Impresa Construction v Oxford Building

[2021] VCC 1146

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Building Cases List

Case No. CI-20-01412

Impresa Construction Pty Ltd (ACN 607 768 061)	Plaintiff
v
Oxford Building Group Pty Ltd (ACN 394 617 969) & Ors	Defendants

AND

Oxford Building Group Pty Ltd (ACN 394 617 969) & Ors	Plaintiffs by Counterclaim
v
Impresa Construction Pty Ltd (ACN 607 768 061)	Defendants by Counterclaim

---

JUDGE:	Her Honour Judge Burchell
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers (written submissions dated 14 and 23 July 2021 and 4 August 2021)
DATE OF RULING:	18 August 2021
CASE MAY BE CITED AS:	Impresa Construction v Oxford Building
MEDIUM NEUTRAL CITATION:	[2021] VCC 1146

RULING
---

Subject:CONTRACTS – BUILDING AND CONSTRUCTION – DOMESTIC BUILDING

Catchwords:              Building and construction – application to stay a proceeding on a basis that it is a “domestic building dispute” under the Domestic Building Contracts Act 1995 (Vic) – whether domestic building work “other than a contract between a builder and a sub-contractor” – public policy – whether action can be heard by VCAT – overarching purpose – timeliness of resolution

Legislation Cited:      Domestic Building Contracts Act 1995 (Vic) ss3, 5, 6, 54 and 57; Civil Procedure Act 2010 (Vic) s7; Victorian Civil and Administrative Tribunal Act (1998) s77; County Court Civil Procedure Rules 2018 r63A.20.1; Domestic Building Contracts Regulations 2017 reg 7

Cases Cited:Barcrem Pty Ltd v Nisiotis [2019] VCC 106; Burbank Australia Pty Ltd v Owners Corporation [2015] VSC 160; Stephens v Cameron [2021] VSCA 208; Lin Tiger Plastering Pty Ltd v Platinum Construction (Vic) Pty Ltd (2018) 57 VR 576; Chartin Group Pty Ltd v L U Simon Builders Pty Ltd [2004] VSC 531; Winslow Constructors Pty Ltd v Mt Holden Estates Pty Ltd [2004] VSCA 159; Dale v Clayton Utz (No 3) [2013] VSC 593; Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297; Radojevic v JDA Design Group Pty Ltd & Anor [2017] VSC 796

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr D I Mence	Peter G Richards Lawyers
For the Defendants	Ms F Cameron	Frenkel Partners

HER HONOUR:

Introduction

1By summons dated 14 July 2021, the first defendant (“Oxford”) applied for a stay of the proceeding pursuant to s57 of the Domestic Building Contracts Act1995 (Vic) (“the Act”) together with costs of the proceeding, including the costs of Oxford’s application under s57 of the Act. The plaintiff (“Impresa”) objects to the application.

2This proceeding concerns an agreement made between the parties on 22 July 2019 for the supply and installation of certain structural elements, doors, and windows as part of the construction of four townhouses and one office building at 116 Roberts Street, Yarraville (“the Property”) for the total sum of $262,500.00 including GST (“the Contract”). On 5 March 2020 and 24 March 2020, Oxford served Notices of Breach or Default on Impresa.

3Oxford contends that the preconditions contained in s57 are met and there are no exceptions nor any residual discretion preserved to the Court: it must grant the stay. I disagree for the reasons set out below.

Procedural History

4Impresa commenced this proceeding by writ and statement of claim dated 30 March 2020. By amended writ and statement of claim filed on 5 May 2020, Impresa claimed, inter alia:

(a)   that the Notice of Breach was defective in failing to comply with the requirements of cl 16.1 of the Contract;

(b)   a declaration that the Notice of Breach and the Notice of Rescission are void and of no legal force or effect; and

(c)   damages.

5On 6 May 2020, Judge Woodward made orders giving leave to Impresa to join ZM Group Vic Pty Ltd (ACN 144 698 037) (“ZM Group”) and Zeijko Mihalj as second and third defendants, respectively.

6Oxford contended in its defence and counterclaim dated 9 June 2020 that the Contract was validly terminated and that Impresa’s works were delayed, incomplete, and contained defects. Oxford seeks damages for costs incurred in respect of defect rectification and incomplete works, and delay costs incurred by ZM Group.

