Limitation periods for water law claims down the drain

What you need to know

• Recent authority suggests that limitation periods do not apply to water flow claims under s 157(1) of theWater Act 1989(Vic).
• There are inconsistent Supreme Court decisions as to whether theLimitation of Actions Act 1958(Vic) applies to VCAT proceedings.
• We anticipate that this inconsistency will be resolved in the near future, either by a subsequent Supreme Court case, or through legislative amendment to theLimitations Act.

What you need to do

• If you may have a claim for damages resulting from the flow of water onto your land, you should bring your claim within 6 years, even though there remains uncertainty as to whether theLimitations Actapplies to such claims under theWater Act.
• 作为一个defendant to a flow of water claim under theWater Act, even if you are served with a claim after more than 6 years, you should ensure you are prepared to engage with the merits of the case, in addition to advancing limitations arguments.

Liability for water flows under theWater Act

TheWater Act 1989(Vic) imposes liability on Authorities in certain circumstances where a flow of water occurs from an Authority's works onto any land and causes injury, damage to property or economic loss: s 157.

The recent decision of the Victorian Civil and Administrative Tribunal (VCAT) inSteedman v Greater Western Water Corporation[2023] VCAT 128 has cast doubt on whether limitation periods in theLimitation of Actions Act 1958(Vic) apply to:

a.proceedings brought in VCAT; or

b.claims made pursuant to s 157 of theWater Act.

Steedman– Does theLimitations Act适用于诉讼VCAT吗?

Steedmaninvolved a claim that the Applicant had suffered loss and damage as a result of a flow of water from the Respondent's sewerage infrastructure on or around 18 February 2015. On 21 April 2021, the Applicant commenced proceedings in VCAT under s 157(1) of theWater Act, seeking damages. The Respondent raised a limitations defence, arguing the claim was statute barred by reason of the 6-year limitation period in ss 5(1)(a) or (d) of theLimitations Act.

VCAT was required to determine whether the action brought under s 157(1) of theWater Actwas statute barred, while considering the potentially conflicting views expressed in two recent judgments of the Supreme Court of Victoria concerning the applicability of theLimitations Actin VCAT proceedings:

• InLanigan v Circus Oz[2022] VSC 35, McDonald J found that theLimitations Actdoes not apply to proceedings brought under VCAT's original jurisdiction to enforce a claim under theEqual Opportunity Act 2010(Vic). It was held that the proceeding was not one which met the definition of 'action' in theLimitations Acton the basis that VCAT is not a 'court of law' for the purposes of that definition.
• InAjaimi v Giswick Pty Ltd[2022] VSC 131, M Osborne J held that a contractual claim under theRetail Leases Act 2003(Vic) brought in VCAT by a tenant for damages arising from water and sewerage ingress to leased property was subject to s 5(1)(a) of theLimitations Act. The Court held that the definition of 'action' was an inclusive one and was not limited to proceedings brought in court – theLimitations Actapplies to a court "or equivalent".

InSteedman, VCAT held that it was bound by the decision of McDonald J in Lanigan, despite the alternative view subsequently expressed inAjaimi.

This was because, applying the doctrine of precedent, VCAT foundLaniganto be indistinguishable from to the facts arising in the case before it, asLaniganalso dealt with a statutory cause of action.Ajaimi, on the other hand, was distinguishable in that it dealt with a claim founded in contract.

If VCAT wasnot boundby the decision inLanigan, their Honours stated that they would be inclined to apply s 5 of theLimitations Actto legal proceedings brought in VCAT for causes of action that fall within the ambit of that section.

Ultimately, VCAT stated that the apparent conflict betweenLaniganandAjaimiis a question that can only be resolved by the Supreme Court, or through legislative amendment.

Steedman- Could s 157(1) of theWater Actattract s 5(1) of theLimitations Act?

Despite finding that it was bound byLanigan(ie limitation periods do not apply), VCAT nevertheless considered whether an action under s 157(1) of theWater Actcould attract s 5(1) of theLimitations Act. Their Honours ultimately concluded that s 157(1) does not fall within ss 5(1)(a) or (d) of theLimitations Act, because:

• it is not an action founded on tort or one for damages for breach of a statutory duty (s 5(1)(a)); and
• it is not an action to recover a 'sum' recoverable by virtue of an enactment (s 5(1)(d)).

In making this finding, VCAT noted that s 157 provides a freestanding statutory cause of action, which is "very different from any cause of action available at common law".

VCAT然后分析the history of s 157 of theWater Act, concluding that theWater Acthad abolished common law claims, and as a result, s 157 was not an action "founded on tort". Therefore, s 5(1)(a) was not enlivened.

The Tribunal was also of the view that a proceeding under s 157(1) is not an action "to recover any sum recoverable by virtue of enactment" for the purposes of s 5(1)(d) of theLimitations Act. Section 157 does not provide for the recovery of a sum which is certain or calculable under the provision of the enactment itself or ascertainable by reference to some stipulated standard or measure.

Was Steedman correctly decided?

Interestingly, the finding that s 157(1) does not fall within ss 5(1)(a) or (d) of theLimitations Actis arguably inconsistent with an earlier VCAT decision inBody Corporate 18236 v Body Corporate 25805[2003]VCAT 1342(Body Corporate 18236).

Body Corporate 18236involved a cause of action brought under s 16 of theWater Act(an equivalent provision to s 157, imposing liability on individuals rather than authorities). InBody Corporate 18236, Macnamara DP found that s 16 of theWater Actwas subject to s 5(1)(a) of theLimitations Act. In finding that s 16 was an action "founded on tort", VCAT stated that, like the common law torts of nuisance and negligence, an inherent component of the cause of action in s 16 is damage suffered by the applicant. As such, "the terms of Section 16(1) make damage the gist of the action", rendering s 16 an action "founded on tort".

Body Corporate 18236was not referred to inSteedman. However, this alone does not mean Steedman was incorrectly decided, as VCAT is not bound by its earlier decisions.

Implications of theSteedmandecision

Steedmanraises doubts about the correctness of the analysis inLanigan. Although VCAT felt bound to applyLanigan, the line of authority that theLimitations Actdoes not apply to proceedings in VCAT is open to scrutiny. The current situation, where there is uncertainty as to which types of proceedings may attract limitation periods in VCAT, is not ideal, and we therefore anticipate further judicial consideration or legislative amendment in the near future.

Authors:Jane Hall, Partner; James Clarke, Partner; and Ben Kilbride, Lawyer.