Koolio Pty Ltd v Owners Corporation 1 PS618397Y (Building and Property) [2024] VCAT 273

1. The proceeding is reinstated.
2. Order 1 made 22 June 2023, insofar as it refers this proceeding BP795/2020 to the County Court, is revoked.
3. The proceeding is listed before a Vice President of the Tribunal to be managed and determined until further order.
4. The proceeding is listed for an administrative mention on 13 December 2024, or such other date as may be ordered following the resolution of proceeding CI‑23‑05881 (the OC proceeding) which is currently listed for trial on 13 November 2024. The purpose of the administrative mention is for the parties to advise the Tribunal (by email to the Vice President's chambers CCVbcl@courts.vic.gov.au) of the orders they propose for the future conduct of the proceeding.
5. The parties are not required to take any further step in the proceeding until further order.
6. Reserve liberty to the parties to apply by email to the Tribunal (by email to the Vice President's chambers CCVbcl@courts.vic.gov.au) for further directions upon giving reasonable notice to all other parties.
7. Costs reserved.

1. Although the procedural orders above were made during a directions hearing, I consider it important to publish Reasons for them, to clarify certain questions about the operation of the referral of a proceeding under s 77(3) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act), which have arisen from the recent decision of the President of the Tribunal in Plunkett v Portier Pacific Pty Ltd[1] (Plunkett).
2. This proceeding BP795/2020 (Koolio proceeding) is one of a number of proceedings commenced in the Tribunal in relation to the same building in Sandringham. It is a low rise, mixed-use building, with retail spaces on the street level and two floors of residential apartments above. The main issues with the building involve water entry and cladding defects.
3. Four proceedings were commenced in VCAT and one in the County Court of Victoria. This was appropriate. This is the type of building and type of dispute which the Supreme Court considered in Presser v Ocean View Properties Pty Ltd[2] as being a domestic building dispute for the purposes of s 57 of the Domestic Building Contracts Act 1995 (Vic) (DBC Act). That is, absent any jurisdictional limitations, this is the type of dispute which the Domestic Building Tribunal and then VCAT were set up to resolve. As His Honour Habersberger J said:[3]

One of the four purposes of the [DBC] Act is "to provide for the resolution of domestic building disputes" by the Tribunal (s.1(b)). This purpose would not be served, in my opinion, by deciding that it was not appropriate to grant a stay even though the dispute essentially centres on responsibility for the allegedly unworkmanlike carrying out of an item of domestic building work. Jurisdiction is given to the Tribunal by s.53(1) of the Act to resolve domestic building disputes and the Tribunal's role in this regard is emphasised by the fact that, pursuant to s.57(2), if the Tribunal has jurisdiction, the Court must stay an action on the application of a party to the action.

1. A brief history of the five proceedings (leaving out details not relevant for the purpose of these Reasons), follows.
2. The Owners Corporation commenced proceeding BP2051/2020 (OC proceeding) as a claim against the builder of the property, in relation to the allegedly defective building work. The cause of action relies on a breach of warranties given by the builder under s 8 of the DBC Act.
3. One of the lot owners issued a separate proceeding BP2065/2020 (Bucktowar proceeding) as a claim against the builder in relation to alleged water entry into her apartment. The cause of action is a breach of the warranties given by the builder under s 8 of the DBC Act.
4. The Tribunal gave the builder leave to join a number of other parties, being subcontractors and professional consultants, to each of the OC proceeding and the Bucktowar proceeding. Originally the joinder was for the purposes of the builder relying on a defence under Part IVAA of the Wrongs Act 1958 (Vic) (Wrongs Act). The builder later sought to file a claim against those other parties to seek contribution under Part IV of the Wrongs Act, and purported to rely on alleged breaches of the Trade Practices Act 1974 (Cth).
5. Because the Tribunal does not have jurisdiction once a federal claim is raised,[4] and at that time did not have jurisdiction under Part IV of the Wrongs Act,[5] the builder also issued a proceeding number CI-23-02997 in the County Court (Watpac proceeding), in which it sought contribution from the subcontractors and consultants in respect of the claims made against it in the OC proceeding and the Bucktowar proceeding.
6. The third related VCAT proceeding BP510/2021 (Smith proceeding) was also a claim by one lot owner against the builder in relation to alleged water entry into her apartment. Ms Smith represented herself and said the builder was liable to rectify because the defect had come to light during the "warranty period." Ms Smith sought leave to withdraw the application by filing consent orders agreed to with the builder, dated 19 June 2023.
7. This Koolio proceeding is different in nature to those other proceedings. The applicant Koolio is the owner of an apartment which is allegedly suffering water entry. Koolio's claim was brought against the Owners Corporation, and/or the builder for orders under sections 16 and 19 of the Water Act 1989 (Vic) (Water Act). That is, while the other related proceedings involved claims against the builder of the property for breaches of the warranties under the DBC Act, this proceeding is for orders to stop the flow of water and/or damages under the Water Act. Koolio subsequently settled its claim against the builder and the only cause of action currently on foot is its claim against the Owners Corporation.
8. On 22 June 2023 Vice President Judge Marks made the same order in respect of the four VCAT proceedings, i.e. the OC, the Bucktowar, the Smith and the Koolio proceedings (the s 77 order). Her order stated as follows:

