The jury is still out on VCAT’s jurisdiction to hear claims of contribution

The Victorian Civil and Administrative Tribunal (VCAT) has the power to hear and make any fair order to resolve a range disputes, including building and construction disputes.

However, two recent cases, Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226 (Thurin) and Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) [2023] VCAT 233 (Vaughan), have raised questions about VCAT’s jurisdiction to hear disputes relating to federal issues and, more specifically, jurisdiction to determine claims for contribution brought pursuant to the Wrongs Act 1958 (Vic).

Legal professionals and experts believe that this could be a significant and potentially wide-reaching decision, with the potential to be extremely disruptive to VCAT’s operations. As a result, numerous matters are being referred to the County Court and Federal Court.

Thurin v Krongold

In the case of Thurin, David and Lisa Thurin claimed there were defective pipes in internal plumbing works and that the works were not properly carried out by Krongold Constructions (Aust) Pty Ltd. David and Lisa sought compensation for loss and damage in VCAT in excess of $3.5 million, which Krongold denied to pay.

Krongold counterclaimed that any loss and damage suffered by Thurin was apportionable amongst other parties, including Swan Hardware, the supplier of the pipes, and the architect. Thus, there were concurrent wrongdoers, so as to require apportionment of the loss and damage claimed.

The Honours of the Supreme Court of Appeal ultimately established that VCAT does not exercise federal judicial power, or adjudicate on any federal controversy, and used their power to transfer proceedings over which it lacks jurisdiction to a court or other decisionmaking body, the Supreme Court of Appeal.

Vaughan v Melbourne Water

In the case of Vaughan, Vaughan Constructions Pty Ltd (Vaughan) and two other companies initiated proceedings against Melbourne Water Corporation (MW) claiming damages in its capacity as the owner, manager, and operator of a drain which water from the drain flowed into Vaughan’s site causing significant defects to a building.

MW pleaded that if it is liable to pay damages, then by reason of section 157(4)(b) of the Water Act 1989 (Vic), the proportion (if any) of its responsibility must be assessed and the damages must be awarded against it on the basis that other parties were responsible for the loss or damage.

Melbourne Water needed to establish that the other parties to which it seeks to apportion its liability are, or would be, liable to the Applicants under a cause of action for the claimed loss and damage.

Justice Delany of the Supreme Court of Victoria followed the decision in Thurin, affirming that VCAT is not a court and that claims for contribution under Part IV fall outside its jurisdiction.

In summary, these cases have raised questions about VCAT’s jurisdiction to hear disputes relating to federal issues, and in particular claims for contribution under the Wrongs Act 1958 (Vic).

Legal professionals and experts believe this could be a significant and potentially wide-reaching decision, with the potential to be extremely disruptive to VCAT’s operations and may also ease delays due to the anticipated mass transfer of referral to the County Courts and Supreme Court.

However, it is also a significant addition to the jurisdictional issues now facing litigants when deciding in which forum to commence their claim(s).

What does it mean to ‘claim for contribution’?

Apportionment and contribution claims are alternative ways for defendants to reduce their liability in cases of economic loss or damage to property. Apportionment claims, governed by Part IVAA of the Wrongs Act 1958 (Vic), address claims of proportionate liability.

A defendant who is a concurrent wrongdoer, meaning their acts or omissions caused the loss or damage, can seek apportionment to reflect their proportionate responsibility. This typically requires joining other wrongdoers as defendants. VCAT has jurisdiction to hear apportionment claims.

On the other hand, contribution claims are covered by Part IV of the Wrongs Act 1958 (Vic). Section 23B(1) states that a person liable for damage suffered by another person may seek contribution from any other person liable for the same damage.

Contribution claims do not reduce the defendant’s liability but instead require other wrongdoers to make payment to the defendant. These claims are in the nature of third-party proceedings and can be made in a court.

However, the lack of a definition for the term “court” in Part IV raises the possibility that VCAT lacks jurisdiction to determine contribution claims.

POTENTIAL IMPLICATIONS moving forward

The implications of the Thurin and Vaughan cases on VCAT’s jurisdiction are significant.

It is expected that complex cases involving contribution claims and other federal issues will be referred to federal courts, leading to increased costs and delays for the parties involved.

This may create a backlog of cases in the County Courts and Supreme Courts. However, it could also free up VCAT to focus on simpler building and property disputes, which have been experiencing significant delays since the COVID-19 pandemic.

Legislative intervention to include “tribunal” in the definition of “court” in Part IV of the Wrongs Act 1958 (Vic) may mitigate the impact of these cases and allow VCAT to resolve a wider range of building disputes.

In conclusion, the recent cases of Thurin and Vaughan have raised concerns about VCAT’s jurisdiction to hear claims for contribution and disputes involving federal issues. These cases have potential implications for the jurisdiction of VCAT, the transfer of cases to other courts, and the resolution of building and construction disputes.

Builders and tradespeople should be aware of these developments, as they may impact the choice of the appropriate forum for their disputes.

Legislative amendments could also provide clarity and ensure a more effective resolution of building and construction disputes in Victoria.

Please be aware this article contains general information and is not a substitute for professional advice. If you’d like further information, please contact our Legal team on (03) 9411 4555.

Matthew Wassylko MBV Legal Counsel