1. The allegation in this particular instance is that the proceeding issued by the applicant is misconceived and lacking in substance.
2. The relevant facts of this matter have been conveniently set out by Mr Appudurai, solicitor for the respondent, is as follows :

Pursuant to a building contract dated 6 Junem2007, the respondent was engaged by Mr Darren Zerna and Mrs Catherine Zerna to build a new house on their land situated at 9 Outhwaite Avenue, Doncaster (the property).

Pursuant to that contract, the Zernas were required to demolish the existing building and provide a clear site to the respondent to enable the commencement of the construction of the new house.

Brechlen Pty Ltd was authorised to carry out the demolition in accordance with building permit (No 12470/20702553/0) issued for that purpose on 21 June 2007 (the demolition permit)

Following completion of that demolition, Mr Paul Gibcus (building surveyor) issued a certificate of final inspection in respect of the demolition work authorised under the demolition permit.

Prior to the construction of the new house, a tree root barrier was required to be installed in accordance with plans prepared by VHC Engineers (dated 6 July 2007) and, subsequently, approved under the building permit (No 10.3/200700499/0) issued on 22 August 2007 (the building permit).

The respondent engaged Citywide Service Solutions Pty Ltd to construct the tree root barrier in accordance wit the approved plans and the building permit.

That work, which was carried out on or about 2 November 2007, involved the digging of a trench, the insertion of a plastic barrier vertically into the trench and the filling of the trench with concrete slurry to protect and hold the barrier in place.

At the time it engaged Citywide to carry out construction of the root barrier, the respondent had no knowledge that the demolition work had not been carried out such that the then existing sewer connection to the building which had been demolished had not been terminated correctly at the inspection point at the rear of the property.

1. I pause here to say that the sewer connections are clearly set out on various plans which have been put before me and which would have been available to the respondent had they looked at them. Mr Appudurai then continues -

Accordingly, during the construction of the tree root barrier the improperly terminated sewerage pipe was broken and concrete slurry entered the sewerage system and caused a blockage which resulted in the damage the subject of this proceeding.

No employee of the respondent was involved in carrying out the work required to install the tree root barrier. Mr Kristian Ratten (the respondent's site supervisor) had been at the property, prior to the commencement of work by City wide, and had instructed City wide personnel to construct the tree root barrier in accordance wit the approved plan.

Citywide is not, and was not at all relevant times, the servant or agent of the respondent.

The Respondent had no notice of any difficulties encountered during the tree root barrier construction or of any blockage of the sewerage system until 7 November 2007 when Mr Ratten attended at the property and observed Yarra Valley Water personnel in attendance, carrying out repairs to rectify the blockage caused by the entry of concrete slurry.

1. Just to make it clear when the concrete went into the sewerage pipe, sewage from No 11, No 9 and I think No 7 Outhwaite Avenue was blocked.

2. The applicant relies on ss 15 and 16 of the Water Act 1989 to support its claim as pleaded. In particular, s 15(1) which reads as follows :

(d) constructs, maintains or operates any unauthorised works -

and by that act causes injury to any other person or damage to the property (whether real or personal) of any other person or causes any other person to suffer economic loss is liable to pay damages to that other person in respect of that injury or damage

1. The relevant parts of s 16 reads as follows :

(a) a person interferes with a reasonable flow of water onto any land or by negligent conduct interferes with a flow of water onto any land which is not reasonable; and

(b) as a result of that interference water causes -

(ii) damage to the property (whether real or personal) of any other person; or

the person who interfered with the flow is liable to pay damages to that other person in respect of that injury, damage or loss.

(3) If the person who caused, or interfered with, the flow (as the case requires) -

(a) is the servant of another person and acted in the course of the servant's employment; or

(b) is the agent of another person and acted within the scope of the agent's authority -

that other person is liable to pay damages in respect of the injury, damage or loss.

1. Mr Scheid, on behalf of the applicant, submitted that the respondent failed to -

fulfil its role as builder by supervising the entire construction of the root barrier including the positioning thereof. Secondly, it is further submitted that it is also responsible for acts of its agents whereby it had control over the entity in the control of that party in how it carries out its functions. (The agent referred to therein is Citywide).