Having been satisfied that the Tribunal does not have jurisdiction to determine the proceedings and that the subject-matter of the proceedings would be more appropriately dealt with by the County Court of Victoria, I direct pursuant to s 77 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) that BP795/2020, BP2051/2020, BP2065/2020 and BP510/2021 be struck out and the matter be referred to the County Court of Victoria.

1. Her Honour provided the following reasons for the s 77 order:
   1. Related proceedings BP795/2020, BP2051/2020, BP2065/2020 and BP510/2021 (the proceedings) were referred to me as a judicial member to consider making an order under s 77 of the VCAT Act.
   2. Resolution of the disputes in BP2051 and BP2065 requires determination of issues arising under federal legislation: the Trade Practices Act 1974 (Cth). Accordingly, I am satisfied that a federal claim has been raised in the proceedings and that therefore the Tribunal lacks jurisdiction to hear and determine them: see Thurin v Krongold Constructions [2022] VSCA 226, particularly at paragraph 64. It is necessary to strike the proceedings out of the list of cases to be heard at the Tribunal, under s 77(1) of the VCAT Act.
   3. There are common facts to be determined in the proceedings. It is preferable to have all the issues raised in this dispute heard and determined in the one case, at a court which has federal jurisdiction.
   4. All the parties who responded to the Tribunal's email of 26 May 2023, except for Watpac Construction (Vic) Pty Ltd, seek a referral order be made to the County Court of Victoria. Watpac seeks no referral order. It has separately commenced proceedings in respect to its claim for contribution in the County Court of Victoria (according to its email of 3 June 2023).
   5. I consider that it is appropriate to refer the proceedings to the County Court of Victoria under s 77(3) of the VCAT Act.
2. The difficulty with the s 77 order, insofar as it relates to the Koolio proceeding, is that VCAT has been given exclusive jurisdiction to determine all causes of action (other than a claim for damages for personal injury) under the Water Act, and the County Court has not been given this jurisdiction. Section 19 relevantly provides:

(1) The Tribunal has jurisdiction in relation to all causes of action (other than any claim for damages for personal injury) arising under sections 15(1), 16, 17(1) and 157(1) of this Act.

(8) Nothing in this section prevents a person from bringing before a court a claim for damages for personal injury based on a cause of action of a kind referred to in subsection (1).

(10) Subject to subsection (8), a proceeding based on a cause of action of a kind referred to in subsection (1) must not be brought otherwise than before the Tribunal.

