VCAT lacks jurisdiction to determine contribution claims

In brief - VCAT has found that it does not have jurisdiction to determine claims for contribution under Part IV of the Wrongs Act 1958 (Vic). As a result, a party to a VCAT proceeding who wishes to claim contribution under Part IV will need to initiate freestanding contribution proceedings in a Court

Proceedings commenced in VCAT against Melbourne Water Corporation  

The interlocutory decision in Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233 involved a proceeding commenced by Vaughan Constructions Pty Ltd against Melbourne Water Corporation in VCAT. Vaughan alleged that there had been a flow of water from a drain in Epping into nearby land, upon which Vaughan had constructed a warehouse. Following construction, defects became apparent at the warehouse. Vaughan alleged that the defects had been caused by a flow of water from the drain, for which Melbourne Water was responsible. 

Vaughan's claim against Melbourne Water had to be brought in VCAT because VCAT has exclusive jurisdiction to claims for loss or damage (excluding damages for personal injury) caused by water under the Water Act 1989 (Vic) ("Water Act"). 

Subsequently, two other parties, Reeds Consulting Pty Ltd and Tonkin & Taylor Pty Ltd, were joined to the proceeding. One of those parties, Reeds, applied to join additional parties to the proceeding, including AS James Pty Ltd. AS James opposed its joinder, including on the basis that the claims Reeds sought to make against it were based on sections 23B and 24 of the Wrongs Act 1958 (Vic) ("Wrongs Act"), which AS James contended may not be within VCAT's jurisdiction to determine. 

The owner of the warehouse had, separately, commenced related proceedings against Vaughan in the Supreme Court of Victoria. There were also a number of related VCAT proceedings, which were being managed together with the Supreme Court proceeding. 
This decision decided a question raised, but not answered, in Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226.

VCAT is not a "court" 

The Honourable Justice Delany (sitting as an Acting Member of VCAT) determined that VCAT lacks jurisdiction to determine claims for contribution under Part IV of the Wrongs Act, based on the application of principles statutory construction to sections 23B and 24 of the Wrongs Act. 

Relevantly, section 24(2) provides: 

"24 Recovery of Contribution

(2) Subject to subsections (2A) and (2B), in any proceedings for contribution under section 23B the amount of the contribution recoverable from any person shall be such as may be found by the jury or by the court if the trial is without a jury to be just and equitable having regard to the extent of that person's responsibility for the damage; and the jury or the court if the trial is without a jury shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity."

His Honour remarked that, unlike Part IVAA of the Wrongs Act (dealing with proportionate liability), there is no definition of "court" in Part IV of the Wrongs Act. 

His Honour found, after referring to observations made in prior cases, that VCAT is not a "court" for the purposes of section 23B and 24, as VCAT does not have the characteristics of a court. This is because (as observed by Kyrou AJA in Subway Systems Australia Pty Ltd v Ireland [2014] VSCA 142) VCAT is not bound by the rules of evidence, it cannot enforce its own decisions, some of its members are not legally qualified, it can be required to apply a statement of government policy and it can be required to provide advisory opinions.

In doing so, His Honour remarked that "VCAT’s long-standing practice of hearing and determining contribution is inconsistent with the statute pursuant to which the Tribunal has purported to determine such claims". 

Proceedings in VCAT involving claims for contribution under the Wrongs Act impacted

The decision will have significant ramifications for parties to proceedings in VCAT that involve claims for contribution under the Wrongs Act, or parties to those proceedings who may wish to bring contribution claims. Such claims are commonplace in multi-party building disputes at VCAT. 

The decision suggests that, if a party to a VCAT proceeding wishes to rely on Part IV of the Wrongs Act, that party will need to commence a separate, freestanding contribution proceeding in a court, while the primary claim remains in VCAT. His Honour recognised that this outcome, which will necessarily result in a multiplicity of proceedings, may cause "considerable inconvenience". 

Whether parliament intervenes to remedy this issue remains to be seen. 

Colin Biggers & Paisley act for Ground Science Pty Ltd, a third party to the related Supreme Court proceeding.