7On 19 June 2020, Judicial Registrar Tran, as she then was, made orders that Impresa pay $50,000.00 to the Court as security for the costs of Oxford, with liberty reserved to Oxford to apply for further security.

8On 16 November 2020, the Court made an order dismissing Impresa’s summons dated 12 October 2020 (which had sought the preliminary determination of certain questions unrelated to any jurisdictional point), and ordered that Impresa pay Oxford’s costs of and incidental to that summons on a standard basis.

9On 7 April 2021, Judge Woodward ordered that Impresa provide further security for costs in the sum of $40,000.00.

10At the pre-trial directions hearing before Judge Woodward on 18 June 2021, counsel for Impresa raised for the first time the issue of whether the proceeding was a case where the Act applied.

11On 24 June 2021, the parties participated in an unsuccessful Judicial Mediation Conference.

12On 25 June 2021, counsel for Oxford informed the court that she had instructions that the defendants would be making an application to stay the proceeding pursuant to s57 of the Act. Judge Woodward made orders vacating the trial listed for 30 June 2021 and re-listed the matter for trial on 7 March 2022 as a cause before a judge sitting alone (estimate 4 sitting days). His Honour provided a timetable for the s57 stay application.

The s57 Stay Application

13Pursuant to Judge Woodward’s orders made on 25 June 2021, Oxford filed their application seeking a stay of the County Court proceedings together with consequent costs orders against Impresa. 

14Alternatively, Oxfords seeks an order that:

(a)   Impresa pay Oxford’s costs thrown away in respect of the entire proceeding if Impresa does not recommence the proceeding in the Victorian Civil and Administrative Tribunal (“VCAT”) within a reasonable time (for instance, 30 days), which costs are to be taxed (in default of agreement) and paid immediately from the sum held in court as security (currently $90,000.00) for Oxford’s costs; or

(b)   If Impresa does recommence the proceeding in VCAT within 30 days of the date of the Court’s order:

(i)Impresa pay Oxford’s costs thrown away in respect of the preparation of the matter for trial, together with Oxford’s costs of this application, such costs to be taxable (in default of agreement) and payable immediately from the sum held in court as security for Oxford’s costs; and

(ii)the balance of the costs of the proceeding be reserved to the County Court for consideration on application of any party following the conclusion of the proceeding in VCAT.

15Impresa argues that the Contract is a contract between a builder and a sub-contractor and hence is not a “domestic building contract” for the purposes of the Act, and thus the proceeding cannot be stayed pursuant to s57 of the Act. Impresa submitted that Oxford’s summons should be dismissed and that Oxford should pay Impresa’s costs on a standard basis to be taxed in default of agreement.

16Oxford has quantified its costs of and incidental to Impresa’s summons dated 12 October 2020 in the sum of $12,891.65. Oxford contends that the Court has discretion under r63A.20.1 of the County Court Civil Procedure Rules 2018 (“the Rules”) to order that the costs of an interlocutory application be taxed immediately, as the circumstances here include a prospect of considerable delay in completion of the proceeding and the interlocutory issue was discrete from the balance of the proceeding.[1] On this basis, Oxford also seeks an order revising the order made on 12 October 2020, in the following terms:

Paragraph 2 of the Orders of his Honour Judge Woodward made on 16 November 2020 is varied to provide that the plaintiff pay the defendants’ costs of and incidental to the plaintiff’s summons dated 12 October 2020 (including the hearing on 13 November 2020) in the amount of $12,891.65, which costs are to be paid immediately from the sum held in court as security for the [d]efendants’ costs.

[1] Dale v Clayton Utz (No 3) [2013] VSC 593 (“Dale”) at [65].

17In the case of Dale v Clayton Utz (No 3) [2013] VSC 593 (“Dale”), Justice Hollingworth (at [58]) considers the reasons why r63A.20.1 of the Rules has been introduced. These include to avoid interlocutory applications being used as a means to exhaust the funds of an opposing party and to avoid unfairness, for example, where the successful party is unable to set off their judgment against an earlier liability to pay costs.

