1. The applicants ('the Owners') have been the owners of a home in Box Hill since January 2017. The home was built for the previous owners by the respondent builder under a building contract dated 31 May 2011. The owners commenced this proceeding in May 2019 claiming the cost of rectification of alleged defective works.
2. The builder has applied to join the previous owners - Joseph and Melanie Spuria ('the Spurias') as the second and third respondents for the purposes of a proportionate liability defence under Part IVAA of the Wrongs Act 1958 ('Part IVAA defence'). It alleges the Spurias are concurrent wrongdoers as they carried out the works which the Owners claim are defective.
3. This is the second application for joinder by the builder. I refused the first application on 30 October 2019 and gave it leave to renew the application by filing and serving draft Proposed Points of Defence ('PPD') clearly setting out the allegations that the Spurias are concurrent wrongdoers.
4. The renewed application was listed for hearing at a directions hearing on 27 November 2019 when I raised concerns as to whether the Owners' claim as set out in their Points of Claim dated 5 May 2019 is an apportionable claim, and also whether the PPD clearly set out the cause of action it says the Owners would have against the proposed joined parties. At the request of counsel for the Builder I adjourned the application part-heard to 12 December 2019 and orders were made for Further Proposed Points of Defence to be filed and served. The Further Proposed Points of Defence ('FPPD') are dated 9 December 2019.
5. Following the directions hearing I arranged for registry to email the parties drawing their attention to the following decisions:

McClafferty v Greg Smith Pty Ltd [2019] VCAT 299

Owners Corporation 1 Plan No PS63800J v Equiset Construction Melbourne Pty Ltd [2019] VCAT 671 ('Equiset')

Owners Corporation 1 PS538430Y v H Building Pty Ltd (ACN 091 236 912) (under external administration) [2019] VCAT 680

Owners Corporation PS646781P v Verve Constructions Pty Ltd [2019] VCAT 642

LU Simon Builders Pty Ltd v Allianz Australia Insurance Ltd & Ors [2013] VCAT 468

Owners Corporation No 1 of BS613436T v LU Simon Builders Pty Ltd [2019] VCAT 286

Jinalea Pty Ltd v Mace) [2019] VCAT 1732

1. The first four decisions set out the matters the Tribunal needs to be satisfied about when considering an application for joinder for the purposes of a Part IVAA defence. The last three decisions consider whether a claim for a breach of the warranties set out in s8 of the Domestic Building Contracts Act 1995 ('the DBCA') is an apportionable claim.

JOINDER CONSIDERATIONS FOR A PART IVAA DEFENCE

1. It is a serious matter to join a party to a proceeding, and is a discretion that should not be exercised lightly because of the possible cost implications for the party joined, and the other parties to the proceeding. Where a party is joined by a respondent for the purposes of a Part IVAA defence it is incumbent on the respondent to set out the cause of action it says the applicant would have against the proposed party/ies if they were joined. It will then be for the applicant to decide whether they wish to piggyback on the defence and make a direct claim against the joined respondent, to protect their interests should the joined respondent be found by the Tribunal to be a concurrent wrongdoer.
2. As I said in Equiset at [27]

Whilst I accept that Part IVAA should be given a broad interpretation and it will often not be possible to determine whether a party is a concurrent wrongdoer until all of the evidence has been heard, if joinder were simply allowed without the proposed pleading being considered, there is a risk of prejudice to an applicant. Although where an alleged concurrent wrongdoer is dead or in the case of a corporation 'wound up' an applicant cannot make a claim against it, a prudent applicant will nevertheless take all necessary steps to protect itself from the possibility of responsibility being apportioned to such alleged concurrent wrongdoer. This takes on an added import in the Tribunal where any application for costs must always be considered in the context of s109 of the VCAT Act.

The application for joinder for the purposes of Part IVAA

1. Section 60 of the Victorian Civil and Administrative Tribunal Act 1998 provides:

(1) The Tribunal may order that a person be joined as a party to a proceeding if the Tribunal considers that-

(a) the person ought to be bound by, or have the benefit of, an order of the Tribunal in the proceeding; or

(b) the person's interests are affected by the proceeding; or

(c) for any other reason it is desirable that the person be joined as a party.

