Victoria’s VCAT lacks jurisdiction to determine contribution claims

In the case of Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) (Vaughan), the VCAT has clarified that, where disputes involve multiple respondents who are liable to the applicant for the same loss or damage, it does not have jurisdiction to determine what contribution, if any, each of those respondents should make to the award. 

Vaughan comes off the back of a recent decision by the Victorian Court of Appeal in Thurin v Krongold Constructions (Aust) Pty Ltd, which settled that VCAT has no jurisdiction on matters arising under Commonwealth law.

It is common in building and construction disputes for contribution claims or, alternatively, proportionate liability to be raised by respondents due to the number of participants in construction projects, including contractors, subcontractors and suppliers.

This is because contribution, addressed under part IV of the Wrongs Act (185-page / 1.32MB PDF), and proportionate liability, addressed under part IVAA of the Wrongs Act, are both statutory means for sharing liability where two or more respondents are legally responsible for the same loss or damage.

Contribution enables a respondent to seek contribution to any damages award made against them from any third party who is liable in respect of the same damage whatever the legal basis for that liability (for example, due to breach of contract). Proportionate liability applies only to ‘apportionable claims’ and apportions liability against concurrent wrongdoers. ‘Apportionable claim’ is defined in the Wrongs Act to include claims arising out of a ‘failure to take reasonable care’.

In light of the Vaughan case, any contribution claim raised by a party in a VCAT proceeding cannot be heard at the VCAT and must instead be brought through a separate proceeding in a court that has jurisdiction to hear the claim. This will result in a multiplicity of proceedings where contribution claims are heard in court when the primary claim is heard by the VCAT, a consequence which Judge Delany said that would cause “considerable inconvenience”.

Respondents must also continue to carefully consider the forum for dispute resolution when faced with defending an action in the VCAT and must consider all potential claims and defences.

Pending amendment to Part IV of the Wrongs Act by the legislature to provide the VCAT with jurisdiction to determine contribution claims, the possibility of which is uncertain at this stage and, if so, will take time, the VCAT’s ability to efficiently and cost effectively determine building and construction disputes continues to face significant issues. As of the date of this article, we are not aware of Vaughn being the subject of any appeal.

Co-authored by Jordan Davies of Pinsent Masons.