18The discretion may be exercised in favour of a party if they are able to establish that the demands of justice require the departure from the general rule.[2] This would include circumstances where, because of the conduct of the unsuccessful party, there is a likely delay before the completion of the proceeding and the interlocutory application involves a separate or discrete issue.

[2] Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312.

19In my view, Impresa’s conduct has not caused the delay of the final completion of the proceeding. Oxford indicated at the pre-trial directions hearing on 25 June 2021 that it had instructions to make a s57 application. Impresa said that it was ready to proceed to trial. The trial was listed for 30 June 2021. The foreshadowed s57 application caused the vacation of the trial date to 7 March 2022.

20Justice Ginnane in Radojevic v JDA Design Group Pty Ltd & Anor [2017] VSC 796 (“Radojevic”) contemplates outcomes arising from the fact that a s57(2) stay can occur right up to the point before a Court receives oral evidence concerning the dispute. Justice Ginnane was critical of the delay in bringing the stay application in that case and observed that:

It is unclear why Parliament has enabled a party to make a stay application up until oral evidence concerning the dispute is called. That provision is not consistent with the overarching purpose of the CPA nor with the second object contained in s4(b) of the DBC Act.

21Although the delay in making the applicant hampered the just, efficient, timely and cost-effective resolution of the real issues in dispute, Justice Ginnane did not consider that the provisions of the CPA could remove the rights given under s57 of the Act, which they were permitted to take. However, his Honour noted that the plaintiffs’ conduct was relevant to the question of costs. 

22In my view, in circumstances where the likelihood of any lapse of time between the interlocutory application and the final determination of the proceeding was not by reason of the conduct of Impresa, it would be unfair to exercise my discretion to depart from the general practice set out in the Rules and, further, to vary Judge Woodward’s costs orders.

Legal Framework

23Section 57 of the Act provides in effect that if a person starts an action arising “wholly or predominantly from a domestic building dispute” in the County Court, the Court must stay any such action on the application of a party to the action, if the action could be heard by VCAT under subdivision 1 of Part 5 of the Act and the Court has not heard any oral evidence concerning the dispute itself.[3] The use of the word “must” in s57(2) indicates that once sub-ss 57(1) and 2(a) and 2(b) are satisfied, the Court has no discretion and the stay must be granted.

[3] Barcrem Pty Ltd v Nisiotis [2019] VCC 106 at [8].

24The terms that are central to the determination of this application are relevantly defined by the Act as follows (emphasis added):

·“domestic building dispute” is a dispute or claim arising between: a building owner and a builder or sub-contractor, in relation to a domestic building contract, or the carrying out of domestic building work (s54(1)(a)); or a builder and a sub-contractor, in relation to a domestic building contract, or the carrying out of domestic building work (s54(1)(b));

·“domestic building contract” means a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor (s3); and

·“domestic building work” includes the erection or construction of a home, including any associated work, or the preparation of plans or specifications of the carrying out of such work (ss3 and 5).

Is the Contract a “domestic building contract” within the meaning of the Act?

25As noted above, s3 defines a “domestic building contract” as meaning a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor.

26The parties agree in their submissions that the parties to the Contract include:

(a)   Impresa as sub-contractor;

(b)   Oxford as the Builder;

(c)   ZM Group as the Proprietor of the Property; and

(d)   Mr Zeljko Mihalj as the Guarantor.

27Oxford contends that the Contract is not solely a contract between a builder and a sub-contractor as it imposes positive obligations on ZM Group as “the Proprietor”, including to provide site access to Impresa (cl 3.7 of the Contract) and to grant a Security Interest to Impresa over goods delivered as part of the Works (cl 26.2). Oxford further submits that although the Contract is unclear, there is intended to be a primary obligation of payment imposed on the Proprietor (cf Recital H and cl 7.3, 26.6, 26.8 and 28.2). Oxford also refers to item E of Impresa’s Prayer for Relief, where Impresa seeks an order against ZM Group and Mr Mihalj what it claims as the balance of the Contract Price, and the Counterclaim brought by the defendants includes a claim for relief specifically in favour of ZM Group. On this basis, Oxford submits that the Contract is within the meaning of a “domestic building contract”, and the dispute is accordingly a “domestic building dispute” within the meaning of s57 of the Act.