(2) The Tribunal may make an order under sub-section (1) on its own initiative or on the application of any person.

1. Section 24AF(1) of the Wrongs Act provides:

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and

(b) a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria). [this section does not apply here]

1. Section 24AH provides:

(1) A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

(2) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died.

1. Section 24AI provides:

(1) In any proceeding involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and

(b) judgment must not be given against the defendant for more than that amount in relation to that claim.

1. In considering an application for joinder I am not required to determine the issues, rather I am required to have regard to the various matters set out in s60 of the VCAT Act. The broad scope of the Tribunal's powers under s60 were considered in Zervos v Perpetual Nominees Limited[1] where Cummins J said at [11]:

Whether it [the allegation] is sustained in the end is a matter for trial. The application for joinder is not an application for summary judgment and whilst I agree with Mr Herskope that the test is higher than that apposite to a mere pleading matter because it involves joinder of a party, on the other hand Mr Frenkel is entirely right that the bar is set lower than on an application for summary judgment.

1. In addition to the matters set out in s60 of the VCAT Act my comments in Equiset at [33] set out the requirements for a successful joinder application for the purposes of a Part IVAA defence:

As Senior Member Farrelly recently determined in McClafferty v Greg Smith Pty Ltd[2] for a respondent to rely on a Part IVAA defence it must identify and articulate the legal cause of action the applicant has against the proposed party (or would have had but for the proposed party being dead or in the case of a corporation 'wound up') which the respondent alleges is a concurrent wrongdoer. It is not enough to simply assert that the proposed party contributed to or caused the applicant's loss and damage...

Further, I note that Senior Member Farrelly made this decision after discussing St George Bank Ltd v Quinerts Pty Ltd[3] and commenting at paragraph 52:

Accordingly, in my view Quinerts remains authority for the proposition that, under the Act, for a person to be a concurrent wrongdoer sharing responsibility in respect of a plaintiff's claim, the person must be liable (by way of cause of action known to law) for the damage that is the subject of the plaintiff's claim (or in the case of a person who is dead or a company that has been wound up, that person or company would have been liable for the damage if not dead or wound up).

1. The Builder has had four attempts at drafting proposed pleadings seeking to rely on a Part IVAA defence. The first which is headed 'Points of Claim' dated 17 October 2019 accompanied the first application for joinder which was filed on 17 October 2019. The second, which is again headed 'Proposed Points of Claim' dated 14 November 2019 (although my orders of 30 October 2019 required the filing of 'Draft Proposed Points of Defence') accompanied the renewed application for joinder which was filed on 27 November 2019. A document headed 'Points of Defence' also dated 14 November 2019 was subsequently filed in support of the renewed joinder application. The fourth proposed Points of Defence are dated 9 December 2019.
2. When refusing the first application for joinder, I drew counsel's attention to the recent decisions of the Tribunal including Equiset. As noted above, after I adjourned the further application for joinder part-heard I arranged for registry to email the parties details of the relevant authorities.
3. The allegations in paragraphs 4 to 4.2m of the FPPD are, in summary:
   • the respondent entered into a domestic building contract with the Spurias but denies that it carried out all of the works under the contract
   • the Spurias and the Builder agreed to vary the works so that the Spurias would perform a significant part of the works (details of which are provided)
   • the Spurias performed part of the building works including those works which are the subject of this proceeding.
4. Under the heading 'Apportionment of Applicants' Claim' the following allegations are made:
   1. The Applicants' claim is a claim for economic loss or damage to property in action for damages (in tort, contract, under statute or otherwise) arising from a failure to take reasonable care within the meaning of s24AF of the Wrongs Act 1958 (Wrongs Act)
   2. By reason of the matters set out in paragraph 4 to 4.2 herein, the First Owners warranted in accordance with s137C(1) of the Building Act 1993 to the Applicants that:

(a) that all domestic building work carried out in relation to the construction by or on behalf of the First Owners was carried out in a proper and workmanlike manner; and

(b) that all materials used in that domestic building work were good and suitable for the purpose for which they were used and that, unless otherwise stated, those materials were new; and

(c) that domestic building work was carried out in accordance with all laws and legal requirements, including, without limiting the generality of this warranty, the Building Act and the regulations.