That the respondent has been negligent in its role as supervisor, by not taking part in the planning, preparation and carrying out of the construction of the root barrier, and not being onsite when the concrete was poured. The question must be posed, if the supervisor was onsite either during the excavation, or pouring process, he should have picked up the broken earthenware pipe, or the fact that an extra three cubic metres of concrete had disappeared during the pour, and prevented the works from proceeding, thus minimising or preventing the damage.

The respondent may also be held liable for the negligent actions of its agent, being the company that constructed the tree root barrier. The basis for this proposition is the principles of agency, and the control test detailed thereunder. See Barlow v South East Water Ltd ibid at para 31.

The respondent did have the responsibility control the actions of Citywide Services by instructing them not to vary the plans for the root barrier, but did nothing to ensure that those plans were followed by staying onsite to supervise. Further, Mr Ratten's affidavit does not even give an opinion on whether Citywide did follow the plans, but rather is silent on this issue.

1. In relation to s 16(2), Mr Scheid said that -

The definition of interference with reasonable flow, or not reasonable which the Act provides guidelines for in section 20. However, here it is submitted that the flow of water, or any other material for that fact was completely stopped by the concrete slurry, and that therefore it is submitted that the threshold question in s 16(2) is whether or not it is the complete lack of flow of water that can cause the damage as anticipated by that section.

As the Act refers to interferes with a reasonable flow of water onto any land, or by negligent conduct, etc that it is reasonable to submit that the complete obstruction of flow by the pouring of concrete into the sewer connection at number 9, and then into the main sewer.

1. Mr Scheid supported a number of these submissions by reference to Mr Ratten's affidavit (which was filed in this proceeding), who it will be remembered, was an employee of the respondent. The relevant parts of that affidavit are as follows -

Citywide wanted to vary the location of the tree root barrier. I insisted that they follow the VHC plan. I instructed Citywide to construct the tree root barrier in accordance with the VHC plan.

I left the site approximately half an hour after I arrived, that is about 10.00 am.

I did not participate in the construction of the tree root barrier.

The next time I attended the property was the Wednesday after the Melbourne Cup weekend, that is, 7 November 2007. I usually attend all the sites I supervise each day.

1. The test for whether there is direct liability or vicarious liability has been set out in a number of decisions to which I have been referred by both counsel. The first decision was a decision of Macnamara DP in Barlow v South East Water Ltd and Thiess Contractors Pty Ltd. In that matter, the applicant was a Mr Barlow who had suffered damage by sewage being blown back into his house. South East Water was the responsible authority for the water and Thiess Contractors were the contractors who did the work. Macnamara DP at paras 31 et ff stated as follows :

Professor Fleming (the Law of Torts 9th Edition 1998) explains the issue in this way.

"As a general rule, the employment of an independent contractor does not entail responsibility for wrongs committed by him, or his employees, in the course of work for which he was engaged. This important qualification of vicarious liability, established in the early 19th Century, is most commonly explained on the ground that, as the employer lacks detailed control over the manner in which the work is done, it is the contractor who himself who is best able to prevent the risks incidental to it and absorb such losses as occur. While there may sometimes be far greater spot control over the details of work of a contractor as compared with a servant, it is nonetheless felt that, in the stock situations where work is turned over to another who is in that line of business, like a taxi driver, painter or builder, the risk of accident is incidental to the contractor's enterprise rather than his employers."

Accordingly, assuming for the sake of the argument that Mr Newton's use of the jet machine caused the flood of sewage in Mrs Barlow's house, since the doctrine of vicarious liability does not attribute Mr Newton's actions to South East Water Limited, how can it be said that the flow of water was caused by or was a concomitant of the exercise of a function by South East Water Limited? Doubtless if an employee of South East Water Limited had been operating the jet machine any vicarious liability that South East Water Limited may have for his actions would not extend to liability under Section 16 of the Water Act because of the operation of Section 16(2) of the Water Act. Since the work here is done by an independent contractor Section 17(2) has no application. Thiess is neither an authority nor a licensee. Thiess' actions or those of its employees are not attributed to South East Water Limited by the doctrine of vicarious liability.