28Impresa contends that a global reading of the clauses of the Contract reinforces the conclusion that the Contract is between a builder and a sub-contractor as Oxford and Impresa are the only parties upon which substantive rights and obligations are imposed. Impresa argues that ZM Group and Mr Mihalj appear to have been included because Impresa desired greater security and that it does not follow from the granting of security or a guarantee that the Contract is not a contract between a builder and a sub-contractor. Impresa further states that ZM Group and Mr Mihalj do not have substantive rights vis-à-vis Impresa — there is no mechanism whereby they can serve notices of variation, practical completion, default, recission, dispute resolution on Impresa.

29Impresa points to relevant Recitals and clauses in the Contract:

(a)   Recital A states that ‘the Builder … has been engaged to carry out the Head Works under the Head Contract’;

(b)   Recital B states that ‘the Builder wishes to engage and pay for Impresa as sub-contractor to carry out and complete the Works at the Site’ (cf not that the Proprietor wishes to engage and pay); and

(c)   Recital C states the ‘Works comprise part of the Head Works’ (cf not that the Works are the Head Works).

(d)   cl 1 defines:

(i)the ‘Head Works’ as the ‘construction works in relation to the Project carried out by the Builder pursuant to the Head Contract’;

(ii)the ‘Head Contract’ as the ‘agreement between the Builder and the Proprietor in relation to the Head Works; and

(iii)‘Works’ means the works specified in the ‘Scope of Works’.

(e)   cl 3.1 provides that Impresa shall carry out and complete the Works to the reasonable satisfaction of the Builder (cf the Proprietor);

(f)    cl 3.5 provides that the Builder shall pay the Contract Price to Impresa (cf the Proprietor);

(g)   cll 3.7 and 4.1 contemplate the Builder will be in occupation of the Proprietor’s land and that, as such, access and other matters will be granted, or organised, by the Builder and that any liability for inaccurate indication of boundaries will lie with the Builder;

(h)   all instructions given and received, and notices given and received, are contemplated to be between the Builder and Sub-contractor including such important matters as defects notices, recission notices and dispute resolution notices (cl 4.1, 6.1, 6.2, 6.3, 8.2, 12.2, 14.2, 16.1, 16.2, 17.2, 17.4, 19.2); and

(i)    all tax invoices are to be raised by the Sub-contractor, provided to the Builder and, crucially, paid for by the Builder (cl 7.3).

30Oxford submits that Impresa’s Works comprised part of the Head Works being carried out by Oxford at the Property. Impresa was required to manufacture and install a prefabricated wall system referred to in the Scope of Works as the 'Impresa House Solution', which included external and internal walls, floor cassettes, cladding and membrane lining, together with associated elements including door frames, windows and glazing and installation. The Works were intended to be completed within two months of the date of execution of the Agreement (around 22 September 2019), but were substantially delayed. The Works under the Contract were partially completed by Impresa (or sub-contractors engaged by Impresa) before being terminated by the defendants on 24 March 2020. The precise proportion of the Works which were completed is a matter of dispute between the parties.

31Impresa states that the ‘Works’ are those set out in the ‘Scope of Works’, there being no obligation upon Impresa to go beyond the Scope of Works on instructions from ZM Group. Impresa submits that nowhere is it contemplated that ZM Group has the power to vary the Contract (i.e. to encompass the ‘Head Works’) and on its face, it is not clear that Impresa is in any way liable to ZM Group. Impresa further submits that the phrases ‘Head Works’ and ‘Head Contract’ show the objective intentions of the parties. Impresa says that it would be an absurd result if Impresa entered the Contract, relying on its terms, only to discover that it was the head contractor and, as such, that Oxford was redundant.

32Oxford argues that it is also not correct to say that no substantive obligations arise as between Oxford and Impresa. It relies on clause 3.7 of the contract, which imposes an obligation on the Proprietor (ZM Group) to grant access to Impresa to the Site and clause 3.1(ii), which contemplates that the Proprietor may provide drawings and specifications to Impresa directly, in accordance with which Impresa agreed to execute and complete the Works. 