(a) were the registered proprietors of the Property during the performance of the building works which are alleged to be defective by the Applicants; and

(b) were the "owners" of the Property who entered into a Master Builders Association of Victoria New Homes Contract dated on or about 31 May 2011 with the Respondent.

1. If the Applicants have suffered loss and damage, then by reason of the matters set out in paragraphs 4 to 4.2 herein, such loss and damage was caused either in whole or in part by the breach by the First Owners of the warranties in accordance with s137C(1) of the Building Act 1993.
2. By reason of s137C(2) of the Building Act 1993, the Applicants may commence proceedings as against the First Owners.
3. If the Respondent is liable to the Applicants (which is denied) then the First Owners are also liable to the Applicants for their breach of the warranties contained in s137C(1) of the Building Act 1993.
4. By reason of the foregoing:

(a) The First Owners are concurrent wrongdoers within the meaning of s24AH of the Wrongs Act; and

(b) The claim is an apportionable claim within the meaning of s24AI of the Wrongs Act.

1. Further, by reason of the above matters and pursuant to section 24AI(1) of the Wrongs Act:

(a) The Respondent and First Owners' liability in respect of the Applicants' apportionable claims is limited to be just having regard to the extent of the Respondent's liability for the loss and damage suffered; and

(b) Judgement must not be given against the Respondent for more than the amount in relation to the Applicant's apportionable claims.

1. Further, in answer to the whole of the Applicants' Points of Claim, the Respondent did not perform the works which the Applicants have alleged were performed by the Respondent, and the Respondent did not engage, and has no contractual relationship with, the tradespeople who performed the building works on behalf of the First Owners which includes [details given of specific trades].
2. In the FPPD the Builder does no more than allege that the Spurias carried out the defective works which are the subject of the Owners' claims and are therefore responsible for the Owners' loss and damage. In paragraph 9.1 it alleges:

It further says that if the Applicants suffered loss and damage then such loss and damage was caused in whole or in part by the conduct of the First Owners as set out in paragraphs 4 to 4.2 herein.

1. In reality this pleading is no more than the Builder's defence to the Owners' claim. In effect, the Builder is saying that the Owners have sued the wrong person because, it says, it did not carry out the works which are the subject of their claim. Although it alleges that the s137C warranties apply, there are no allegations that the Spurias were owner-builders, and if that allegation is somehow implied because of the reliance on s137C how it is said they became owner-builders. In any event, this is irrelevant as, for the reasons which follow, I am not satisfied that the Owners' claim is an apportionable claim.

Is a claim for a breach of the s8 warranties an apportionable claim?

1. In considering an application for joinder for the purposes of a Part IVAA defence the first step is to consider whether the applicants' claim is an apportionable claim as set out in s24AF(1)(a).
2. In their Points of Claim ('POC') the Owners allege that the Builder breached certain, not all, of the warranties set out in s8 of the Domestic Building Contracts Act 1995 ('the DBCA'). The following paragraphs of their POC are relevant:

7. By section 8 of the DBC Act, the Respondent warranted that:

(a) The Building Works would be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the Building Contract;

(b) The materials supplied by the Respondent for use in the Building Works would be good and suitable for the purpose for which they were to be used and, unless otherwise stated in the Building Contract, those materials would be new; and

(c) The Respondent would carry out the Building Works in accordance with and would comply with, all laws and legal requirements including the Building Act 1993 (Vic) ("Act") and the regulations made under the Act.

1. In breach of the Warranties the Building Works are significantly defective ('Defects') (particulars are provided by reference to the expert reports relied upon by the Owners)
2. Relevantly, the Owners have not relied on the warranty to take reasonable care set out in s8(d) which provides:

the builder warrants that the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract;

1. As noted above, following the directions hearing on 27 November 2019, I had registry email the parties to draw their attention to a number of previous decisions of the Tribunal where it had considered whether a claim for a breach of the s8 warranties is an apportionable claim. These included an earlier decision of mine in LU Simon Builders Pty Ltd v Allianz Australia Insurance Ltd & Ors[4] where I said:

Is it arguable that a claim for a breach of the s8 warranties is an apportionable claim?