The same reasoning applied in the manner in which Mr Scott primarily made the submission would lead to the view that even if it could be shown that Mr Newton's use of the jet machine was the cause of the flood of sewage, South East Water Limited is not responsible or liable for the consequences of Mr Newton's action.

1. The Deputy President took a similar view in the matter of Trycala Importers & Wholesalers Pty Ltd v Growmac Imports Pty Ltd and Ors [2001] VCAT 1445. In that case Qanstruct Pty Ltd was the independent contractor and was in fact one of the relevant parties. At para 13 of that case, the Deputy President stated :

It is appropriate I think to consider first what the situation is in the ordinary Common Law of Tort in circumstances where one person engages a contractor to carry out work for him and for his benefit. In Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia Limited (1931) 16 CLR 41, 48 Sir Owen Dixon said:

"In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort. The work, although done at his request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representatives standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal."

If that is correct and applies under the Water Act then ACI even if it had engaged Qanstruct would not be liable for what Qanstruct did or was alleged to have done.

1. At paragraph 15 the Deputy President then continues -

At Common Law therefore, even if Qanstruct had been contracted by ACI to do work and it turns out now that that is not the fact, ACI could not be liable vicariously for what Qanstruct did in the circumstances such as the present.

1. At paragraph 16 the Deputy President continues -

The principle stated by Sir Owen Dixon in the Colonial Mutual Life Assurance Society case is stated quite generally and would apply as much to tort of absolute liability as it would apply to a tort where there is liability only on a fault basis. In any event there is nothing that I can see in Section 16 of the Water Act that appears to codify in any way the concept of vicarious liability or even mention it. The inference is irresistible therefore that Section 16 intends in so far as it posits concepts of causation simply to adopt the law of ordinary analysis of vicarious liability. A person is regarded as causing those things which flow from the actions of those for whom that person is vicariously liable but not for those acts flowing from the acts of those for whom the first person is not vicariously liable.

1. Mr Scheid submitted that Mr Ratten who is clearly an employee of the respondent should have stayed on the site and supervised it's contractor's work (ie Citywide Solutions Pty Ltd "Citywide"). He said that if he had done so, he would have seen the broken pipe and he would have been able to observe that 3 cubic metres of concrete was used in excess of what was needed. He referred to what Mr Ratten said in his affidavit which I have previously mentioned.
2. In my view, telling the contractor that he must comply with the plans is not supervising the work. It is merely informing the contractor that he should do the work as he is contracted to do. Further, in my view, it is unlikely that a supervisor in Mr Ratten's position would be able to observe that an extra 3 metres of concrete was used in the pour.
3. The matters that are referred to by Mr Scheid do not, in my view, in any way, show that Citywide was the agent or employee of the respondent. All they do is show that the respondent required Citywide should do the work according to its contract or its original authority. It would be quite extraordinary if a supervisor of a building company was able to authorise an independent contractor to vary from the plans.
4. I see nothing in the case as pleaded by the applicant to indicate that at a final hearing of this matter, the Tribunal would be likely to find that Citywide was either the agent of the respondent or it was, in any way, responsible for the way in which Citywide was to carry out its work. It appears to be a specialist job that Citywide was doing and it would be surprising indeed if the respondent was able to tell Citywide the way in which it was to perform the work.
5. It is clear from the quotation referred to by Macnamara DP in both Barlow and Trycala that there would not be any likelihood of it being found that Citywide were in any way taking orders from the builder or from Mr Ratten.
6. The respondent did not carry out any of the works. Under these circumstances, it is difficult to see how it can be responsible for the works that it did not carry out. Mr Scheid submitted that it had a responsibility to supervise, that is, a builder has a responsibility to supervise a contractor who was performing the act of pouring a concrete slab. I am not convinced that such a builder would have the responsibility to supervise. There are certainly matters in the Domestic Building Act or in the Building Act that would make the builder responsible for the work of its subcontractor, to the owner or subsequent owners of the premises. But that is a statutory obligation or a contractual obligation between an owner and builder. It is not an obligation at common law or one arising under the Water Act. In this particular case, while I am not concerned with the contract between the respondent and Mr or Mrs Zerna, I am concerned with the acts that might have taken place between the respondent and its contractor Citywide. Under those circumstances, I cannot see any way in which the respondent would be liable for the work of Citywide in an action such as this which has been commenced by the applicant water company pursuant to ss 15 and 16 of the Water Act.
7. Further, I cannot see how the respondent could be liable pursuant to s 16 of the Water Act because that section requires that a person interferes with a reasonable flow of water onto any land. It has been held in a number of decisions by this Tribunal in particular the decision of Transpacific Cleanaway Ltd v South East Water Limited (a decision of Macnamara DP) [2008] VCAT 1798 that to be a flow of water onto the land, it must be on the surface of the land, not running under the land.
8. In this particular case, the concrete which caused damage ran under the land. Mr Scheid conceded that there was nothing running on top of the land which caused the damage. Therefore, I fail to see how s 16 can hold the respondent liable for the alleged damage.
9. Mr Scheid also submitted that as the tree root barrier was being constructed right over the sewerage system, it was incumbent upon the respondent to obtain a permit from his client (the applicant) in order to build the wall. In my view, that is not a correct proposition. It would have been incumbent upon the respondent to obtain a permit from the applicant to connect the sewerage which it ultimately did. It cannot be said that because the barrier wall is over the sewerage connection that it is incumbent to obtain a permit for such. What is incumbent was to obtain a permit from the relevant authority to build the barrier wall which in fact the respondent did.
10. Under these circumstances, I have come to the conclusion that the applicant could not succeed on the case as pleaded before this Tribunal and, under those circumstances, the proceeding should be dismissed. I take the view that to use the words of s 75 of the VCAT Act, this is a proceeding that is misconceived or lacking in substance.
11. In conclusion, the fact is that the respondent is not a person referred to in s 15 or s 16(2) of the Water Act. That is enough to dispose of this proceeding. Under those circumstances, the application will be dismissed.