33The Contract the subject of the present proceeding is not a standard contract and is unusual. The parties agree that Impresa was the sub-contractor and Oxford the Builder under the Head Contract, the complicating factual matter is the inclusion of ZM Group as proprietor and Mr Mihalj as the Guarantor. In my view, on a fair reading of the Contract as a whole, it is a contract between a builder and a sub-contractor. I accept that ZM Group and Mr Mihalja are only included to provide greater security and a guarantee which does not change the nature or substance of the Contract between the builder and its sub-contractor. Further, the mechanisms for site access and provision of drawings are not substantive rights but are practical provisions which do not give rise to liabilities, default or rescission. 

34For the above reasons, I find that the Contract is not a “domestic building contract” within the meaning of the Act.

Did Impresa carry out “domestic building work”?

35Oxford submits that that in any event, the words of s54 of the Act are disjunctive and relate to a dispute or claim arising in relation to either a domestic building contract or the carrying out of domestic building work (emphasis added).

36Oxford argues that s5 of the Act squarely encompasses the work required under Impresa's scope of works, which involved the manufacturing and construction of the structural elements of four townhouses and one office. It says that none of the exclusions in s6 of the Act apply, as it is not the case that Impresa's works were “in relation to a building intended to be used only for business purposes” (s6(1)(c)); rather, the development was predominantly residential.

37Impresa submits that the dispute does not fall within the limb of “domestic building work”. It says that while the Contract is for “domestic building work”, it does not follow that the Act applies. This is because the Act expressly excludes “domestic building work” that is undertaken under a contract between a builder and a sub-contractor. Further, it argues that it is no answer to this to say that the subject of such a contract is for “domestic building work” because that would render inutile the proviso given in the definition of “domestic building contract”.

38Impresa observes that this does not mean that the second limb of “carrying out of domestic building work” does not have work to do (s57(2)(b)). Impresa says that if there is no contract, i.e. the work is done on a quantum meruit, then it is engaged (there will then be a direct relationship between the parties). This fits with the stated purpose of the Act and preserves the operation of the proviso in the definition of “domestic building contract” which means a contract to “carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor” (emphasis added) and internally references “domestic building work”.

39“Domestic building work” is any work referred to in s5 that is not excluded from the operation of the Act by s6. Section 5 provides that the Act applies to “the erection or construction of a home”, including any associated work (s5(a)), or the preparation of plans or specifications for the carrying out of such work (s5(g)). For the purposes of s6(2) of the Act, reg 7 of the Domestic Building Contracts Regulations 2017 prescribes the types of work that is not building work to which the Act applies if the work is to be carried out under a contract for only that type of work. The Works the subject of the Contract in the present case are not captured by s6.

40In the recent decision of Stephens v Cameron,[4] the Court of Appeal provided some guidance as to the construction of the Act. The relevant propositions for the purposes of the present application are:

(a) the fact that the parties’ contractual provisions may appear to conflict with the terms of the Act will not be to the point in determining if it is a domestic building contract;

(b) s5 of the Act directs attention to the nature of the work undertaken rather than the parties to the contract governing the work;[5]

(c) the Act’s purpose is revealed in its express purposes and objects, and its structure which includes to regulate contracts for carrying out domestic building work and to require builders carrying out that work to be insured in relation to it (s1);

(d) the objects include the maintenance of proper standards in the carrying out of domestic building work in a way that is fair to builders and building owners, and enabling building owners to have access to insurance for incomplete or defective domestic building work (s4). The Act is about the carrying on of domestic building work;

(e) the defined expression “domestic building work” is critical because it delimits the scope of the Act as a whole. Section 5 sets out the work to which the “Act applies”, and supplies the primary content of the defined term “domestic building work”; and

(f) A contract between a builder and sub-contractor is expressly excluded from the definition of “domestic building contract” (s3(1)). It is plain from other provisions of the Act, including its objects, that a “domestic building contract” is a contract between a builder and a building owner.

[4] [2021] VSCA 208 at [59]-[64].

[5] see also Burbank Australia Pty Ltd v Owners Corporation [2015] VSC 160, at [32]; the exception being under s3(1) of the Act for sub-contractors which identifies the question by reference to a contract between builder and sub-contractor (see also Winslow Constructors Pty Ltd v Mt Holden Estates Pty Ltd [2004] VSCA 159 at [103] and [111]) in which the Court of Appeal notes that “[e]xcluded from domestic building contracts are contracts between builders and sub-contractor. This indicates that [the Act] is only intended to apply to a restricted scope of building activity rather than building activity generally”.