1. The OC's primary claims against the builder are founded on an alleged breach of the building contract which pursuant to s8 of the Domestic Building Contracts Act 1995 ('the DBCA') included the statutory warranties. Amongst other breaches of the s8 warranties, the OC alleges that the builder failed to carry out the work with reasonable care and skill.
2. Section 8(d) of the DBCA provides:

(d) the builder warrants that the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract; [underlining added]

1. Mr Laird referred me to previous decisions of the tribunal in support of his submission that claims brought for a breach of the statutory warranties are not apportionable claims. As the statutory warranties are incorporated into every major domestic building contract, the claims for breach of those warranties are founded in contract. In Serong v Dependable Developments Pty Ltd[5] Macnamara DP (as he then was) said at [349]:

The contractual claim against Dependable does not arise from a claim for misleading and deceptive conduct contrary to Section 9 of the Fair Trading Act nor does it arise from an alleged failure to take reasonable care. Rather it arises out of allegations that Dependable has failed to meet certain absolute standards arising out of the contract including the due completion of the works within a specified time and the employment of proper workmanship in the construction of those works. Dependable's liability under the contract is to perform its terms not to use reasonable care to perform them. Mr Gurr submits that the effect of Section 24AI is that there should be no apportionment as between the contractual claim against Dependable and the claims for misleading and deceptive conduct. I agree with this submission.

1. In Spiteri & Ors v Stonehenge Homes & Associates Pty Ltd[6] Judge Lacava said at [136-138]
   1. Mr Laird submitted that the claims made against Homes in the primary proceedings are brought under the statutory warranties in the case of the Owners and in contract in the case of Wesfarmers. He correctly, in my view, submits that claims brought under the statutory warranties contained in the Act and the claim in contract are not apportionable claims within the meaning of the Wrongs Act 1958.[7]
   2. With respect, that submission must be correct. Part IVAA of the Wrongs Act 1958 requires a court or tribunal when apportioning a claim, to assess from the facts, the degree of responsibility or liability between concurrent wrongdoers. That can be done in the context of a negligence claim but not in a claim in contract or where the claim is based in breach of warranty.
   3. In my judgment, the claims that Wesfarmers and the owners bring against Homes are not apportionable claims within the meaning of the Wrongs Act 1958.
   4. I note that Homes made no submissions contrary to those advanced by the applicants on this question.
2. However, I am not persuaded that the question as to whether a breach of the implied warranty set out in s8(d) of the DBCA satisfies the definition of an apportionable claim as set out in s28AF of the Wrongs Act has been finally determined. In Gunston v Lawley[8] Byrne J said at [46]:

The Tribunal noted that one of the statutory warranties relied on by the owners was that "the builder would carry out the work with reasonable care and skill".[9] It nevertheless concluded that this was not an apportionable claim, that is, it was not "a claim... (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care."[10] This conclusion was not challenged before me and nothing turns upon this. I would not, however, like to think that my silence should be taken as an indication that I share this view. The point is of no significance in this appeal because, in the Tribunal's consideration of the responsibility of the other respondents for the loss or damage of the owners, the builder was in fact treated as a concurrent wrongdoer. [emphasis added]

1. More recently in Owners Corporation No 1 of BS613436T v LU Simon Builders Pty Ltd[11] Judge Woodward said, in finding the warranties set out in s8(b), (c) and (f) were not apportionable:
   1. The warranties implied into the D&C Contract by s8 of the DBC Act and relied on by the Owners are summarised above.[12] They are, in substance, warranties as to:
      • suitability of materials (DBC Act s8(b));
      • compliance with the law (including the BCA) (DBC Act s8(c)); and
      • fitness for purpose (DBC Act s8(f))
   2. LU Simon admitted that the warranties in s8 of the DBC Act were incorporated into the contract for the construction of the building. It also admitted that the warranties run with the building and that the Owners may take proceedings against LU Simon for breach of those warranties, as if they were parties to the D&C Contract.[13] It denied breaching the warranties [the Owners relied on], but has not advanced any argument in support of that denial. Further, when asked about the Owners' submission that the warranties are absolute in nature and not qualified by or limited to an obligation to use reasonable care and skill, senior counsel for LU Simon said: "we don't have firm submissions to make on that behalf".[14]
   3. It is not surprising that LU Simon has not sought to mount a substantive defence to these claims. In my view, there is none. [my underlining]
   4. In Barton v Stiff,[15] Hargrave J (as he then was) confirmed the principle that a builder's liability for design and construction was not merely an obligation to use reasonable care. In particular, the warranty of fitness for purpose was absolute.[16] His Honour added that: "the absolute warranty of fitness for purpose relates to the purpose as properly identified". That is, the obligation of the builder must be measured by reference to the purpose for which the building was required under the conditions likely to be encountered at the land.[17]
   5. Thus I accept the Owners' submission that the warranties are "not qualified or limited to an obligation to use reasonable care and skill" and that:

