Troubled waters – the Water Act, VCAT and contribution claims

Troubled waters – the Water Act, VCAT and contribution claims

While VCAT, parties and practitioners await a signal of what legislative changes will be proposed to resolve or ameliorate the effects of the jurisdictional shadow cast by the decision of the Court of Appeal in Thurin v Krongold [2022] VSCA 226[1], it is at least clear that VCAT has exclusive jurisdiction in relation to certain causes of action under the Water Act 1989 (Vic)[2].

However three recent decisions in Water Act disputes have produced troubling results on issues of limitation of Water Act proceedings and on VCAT’s jurisdiction to hear and decide contribution claims in general.

Chronologically:-

1. In Melbourne Water Corporation v Vaughan Constructions [2022] VSCA 241, the Court of Appeal considered s 157 of the Water Act 1989 (Vic), which establishes statutory liability in water authorities for a flow of water causing damage where there has been (or is presumed to be) negligent or intentional conduct.  In that appeal, the Court was required to interpret the words “the proportion (if any) of the responsibility of the Authority”, being the apportionment mechanism within s157(4) applying in the case of a claim against a water authority in respect of damage arising from a flow of water.  The Court of Appeal held that the focus is on the attribution of responsibility (rather than cause), and that the relevant requirement is for a comparison of the responsibility of the authority for the damage for which it is liable with the responsibility of any other persons who are also liable for that loss.  This means that a water authority must plead the basis on which it alleges that other parties bear a legal liability for the loss claimed.  This confirmed the decision of the Court below (to which VCAT had originally transferred the proceeding).

2. In Steedman v Greater Western Water Corporation [2023] VCAT 128, VCAT also considered a claim against a water authority under s 157 of the Act.  VCAT there decided that a claim under s 157 of the Water Act 1989, being a statutory cause of action, is not subject to the limitation period of six years set out in the Limitation of Actions Act 1958 (Vic).  VCAT reached the decision applying an indistinguishable Supreme Court authority in the case of Lanigan v Circus Oz [2022] VSC 35, and declining to apply the distinguishable and later Supreme Court authority of Ajaimi v Giswick [2022] VSC 131.  VCAT confirmed that the potentially relevant provisions of the Limitation of Actions Act – concerning actions in contract or tort for damages for breach of statutory duty, and actions to recover a sum recoverable by virtue of an enactment – were inapplicable to a s 157 claim.

In that s 16 of the Water Act, creating a strict liability statutory cause of action for unreasonable flow of water (other than associated with the works of a water authority), is “comparable” to s 157[3], it seems likely that the same reasoning as in Steedman would apply, meaning the six-year limitation period in the Limitation of Actions Act also would not apply to such unreasonable flow of water claims.

The unusual position of an apparent lack of an applicable limitation period bears some parallels with the decision reached by VCAT in the case of Gledhill v Scotia Property Maintenance [2019] VCAT 422, where VCAT decided that the s 134 Building Act 10-year limitation period for building actions, that runs from the date of issue of the occupancy certificate or certificate of final completion, does not apply where there was no building permit (in respect of which a occupancy certificate or certificate of final completion would ordinarily be issued).  VCAT decided there that the six-year limitation period under the Limitation of Actions Act applied in its place.  In Steedman, there was no “fallback” position – a s 157 claim does not fit within the categories of claims dealt with in the relevant provision of the Limitation of Actions Act, so the six-year limitation period has no application at all. VCAT being a “creature of statute” cannot necessarily apply public policy principles or the common law and has no inherent power to prevent abuses of its own processes, as might arise where certain Water Act claims could be brought at any time without limitation.

3. In Vaughan Constructions v Melbourne Water Corporation [2023] VCAT 233, a judge of the Supreme Court acting as a member of VCAT has decided in relation to s 16 Water Act claims that VCAT lacks jurisdiction to determine claims for contribution under Part IV of the Wrongs Act 1958 (Vic).  This determines the point flagged by the Court of Appeal in its decision in Thurin v Krongold [2022] VSCA 226[4].  The contribution issue arose for consideration in Vaughan because, unlike the in-built proportionate liability regime in s 157 of the Water Act regarding water authority liability [refer case 1, above], there is no proportionate liability regime applicable to s 16 Water Act[5]

The judge decided that both the construction of Part IV and the history of amendments to the Wrongs Act meant that VCAT is not a “court”, except where expressly so stated.  Part IV of the Wrongs Act lacks any such statement.  The judge stated:

“… the text [of Part IV] is unambiguous. A potential multiplicity of proceedings in different fora, where claims are made under s 16 of the Water Act in the Tribunal is regrettably the consequence of the only construction of the meaning of the word ‘court’ that is reasonably open.”[6]

The judge also rejected the argument that the cause of action in Part IV – for contribution – arises “in relation to” a cause of action arising under s 16 of the Water Act where VCAT has exclusive jurisdiction.

These decisions variously:

• confirm that Water Act claims as to use or escape of water must be heard and determined at VCAT;
• clarify the requirements of the in-built proportionate liability regime applying to water Authorities in respect of proceedings under s 157 of the Water Act;
• decide that s 157 claims have no applicable limitation period.  This position likely applies also to s 16 claims; and
• decide that if a question of contribution arises in a Water Act proceeding – or in any proceeding at VCAT – the Tribunal is unable to hear and determine such contribution claim.

Unless or until the legislature amends Part IV of the Wrongs Act to add a definition of court that includes tribunal, parties will need to pursue separate proceedings in a Court to deal with what would otherwise be “third party” contribution claims.

VCAT’s travails continue.  All eyes turn to Spring Street to consult over, identify and implement swiftly amendments and other reforms to deal with Water Act statutory causes of action without a limitation period, the exodus of proceedings or parts of proceedings from the Tribunal, and the uncertain status of decisions already made.

This article was first written by Catherine Bell and published by KHQ Lawyers on 11 April 2023.

[1] See article regarding the decision in Thurin v Krongold [2022] VSCA 226. https://www.keypointlaw.com.au/keynotes/the-court-of-appeal-finds-vcat-pipeline-broken-vcat-has-no-jurisdiction-in-federal-matters/

[2] Steedman v Greater Western Water Corporation [2023] VCAT 128 at [117], referring to s 19(1) of the Water Act 1989 (Vic)

[3] Steedman v Greater Western Water Corporation [2023] VCAT 128 at [106]

[4] Thurin v Krongold [2022] VSCA 226 at [35]. See article regarding the impacts of Thurin v Krongold [2022] VSCA 226 https://www.keypointlaw.com.au/keynotes/further-to-thurin-think-twice-before-commencing-a-domestic-building-dispute-at-vcat/

[5] See Vaughan Constructions v Melbourne Water Corporation [2023] VCAT 233 at [18], [41] and [42]

[6] Vaughan Constructions v Melbourne Water Corporation [2023] VCAT 233 at [66]