1. Further, the proceeding was not a "substituted proceeding" within the meaning of s 57C(2) of the VCAT Act, which was then "transferred" to the County Court under s 57J_._ If it were (meaning it had involved federal subject matter and had been the subject of an application in the Magistrates Court under Part 3A of the VCAT Act) it is arguable that the County Court would have had, "jurisdiction to exercise judicial power to resolve controversies involving federal subject matter, including functions and powers conferred or imposed by or under [the VCAT] Act or an enabling enactment,"[6] namely the Water Act.
2. Accordingly, the County Court is not able to determine Koolio's application, even though the VCAT proceeding has purportedly been referred to it.
3. I record that I make no criticism that her Honour made the s 77 order, as it was made at a time of uncertainty about the Tribunal's jurisdiction and the effect of s 77 (i.e. pre Thurin v Krongold Constructions [2023] VSCA 191 (Krongold No 2)); it was made without direct submissions from the parties (in respect of this proceeding at least); and this proceeding was caught up in the many related proceedings on foot.
4. Koolio has requested I make an order revoking the s 77 order, reinstating the proceeding in VCAT and then staying the proceeding until after the OC proceeding is resolved. This order is not opposed. Koolio has taken no further steps in VCAT or in any court since the s 77 order was made.
5. The question for me is the status of the Koolio proceeding. Has it become a County Court proceeding because of the referral made as part of the s 77 order, or is it still a VCAT proceeding because the referral was ineffective?
6. As decided in Krongold No 2,[7] it is not necessary to file an originating motion to invoke the Court's jurisdiction. In any event, Koolio has not done this.
7. Instead, the usual process adopted by the Tribunal is that in order to form a view about which is the more appropriate forum (as it must do under s 77), the Tribunal will contact the relevant Court to discuss the nature of the proceeding, jurisdiction, any related proceedings and the Court's and Tribunal's resources at that time. The parties are also given the opportunity to make submissions as to the appropriate forum before an order is made.[8] It may be that all or part of the subject matter is referred (for example, part may remain as a VCAT proceeding, as a means of addressing those claims where VCAT has exclusive jurisdiction).
8. Once the Tribunal has made an order referring a matter (or part of a matter) to it under s 77(3), the County Court Registry will send the parties a form (called the Case Management Information Form) as an administrative means of commencing the proceeding in the Court. Once the form is completed and returned, the proceeding is given a County Court proceeding number and orders are made in chambers dispensing with the need to file a writ and (usually) accepting all documents filed in the VCAT proceeding as being filed with the Court.
9. In the Koolio proceeding, no party has returned the Case Management Information Form and no County Court proceeding number has been allocated.
10. As stated above, because of s19(10) of the Water Act, the County Court does not have jurisdiction to determine Koolio's claim. In Krongold No 2 the Court of Appeal noted that a Court is only required to accept those referred matters over which it has jurisdiction. Although it was dealing with a referral to the Supreme Court, the same principle applies to a referral to the County Court. The Court of Appeal held:[9]

A referral under s 77 to the Supreme Court invokes the jurisdiction of the Court. On receipt of a referral, the first task of the Court is to satisfy itself that it has jurisdiction with respect to the referred matter and, if an affirmative answer is given to that question, the Court is required, in the sense of being under a duty, to exercise jurisdiction in respect of it.

1. In Plunkett,[10] the President of the Tribunal also noted the need for the receiving Court to first ask itself whether it has jurisdiction:

As the Court of Appeal in Krongold No 2 made plain, the first task of the receiving court is to ask itself whether it has jurisdiction in respect of the referred matter, having regard to the nature of the dispute and perhaps the identity of the parties.

