apply to matters heard at VCAT as well at the courts.[18]
• Inserting a transitional and validating provision into Part IV of the Wrongs Act to provide that these new definitions in ss 23A and 24 apply on and after the commencement date[19] of the Amendment Act, whether the damage in question occurred before, on or after the commencement date[20]. New s 24ADA further provides that VCAT decisions made before the commencement date are as valid and effective as they would have been had they been made if the definition amendments to Part IV of the Wrongs Act had been in operation at the time the decisions were made.[21]
• Substituting the definition of court in s 25 in Part V of the Wrongs Act to ensure that the definition expressly includes VCAT.[22]
• Inserting a transitional and validating provision into Part V of the Wrongs Act to provide that the amended definition of court applies on and after the commencement date of the Amending Act, whether the damage in question occurred before, on or after the commencement date[23], for the application of the new definition in s 25. New s 28AAB provides VCAT decisions made before the commencement date are as valid and effective as they would have been had they been made if the definition amendment to Part V of the Wrongs Act had been in operation at the time the decisions were made.[24]
• Amending the definition of action in s 3 of the Limitations of Actions Act to provide that it includes a proceeding at VCAT.[25]
• Inserting a new transitional provision to clarify that the updated definition in s 3 (extending action to include VCAT proceeding) applies whether the cause of action accrued before, on or after the commencement date.[26]

Implications

These reforms should provide clarity and certainty to litigants, reduce costs and the time for disputes to be re-heard by the courts, avoid the need for proceedings to be run concurrently in VCAT and before the Courts, and assist in resolving numerous transfer applications pending before VCAT pursuant to s 77 of the VCAT Act.[27]  

However, the time taken for these reforms to be enacted has meant that substantial damage has already been done, with a large number of VCAT cases impacted by these decisions and the absence of legislation to address them. The number of transfer applications and cases being transferred to the courts, to ensure that all aspects of these cases could be heard and determined, has been voluminous and has already resulted in substantial additional costs, delays and inconvenience for the parties involved in those matters. 

[1] Justice Legislation Amendment Bill 2023 (Vic) s 1(i).

[2] [2022] VSCA 226.

[3] [2023] VCAT 233.

[4] [2022] VSCA 226.

[5] [2023] VCAT 233.

[6] Victoria, Second Reading Speech, Legislative Council, 31 August 2023, Harriet Shing. https://hansard.parliament.vic.gov.au/search/?LDMS=Y&IW_DATABASE=*&IW_FIELD_ADVANCE_PHRASE=be+now+read+a+second+time&IW_FIELD_IN_SpeechTitle=Justice+Legislation+Amendment+Bill+2023&IW_FIELD_IN_HOUSENAME=COUNCIL&IW_FIELD_IN_ACTIVITYTYPE=Second+reading&IW_FIELD_IN_SittingYear=2023&IW_FIELD_IN_SittingMonth=August&IW_FIELD_IN_SittingDay=31.  

[7] Ibid.

[8] See ibid.

[9] See ibid.

[10] Ibid (n 1) s 64.

[11] Ibid (n 1) s 65.

[12] Ibid (n 1) s 67(1).

[13] Ibid (n 1) s 67(2).

[14] Ibid (n 1) s 67.

[15] Ibid (n 1) s 75.

[16] See ibid.

[17] Ibid (n 1) s 68.

[18] Ibid (n 1) s 69.

[19] Commencement date is defined to mean the day on which Division 2 of Part 10 of the Amendment Act comes into operation.

[20] Ibid (n 1) s 70

[21] Ibid (n 1) s 70.

[22] Ibid (n 1) s 71.

[23] Ibid (n 1) s 72.

[24] Ibid (n 1) s 72.

[25] Ibid (n 1) s 73.

[26] Ibid (n 1) s 74.

[27] Victoria, Parliamentary Debates, Legislative Council, 30 August 2023, Harriet Shing https://www.parliament.vic.gov.au/images/stories/daily-hansard/Council_2023/Legislative_Council_2023-08-31.pdf.