When deciding between VCAT or court for your commercial dispute, you’re making a strategic decision that affects time, costs and likelihood of success.

Your commercial dispute hasn’t resolved through negotiation. The other party won’t return calls or engage meaningfully. You’re facing significant losses and need formal legal proceedings.

But should you file in VCAT or a court?

For Melbourne business owners, this isn’t just a technical legal question. It is a strategic decision that will affect your time, costs and in some cases the likelihood of success. Here’s what you need to know.

What is VCAT?

The Victorian Civil and Administrative Tribunal (VCAT) is a tribunal that resolves disputes more informally and affordably than traditional courts.

Think of it as the middle ground between negotiation and full court litigation.

VCAT can handle:

• Contract disputes
• Debt recovery
• Consumer claims
• Property disputes (specific types)
• Domestic Building disputes and retail lease disputes

Key features:

• Less formal procedures
• No wigs or robes
• Generally faster resolution (but not always)
• Often means lower legal costs
• More flexible hearing processes
• Often referred to as the “People’s Tribunal”

What cases go to court?

The Magistrates’ Court has civil jurisdiction up to $100,000 and tends to handle smaller commercial disputes including debt claims, contract disputes, misleading conduct claims, some civil torts and some property matters such as fencing disputes.

The County and Supreme Courts both have unlimited civil jurisdiction and they are equipped to handle most commercial disputes.

Victorian Courts are very well resourced and are staffed by very capable Magistrates and Judges. As with everything though, they have a ceiling on capacity which can mean some delays.

When VCAT is the better choice

1. Straightforward contract disputes

If your case is primarily “they didn’t do what the contract says,” VCAT can often be ideal.

Examples include:

• Supplier didn’t deliver goods
• Contractor performed defective work
• Payment dispute over services
• Simple breach of terms

VCAT tribunal members can often understand commercial contexts and can cut through to the key issues quickly.

Be aware however that VCAT is still dealing with COVID-19 backlogs and matters can often take some time to get to final hearing, especially in the domestic building and retail leasing lists.

2. You want to minimise costs

The filing fee is cheaper at VCAT than in the Court system.

Be sure to be aware however that costs Orders operate differently too.

In VCAT the starting position is that no costs Orders will be made (there are exceptions), whilst in Courts the starting position is that costs follow the event and the successful party usually receives a costs Order to compensate them for legal costs incurred.

3. You value speed

VCAT was the place to go before the pandemic for quick resolution. That has now changed however given the sheer volume of cases which have been filed in VCAT.  Depending on the type of matter, VCAT can take 3 to 24 months to advance matter to trial. In the courts however, matters can take 9 months to get to trial (Magistrates’ Court) to 18 months (Supreme Court).

4. You’re representing yourself or using limited legal help

VCAT is designed to be accessible:

• You can represent yourself more easily
• Procedures are less formal
• You can have a lawyer for some parts but not others
• Tribunal members will explain processes

Courts assume you understand legal procedures and won’t necessarily guide you through them. In my experience though, most Magistrates’ and Judges will do what they can to ensure you fully understand process and expectations.

When court is the better (or only) choice

1. Jurisdiction

There are instances where VCAT will not have jurisdiction and a court is the only option. For example, fencing disputes can only go to the Magistrates’ Court.

2. You need specific court powers

Courts can grant remedies VCAT cannot:

• Mareva injunctions (freezing assets)
• Anton Piller orders (search orders)
• Certain types of declaratory relief

3. The legal issues are complex

Go to court when your case involves:

• Difficult questions of law requiring precedent
• Multiple overlapping contracts or multiple parties
• Complex commercial or corporate arrangements
• Trust or equity matters
• Significant cross-claims

Courts have more sophisticated legal frameworks for handling complexity and are usually governed more heavily by the law of precedent.

4. You need an enforceable precedent

VCAT decisions don’t always create binding legal precedent for other cases.

If establishing a legal principle matters to you (or your industry), the court process and outcome can be more definitive in meeting this goal.