41I accept Impresa’s submission that the second limb of s54 is not relevant to the present proceeding as the Contract is in place. Therefore only the first limb is engaged. In my view the Act only applies to a domestic building contract other than a contract between a builder and a sub-contractor, or to the carrying out of domestic building work in the absence of a contract (and then only if the work is not excluded under s6 of the Act).[6]

[6] Lin Tiger Plastering Pty Ltd v Platinum Construction (Vic) Pty Ltd (2018) 57 VR 576 at [18] and Chartin Group Pty Ltd v L U Simon Builders Pty Ltd [2004] VSC 531 at [7]-[10].

42I do not accept Oxford’s submissions that the Act applies because Impresa was carrying out domestic building work. This is because the Works were carried out under the Contract. The construction advanced by Oxford would have the effect of neutering the important proviso “other than a contract between a builder and a sub-contractor’ in the definition of ‘domestic building contract” (s3). The carve-out would have no work to do because any sub-contractor who carried out domestic building work would be caught the second limb of ss44 and 54 of the Act (unless they fell into a s6 exception).

43As to the question of whether this proceeding arises “wholly or predominantly from a domestic building dispute”, the instant proceeding does not arise from a domestic building dispute, under the two limbs of s54 (in relation to a domestic building contract or the carrying out of domestic building work) because:

(a)   it does not relate to a domestic building contract but rather a contract between a builder and sub-contractor; and

(b)   it does not relate to the carrying out of domestic building work because the Works were carried out under the Contract.

44The consequence of this is that the mandatory and exclusive jurisdiction of VCAT is not enlivened.

Public Policy underpinning s57 of the Act

45Although not argued by the parties, I observe that for the reasons set out below, in my view, it would be open to a party to argue that the precondition in s57(2)(a) of the Act cannot be satisfied given the current state of under-resourcing at VCAT. That is, in a practical sense, the action could not be heard by VCAT for the following reasons. I set out the following matters by way of comment and they do not form part of my disposition of the defendants’ application set out above. 

46One of the main objectives of the Act is “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” (s4) (emphasis added). This reflects the overarching purpose of the Civil Procedure Act 2010 (Vic) (“CPA”) to “facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute” (s7) (emphasis added). These statements of purpose and object are further elaborated in the second reading speech, as follows (emphasis added):

The public policy rationale for [s57] is the intention to provide a single, inexpensive, time-efficient and expert forum for the resolution of domestic building disputes. Domestic building disputes are a special category of dispute where timeliness of resolution is critical, and where less formal proceedings are more likely to reach the heart of the matter than the full panoply of the law. Therefore, a party to the dispute should be able to have the option of taking advantage of the benefits offered by the tribunal if a matter is brought before the courts for resolution.

47Section 57 should be read in light of the overarching objective of the Act and in order to give a purposive interpretation to the provision. It is common knowledge that VCAT has experienced delays in its hearings since the beginning of the coronavirus pandemic. If a mandatory stay of proceeding is granted for the present matter to be heard at VCAT, parties will not have their matter heard until a date much later than if the matter were heard in this Court. This proceeding currently has a trial fixed for 7 March 2022. The VCAT website indicates “COVID-19 has impacted normal timeframes for hearings… [VCAT is] working hard to address the delays”[7] and specifically to the Building and Property List that “due to COVID-19 … time frames do not apply”. After any application to VCAT “it will take longer to hear from us about the next steps in your case”.[8] VCAT notes that it will “assess your application and contact you within 8-10 weeks to:

·give you a date to come to VCAT

·ask for more information if we need it

·let you know if we can’t deal with your dispute”.[9]

[7] ‘VCAT Hearings during Coronavirus Restrictions’, Victorian Civil and Administrative Tribunal < (accessed on 5 August 2021).

[8] ‘After you Apply: Building and Construction Disputes’, Victorian Civil and Administrative Tribunal < (accessed 5 August 2021).

[9] Ibid.

