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New VCAT fee structure adds Corporate and Concession rates

The Victorian Civil and Administrative Tribunal (VCAT) was established as a low-cost alternative to the courts for resolving civil disputes, but in recent years its fee increases have been criticised for undermining that mission. In 2013, fees for consumer cases increased from $39 to $132 and the number of applications fell by 15 per cent. Gerard Brody of the Consumer Law Action Centre said, “If the claim is less than a couple of thousand dollars then you might think the fee, together with the time involved with having to go to VCAT, is not worth the effort.”

The Andrews Government conducted a review of the tribunal’s fee structure to ensure its resources were allocated as effectively as possible, taking into account the applicant’s capacity to pay. The result is a new system providing for Concession, Standard and Corporate fee rates, which commenced on 1 July 2016.

At the higher end of the scale, a new Corporate fee rate has been established, which applies to government agencies and companies with a turnover in excess of $200,000 per year. The Victorian Government highlighted that “the corporate fee to challenge the refusal of a planning permit for a development with a value of between $15 million and $50 million will increase from $2,086 to $2,328, while the concession fee to challenge the grant of such a permit will now be $150.”

The Standard rate (for individuals and small businesses) is fixed at 70 per cent of the Corporate rate. For most residential tenancy matters, the Standard fee is $61.50, and there is no fee for bond disputes. The new fee structure also includes a sliding scale based on the value of the claim; for goods and services, the Standard fee ranges from $61.50 for a claim under $3000, to $1571 for a claim over $5 million.

In order to address access to justice for those least able to pay, a new Concession rate of fees has been established. Holders of a federal Health Care Card will be eligible for this category, with no application fee for residential tenancy disputes, or for goods and services claims worth up to $15,000. They will also benefit from a cap of $150 on any fee they are required to pay. The option of applying for a fee waiver in exceptional circumstances will remain.

The review process included public consultation, and the Government appears to have taken into account some of the specific suggestions made by lobby groups on behalf of low-income claimants. For example, both the Victorian Council of Social Services and the Consumer Action Law Centre argued that $10,000 was too low a threshold for small claims — the new fee structure removes application and daily hearing fees for Concession holders for claims up to $15,000. However, their proposals that there should be no fee for claims up to $100,000 (VCOSS) or for any claim regardless of value (CALC) were not accepted.

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Labor to increase VCAT fees again, despite access concerns

The Andrews Government will not reverse VCAT fee hikes that caused a reduction in the number of cases it dealt with. Attorney-General Martin Pakula acknowledged that fee increases “contributed to a substantial drop-off in applications to the tribunal”, but will allow fees to increase by up to 10% for the 2015-16 financial year. He said the Government will work on a new fee structure to be implemented in the following year, as he had promised before the last election. Last year, statistics revealed that VCAT claims fell by 15-35% in lists affected by fee increases. Barrister Michelle Quigley QC warned, “Ordinary people just can’t afford it. It’s contrary to access to justice.”

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Concerns VCAT fee hikes hurt access to justice

The impact of VCAT fees on access to justice has been questioned, with statistics revealing a significant drop in the number of applications following fee increases. Last financial year, fees for consumer cases increased from $39 to $132, and the number of applications fell by 15%. Gerard Brody of the Consumer Law Action Centre said, “VCAT was created as an alternative to the mainstream court system [and] we are concerned that it remain a low-cost accessible tribunal, rather than becoming more court-like. If the claim is less than a couple of thousand dollars then you might think the fee, together with the time involved with having to go to VCAT, is not worth the effort.” The fee to lodge a planning dispute was increased from “$322 with no daily charges” to “$805, with daily fees of up to $1462″—and in the following year, the number of applications fell by 35%. VCAT said this was partly explained by changes to planning laws making it easier to amend planning permits without going to VCAT, but barrister Michelle Quigley QC warned, “it’s not just a one-off fee now—it’s a daily fee. Ordinary people just can’t afford it. It’s contrary to access to justice.”