5. Multiple parties or related claims

If your dispute involves:

• Multiple defendants
• Third-party claims
• Related proceedings in other courts
• Complex funding arrangements

Courts are better equipped to manage multi-party litigation.

6. The other party is a large corporation with deep pockets

While VCAT levels the playing field, sophisticated opponents can still out-resource you.

Court may be better if:

• The other party will heavily resource the case anyway
• You need formal discovery processes
• Complex evidence is required
• You want access to superior court powers
• You want access to costs orders

Settlement dynamics differ

VCAT actively encourages settlement:

• Compulsory conferences designed to facilitate agreement
• Tribunal members often sit as chair of these processes and may indicate likely outcomes
• Informal process makes compromise easier
• Both parties know costs won’t be recovered

Court settlement is different:

• Potential costs orders create pressure to settle
• More formal settlement conferences
• Offers of compromise have legal consequences
• Costs following the event can affect negotiation

The practical factors

Your business continuity

VCAT:

• Can be less time-intensive
• Fewer procedural steps and the rules of evidence often don’t apply to the same standard
• Can often be managed while running your business
• Shorter overall duration for simpler cases

Court:

• Can often be demanding
• Multiple court appearances
• Extensive document discovery in some cases
• Can dominate management time for 1–2 years

Your stress tolerance

VCAT:

• Less formal
• Tribunal room, not courtroom
• Tribunal member in business attire
• More conversational
• Less intimidating

Court:

• Formal and imposing
• Traditional courtroom
• Judge or jury
• Barristers, gowns, formality

The strategy question: What does the other party want?

Consider:

• Will they be intimidated by court proceedings or emboldened?
• Do they have resources to fight in court?
• Will VCAT’s informal process help or hinder settlement?
• Do they respond better to formal or informal pressure?

Sometimes the choice of forum affects negotiation leverage.

Making the decision: A framework

Choose VCAT if:

✓ Facts are straightforward
✓ It has jurisdiction
✓ You want lower costs
✓ Settlement is likely
✓ You’re comfortable with limited cost recovery

Choose court if:

✓ Legal issues are complex or Courts only have jurisdiction
✓ You need specific court powers
✓ Multiple parties involved
✓ Costs recovery matters
✓ Establishing precedent is valuable

Key takeaways

1. VCAT handles disputes more informally and with lower filing fees than courts.
2. VCAT currently has COVID backlogs – matters can take 3–24 months to reach trial in some cases.
3. Courts can sometimes now be faster and can grant remedies VCAT cannot.
4. VCAT generally doesn’t order costs recovery – each party pays their own legal costs.
5. Courts typically order losing party to pay winner’s costs.
6. Choose VCAT for straightforward contract disputes under $100,000 where settlement is likely.
7. Choose court for complex legal issues, multiple parties, or when specific court powers are needed.

Frequently asked questions

Can I transfer my case from VCAT to court if it becomes more complex?

Transfer is possible but difficult. VCAT can transfer for significant legal questions, jurisdictional issues, or complexity beyond its capacity. However, VCAT is reluctant unless genuinely necessary.  Starting in the wrong forum deliberately then seeking transfer will likely be rejected.  Put simply, transfer should be avoided.

If VCAT makes an order against me, am I bound in future disputes?

The order binds only the parties to that specific dispute. However, findings of fact and law may have practical consequences. If VCAT finds you breached a contract term, you cannot relitigate that in different matters about the same contract.

Repeated adverse findings can establish conduct patterns.

The bottom line

MST Lawyers’ commercial litigation team regularly advises Melbourne and interstate businesses on forum selection and represents clients in both VCAT and all levels of Victorian and interstate courts.

We can assess your dispute and recommend the most effective and cost-efficient path forward.

We pride ourselves on giving clear advice at the start so you can make informed decisions, including whether your matter goes to VCAT or to a Court.

Not sure whether VCAT or court is right for your dispute?

Our litigation team can assess your situation and explain your options. Contact MST Lawyers or call (03) 8540 0200.

This article provides general information only and should not be relied upon as legal advice. The appropriate forum depends on your specific circumstances.