1. In the present matter, as the County Court does not have jurisdiction in the Koolio proceeding, it is not required to (and arguably is not able to) accept the referral. The County Court's jurisdiction has not been enlivened and in my view, that means that the proceeding remains a VCAT proceeding, albeit struck out.
2. It would be an absurd situation if the County Court were required to open a file and allocate a proceeding number to a matter following an order under s 77(3), against the wishes of the parties, and when it is clear that the Court does not have jurisdiction over the subject matter, simply for the purposes of then making an order dismissing that proceeding for lack of jurisdiction. These practicalities were not addressed in Krongold No 2 or Plunkett. At most, in Krongold No 2 the Court of Appeal noted that before making a s 77 order, VCAT is required to assess whether another entity would be able to deal with the subject matter.[11]
3. The Court of Appeal noted variously:
   1. "In the context of a referral to a court, that would plainly require an assessment as to whether the subject matter is within the jurisdiction of the receiving court in the sense that the court would have authority to decide the issues that arise."[12]
   2. "[T]he first task of the receiving court is to ask itself whether it has jurisdiction in respect of the referred matter."[13]
   3. "[I]t would be open to the receiving court in dealing with the matter to take a different view from VCAT on the issue of jurisdiction and dismiss the proceeding for want of jurisdiction."[14]
4. However, the Court of Appeal did not comment on the process that should be followed if it is clear before any steps are taken that the Tribunal's assessment was incorrect and the receiving court does not have jurisdiction. It would be absurd and cannot have been the intention of Parliament that a party caught in this situation should either have to appeal the Tribunal's s 77(3) order on the grounds of legal error (assuming there is even a right of appeal under s 148 of the VCAT Act); or to ask the receiving court to allocate a proceeding number and then to dismiss that proceeding, and then to have to go back to the Tribunal and ask for the proceeding to be reinstated.
5. Accordingly, my view is that the better approach is to conclude that the referral purportedly made under s 77(3) has failed, and the order currently in force is the order made under s 77(1) striking out the proceeding.
6. It is well accepted that striking out of a proceeding at VCAT merely removes it from the list of active cases. It does not mean that the proceeding has been adjudicated on the merits or dismissed.[15] A VCAT member has an implied power to reinstate a proceeding that has been struck out.[16]
7. Similarly, the referral under s 77(3) is not a final order, as the proceeding has been struck out and not finally determined. In Krongold No 2, the Court of Appeal noted that VCAT does not determine the proceeding, but instead sends the subject matter elsewhere.[17] It is well accepted that the Tribunal has power to, "give directions at any time in a proceeding and do whatever is necessary for the expeditious or fair hearing and determination of a proceeding."[18]
8. Accordingly I am satisfied that as a VCAT Vice President, I have the power, and I consider it appropriate, to make the orders requested by Koolio. That is, to revoke the s 77(3) referral and to reinstate the struck out proceeding.
9. Finally, I note the comments of the President of the Tribunal in Plunkett to the effect that s 77 gives VCAT an unequivocal and unfettered discretion:

Clearly, Parliament has evinced an intention to invest VCAT with jurisdiction in a wide variety of matters. But it has also evinced a clear intention by s77 to confer on VCAT an unequivocal and unfettered discretion to determine that the subject matter of particular proceedings would be more appropriately dealt with by another tribunal, a court or any other person or body. [19]

1. In my view, the administrative process I have described above does not fetter the Tribunal's discretion. The consultation process between the Tribunal and the Courts aims to avoid situations such as this one, where parties have been put to unnecessary extra expense and uncertainty. There is no dispute that a Court will be a more appropriate forum where the Tribunal lacks jurisdiction and/or for more complex claims. President Woodward listed some of the factors that may determine complexity in Plunkett and concluded, "the exercise of the discretion involves a subjective balancing process in which the relevant factors will vary."[20] Consultation provides the opportunity for the Tribunal and the Courts to consider these varying factors, to give the parties the opportunity to make submissions once informed about the alternative forum(s), and to implement the purpose of the VCAT Act and its enabling enactments.
2. I appreciate that it must be frustrating for an apartment owner with a leaking light-well to have found themselves being 'bounced around' from their original choice of VCAT, to the County Court, and then potentially back to VCAT. The Tribunal and the Courts should do all they can to minimise such impacts (both financial and non-financial) by making their processes as simple as possible for those who find themselves in such a situation due to the jurisdictional issues and / or resourcing decisions made. Accordingly I will order that the Koolio proceeding remains as a VCAT proceeding and I, sitting as a Vice President of the Tribunal will manage it alongside the referred proceedings. At the request of the parties, I will also order that no steps are to be taken in this proceeding until further order, and will list it for an administrative mention following the resolution of the OC proceeding, at which time the parties may address me on the orders they seek.

[1] [2024] VCAT 205.

[2] [2006] VSC 143.

[4] Thurin v Krongold Constructions [2022] VSCA 226 (Krongold No 1).

[5] Per Vaughan Constructions Pty Ltd v Melbourne Water Corporation [2023] VCAT 233.

[6] Victorian Civil and Administrative Tribunal Act 1998, s 57C(2) (VCAT Act).

[7] Thurin v Krongold Constructions [2023] VSCA 191, 58-59 (Krongold No 2).

[8] See Plunkett v Portier Pacific Pty Ltd [2024] VCAT 205, 41(f) (Plunkett).

[15] Krongold No 1, 150; Krongold No 2, 68.

[16] Herald & Weekly Times Pty Ltd v Victoria (2006) 25 VAR 124; [2006] VSCA 146, 19; Turner v Hidayat [2011] VSC 202, 35; Wahr v Australian Broadcasting Corporation [2000] VCAT 1081.