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UK court upholds “friendly discussion” as valid ADR

A justice of the UK High Court recently held that “friendly discussion” is a legitimate form of alternative dispute resolution. The parties had a contract requiring them to “first seek to resolve [a] dispute or claim by friendly discussion”; if it was unsuccessful, they would move to binding arbitration. Asked to rule on whether the clause was valid, Teare J said: “There is obvious commercial sense in such a dispute resolution clause. Arbitration can be expensive and time consuming. It is far better if it can be avoided by friendly discussions to resolve a claim. …[T]here is a public interest in giving effect to dispute resolution clauses which require the parties to seek to resolve disputes before engaging in arbitration or litigation.” The NSW Court of Appeal has previously found that an agreement to undertake “genuine and good faith negotiations” to resolve disputes was valid.

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Schrödinger’s VCAT: both a court and not

Is VCAT a court? Yes and no, the Court of Appeal ruled in Subway Systems Australia Pty v Ireland [2014] VSCA 142. The case was about a Subway restaurant franchise arrangement, including an arbitration agreement to deal with any disputes that arose. The Commercial Arbitration Act 2011 (Vic) prevents “a court” from hearing a matter that is covered by an arbitration agreement. The franchisees tried to take a retail tenancy dispute to VCAT, but Subway objected. The Court of Appeal majority judges held that parliament intended the law to “prefer[] arbitration of whatever kind has been agreed between the parties over State sponsored dispute resolution”, and the word “court” should be interpreted broadly in this context. So VCAT is usually considered to be a tribunal, but in some specific situations it is treated as if it was a court.

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Magistrates’ Court expands mediation programme

In 2007, the Magistrates’ Court introduced a pilot programme to refer defended civil cases up to $40,000 for mediation, at no cost to the parties. It began at Broadmeadows, and has since been expanded to a number of other courts. Under a new practice direction, that programme will be extended to Heidelberg from 1 August 2014. The mediatior will be provided by the Dispute Settlement Centre of Victoria. Section 108 of the Magistrates’ Court Act 1989 (Vic) gives the court the power to refer civil cases for confidential mediation in the hope that they will reach an agreed settlement or at least narrow the issues in dispute.

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Productivity Commission draft report on access to justice

The Productivity Commission has released its draft report on access to justice in the civil jurisdiction, and will now seek public feedback. The PC provides advice to the Commonwealth on economic issues. The terms of reference for its inquiry focus on the financial and social costs of the justice system, and possible reforms to improve efficiency and accessibility. For example, “The report heavily criticises time-based billing by lawyers, ­arguing that it leads to over-­servicing, rewards inefficiency and lacks certainty for clients.” One of its more unusual proposals is for “a legal expenses loan scheme which would offer income-contingent interest-free loans to people who do not qualify for public legal assistance. The person would repay the loan through contributions of a proportion of their income, or from any award of damages.”

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VCAT losers will soon pay winners’ fees

The Victorian Civil and Administrative Tribunal Bill 2014 was passed by parliament this week. It will allow VCAT to order the losing side to pay the fees of the winner (but not their full legal costs). The Tenants Union is concerned that this will “cause further harm to a frequently economically disadvantaged section of our community”. On the other hand, the Consumer Law Action Centre says the impact of last year’s fee increases may be reduced, because winners could now have their fees reimbursed. A proposed amendment to require VCAT to specifically consider “financial hardship” before making a fees order was defeated.

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Fencing disputes keep mediators busy

According to the Dispute Resolution Centre of Victoria, a free mediation service provided by the Victorian Government, about one third of the disputes they deal with relate to fences and boundaries. The centre’s director, Gina Ralston, said, “Typically, neighbours may disagree over the condition of the fence, the kind of fence needed to replace it, which way the rails should go, when it should be replaced, who should do the work and the overall cost.” In 2013, a parliamentary committee reviewed the Fencing Act 1968 and recommended sweeping changes. A bill to replace it with a new Fencing Act is currently before parliament.

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Plain packaging fight didn’t end in the High Court

In 2012, the High Court ruled that the Gillard Government’s laws mandating plain cigarette packaging were constitutionally valid. However, the tobacco industry has taken the dispute to international arbitration, arguing that restrictions on the sale of cigarettes are in breach of Australia’s free trade agreements. According to Mike Seccombe, these costly dispute-settlement procedures “have become a means by which big corporations, and often the home countries of those big corporations (notably the United States) seek to subvert the national sovereignty of other countries.” He says that as a result, many countries, including Australia, are questioning whether arbitration processes should be included in future trade treaties.