This inability to commit to a time frame and/or the inability to deal with disputes due to lack of VCAT resources undermines the objective of the Act and the CPA and VCAT is effectively prevented from being able to perform its function and role.

48Publicly available material indicates that VCAT is experiencing delays in its hearings due to the sheer volume of matters being brought before it during COVID-19 and the slow transition to remote hearings. As at 30 April 2020, approximately 400 VCAT matters were adjourned,[10] with VCAT venues (including VCAT counters) closed to the public and no face-to-face hearings being scheduled.[11]

[10] ‘Breaking News: all the Latest on VCAT Recommencing and the Development Facilitation Taskforce’, Ratio < (accessed 6 August 2021).

[11] ‘Information & Advice from the Courts’, Law Institute of Victoria < (accessed on 6 August 2021).

49During the first lockdown period, there was an extended adjournment of all non-critical matters up to and including 15 May 2020.[12] Only injunctions and other urgent matters were scheduled since late March 2020 via telephone and video conference, meaning that pending matters, especially Planning and Environment List issues, were on hold.[13] The majority of these matters were not relisted until after the 12-week rollout (beginning at the end of April 2020) of digital technology at VCAT.[14] The roll out of the paperless file management system called “Felix” is an ongoing project.  VCAT members and staff had limited access to VCAT systems and documents (being manual hardcopy based systems with orders sent by prepaid ordinary post) while awaiting this rollout,[15] resulting in heavy disruption of its operations and leading to significant delays in dispute resolution.[16]

[12] ‘Information & Advice from the Courts’, Law Institute of Victoria < (accessed on 6 August 2021).

[13] ‘Getting VCAT Moving Remotely During Coronavirus’, Premier of Victoria < (accessed 6 August 2021).

[14] ‘Breaking News: all the Latest on VCAT Recommencing and the Development Facilitation Taskforce’, Ratio < (accessed 6 August 2021).

[15] ‘VCAT builds digital capabilities to better serve Victorians and the State’s economy’, Microsoft < (accessed 9 August 2021).

[16] ‘PwC tackles VCAT case backlog with Dynamics 365’, ARN < (accessed 9 August 2021).

50Further, with the recent retirement of Deputy President Aird in May 2021 who, since 2004 has worked tirelessly to improve efficiencies and case management procedures through, inter alia, the drafting of the Building and Property List practice note in 2005 (and revised in 2010, 2014 and 2018), the introduction of compulsory conferences and the listing of hearings only after an unsuccessful mediation ensured that the Domestic Building List provided fair, efficient and affordable justice for the Victorian community by being able to offer hearings within 12 months of initiation, it is bittersweet to see that her legacy has been diminished through the effects of the pandemic and lack of resources. 

51During her keynote farewell speech given to the Building Dispute Practitioners Society on 4 August 2021 at The Essoign,[17] Deputy President Aird informed its members that VCAT’s Building and Property List was vacating hearings of long and complex cases from October 2021 onwards due to a lack of much needed resourcing. This was announced prior to Lockdown 6.0 and its inevitable flow on effects on listings. 

[17] ‘Welcome to The Building Dispute Practitioners Society’, Building Dispute Practitioners' Society < (accessed 11 August 2021). 

52Further examples of the under-resourcing of VCAT at present is demonstrated by the offer in early July 2021 of a half-day Assessment of Damages no earlier than 3 March 2022.[18] In the County Court, the listing of hearings for trial assessments is fixed within 2 months of the request for an assessment of damages. Given this state of affairs, in my view, it is arguable that VCAT could not hear this proceeding if a stay was granted in this Court, and even if it could, it would not be in a position to list the hearing for a date much later than the trial date fixed in this Court, being 7 March 2022, due to the backlog of its workload. 

[18] Building Cases List User’s Group Feedback.

53Considering this, the public policy rationale behind s57 of the Act appears to be frustrated. Allowing mandatory stay of proceedings to be heard in VCAT where there is a shortage of resources to meet the backlog of matters, where:

(a)   time lines do not apply;

(b)   VCAT will contact the parties 8-10 weeks from initiation with the proposed next steps;

(c)   currently listed hearings fixed from October 2021 are being vacated and presumably refixed in priority of new initiations to ensure that adjourned hearings are heard within a reasonable timeframe; and

(d)   where interlocutory hearings are being fixed some 8 months into the future,

all subvert the purpose of both the Act and the CPA to enable timely and cost-effective dispute resolution.