"[T]herefore, it is irrelevant whether LU Simon reasonably relied (as it asserts) upon the 'experts in the design team' (that is, the other respondents) for advice as to the compliance of the Alucobest panels with the BCA; or that it was not made aware of any concerns regarding the use of ACP as an external cladding material; or that ACP had been used to clad other high-rise buildings in Melbourne, such that personnel within LU Simon may have believed that it was suitable for that purpose."[18]

1. Consistently with the discussion in Barton v Stiff[19], the starting point in the analysis in respect of both the warranty as to suitability of materials and the warranty of fitness for purpose, is to determine the purpose for which the building (and thus the relevant materials) was required. The purpose of Lacrosse tower was as a multi-storey residential apartment building. What this means for the selection and fitness of materials might be said to be a matter of common sense, but it is convenient to draw on the provisions of the BCA.
2. The Builder relies on the comments by Member Edquist in Jinalea Pty Ltd v Mace)[20] where he said at [170]:

On the basis of Lacrosse, it would seem that these warranties are qualified in the sense that the builder's obligation is limited to an obligation to use reasonable care and skill. Accordingly, liability under each of these warranties can be seen to be theoretically apportionable.

If there is any suggestion that Member Edquist is expressing a concluded view, I respectfully disagree with that view. In Lacrosse the applicants' claims insofar as they related to a breach of the s8 warranties were limited to those which his Honour found to be absolute. He did not consider, and had no reason to consider whether the remaining s8 warranties are apportionable. Further, I note that Jinalea proceeded as an undefended hearing, and that in any event, the member's comments are qualified by the use of phrases such as 'it would seem' and 'can be seen to be theoretically'.

1. In my view the warranties relied upon by the Owners are absolute and not subject to a qualification to use reasonable care and skill as submitted by counsel for the Builder. If Parliament had intended these warranties be subject to such a qualification the warranty in s8(d) would serve no purpose and have no work to do. Each of the warranties are quite specific and only s8(d) contains a specific warranty to take reasonable care. Therefore the Owners' claim is not an apportionable claim within the meaning of s254AF(1) of the Wrongs Act. Therefore Part IVAA of the Wrongs Act does not apply.
2. I reject the submission by counsel for the Builder that it would be unfair if an applicant could selectively choose which warranties to rely upon and thereby deprive a respondent of an opportunity to rely on a Part IVAA defence. It is for an applicant to decide how to put their case; not for a respondent to dictate how the case should be put.

1. The Builder's application for joinder of the Spurias will be refused. I will reserve the question of costs, including those of Mr Spuria. Any application for costs will be determined on the papers.

[1] [2005] VSC 380

[2] [2019] VCAT 299

[3] [2009] VSCA 245

[4] [2013] VCAT 468

[5] [2009] VCAT 760

[6] [2011] VCAT 2267

[7] Serong v Dependable Developments Pty Ltd (Domestic Building) [2009] VCAT 760 at [66 and 349] and

Lawley v Terrace Designs Pty Ltd (Domestic Building) [2006] VCAT 1363 at [318].

[8] [2008] VSC 97

[10] Wrongs Act s 24AF(1)(a).

[11] [2019] VCAT 286

[15] [2006] VSC 307

[16] Barton v Stiff [2006] VSC 307 at [33] and [37]

[17] Barton v Stiff [2006] VSC 307 at [36] and [39]

[19] [2006] VSC 307

[20] [2019] VCAT 1732