54Section 57(2)(a) of the Act reads (emphasis added):

[t]he Court must stay any such action on the application of a party to the action if the action could be heard by VCAT under this Subdivision.

55In my view, given the current under-resourcing of VCAT and the vacation of hearing dates and delays, the precondition imposed by this subsection arguably cannot be met when read in light of the overarching purpose of the Act. The backlog of matters and shortage of resources at VCAT currently means that this matter in fact could not be heard by VCAT. 

56Further, I reiterate what was stated in the second reading speech: “a party to the dispute should be able to have the option of taking advantage of the benefits offered by the tribunal if a matter is brought before the courts for resolution” (emphasis added). It is clear that the benefits of having the proceeding stayed and heard at VCAT  — primarily, the timeliness of resolution — are an impossibility.

57Although VCAT has worked hard over the last 16 months and is continuing to upgrade its technology through the “Felix” system, the listing of the adjourned hearings in addition to its usual 2,295 annual initiations[19] is being done without any additional VCAT members being added to the list of members. The move to online filing of applications is a positive and welcome step to allow VCAT to work expeditiously and efficiently. However, more is required. 

[19] ‘VCAT Annual Report 2019-20 now available’, Victorian  Civil and Administrative Tribunal < (accessed 13 August 2021).

58The Access to Justice Report 2006 provided various recommendations to improve the services that VCAT provides to its users such as proposals to:

(a)   modernise services offered by VCAT, including better utilisation of online technology to provide more accessible, user-focused and responsive administrative services (recommendation 5.1);

(b)   develop an online system for the resolution of small civil claims in the VCAT that is a more flexible and proportionate way of resolving small claims (recommendation 5.2);

(c)   consider development of an online tool or website portal to match community legal centres and other organisations with legal practitioners who can provide pro bono legal assistance (recommendation 7.7);

(d)   to consider ways to make their websites and legal information materials more accessible and consistent, including possible provision of information in languages other than English and in “Easy English” format (recommendation 2.4);

(e)   improve the capacity of legal and community services and VCAT to triage legal issues to help people to get the assistance they need at the right point (recommendations 3.1-3.4);

(f)    help people to get access to alternative dispute resolution services that are right for them through improved screening of cases (recommendation 4.1), and for VCAT to consider partnering with the Dispute Settlement Centre of Victoria to provide expanded alternative dispute resolution services, including in regional areas;

(g)   establish a Self-Representation Service to help people who represent themselves in court or at VCAT to obtain some legal advice as they consider their options or prepare their case (recommendation 8.4); and

(h)   potential reform to the small civil claims jurisdiction of VCAT. 

59The abovementioned strategies designed to increase access to justice and to enhance the benefits of a no costs jurisdiction can only be achieved if appropriate resources are allocated towards the proper functioning of the Tribunal. An injection of much needed resources is required to make it possible for VCAT to fulfil its role in providing an accessible, efficient and low-cost tribunal by ensuring it can to provide a timely service in the resolution of parties’ disputes. 

60In the meantime, in circumstances where: (a) a party does not promptly commence proceedings in VCAT and/or (b) there is an in ordinate delay in VCAT’s ability to hear the proceeding, the parties can apply to lift any stay granted by this Court pursuant to s57 of the Act.[20] Another alternative is to seek an order under s77 of the Victorian Civil and Administrative Tribunal Act1998 (Vic) to globally refer matters back to this Court.

[20] Radojevic at [70].

Conclusion

61For the forgoing reasons, I find that the dispute currently before the Court is not an action arising wholly or predominantly from a “domestic building dispute” within the meaning of s54 and hence s57 of the Act is not engaged. Accordingly, I order that defendants’ summons filed on 14 July 2021 be dismissed and the defendants to pay Impresa’s costs on a standard basis to be taxed in default of agreement (unless either party has a basis for a different costs order). I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.

- - -

Certificate

I certify that these 21 pages are a true copy of the judgment of her Honour Judge Burchell delivered on 18 August 2021.

Dated: 18 August 2021

Andrea Ko

Associate to her Honour Judge Burchell