1. Soon after delivering the decision which I delivered about 10 minutes ago, Mr Appudurai for the respondent made an application for costs. In support of that application he showed me a letter dated 19 December 2008 which letter summarises the arguments which were put today on behalf of the respondent and which letter makes it clear that the respondent would give the applicant an opportunity to withdraw the proceeding prior to it coming before me on 19 December 2008 where I made certain directions.
2. Mr Scheid, on behalf of the applicant, does not deny that the letter was sent but says that the respondent's material only came forward on 26 February 2009 which was the date far in excess of what was allowed in the orders I gave. His instructor agreed to extend those dates because there were various round table conferences etc taking place before the parties.
3. Costs orders in this Tribunal in a case such as this are made pursuant to s 109 of the VCAT Act. Section 109(1) mandates that each party should bear their own costs in the proceeding. However, sub-section (2) provides that the Tribunal may make an order for costs and sub-section (3) provides some examples as to when costs can be awarded. In particular, I think there may be two or three examples which are relevant to this particular application.
4. The first is in s 109(3)(c) -

(3) The Tribunal may make an order under subsection

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(e) any other matter the Tribunal considers relevant.

1. Mr Scheid said that had his client received the affidavit material earlier, it would have been in a better position to assess the allegations and the arguments that were contained in the letter of 19 December, to which I have already referred and the summary of the argument that was put in the letter.
2. To some extent that may be true. However, in my view, the arguments in the letter were put in such a way that with some further questioning of the respondent, it would have become very clear that the applicant was in fact suing the wrong party and which would have led to these proceedings being withdrawn or revamped against a different party. They did not do that. I think that is something that I must take into account. In my view, it is appropriate to award costs against the applicant on or after 19 December. To award costs prior to that would be unfair because prior to that time, it was not apparently clear as to what arguments the respondent would be urging upon the Tribunal.
3. It then comes to the question on what scale the costs should be awarded? Mr Scheid said that they should be awarded on Magistrates' Court Scale "G" because he informed me that that was the scale applicable where there was a claim over $70,000. Here, the claim is $83,886.94. In my time at the Tribunal, it has been very rare to award costs on Magistrates' Court scale and I do not think that that is something which should be introduced here. What I am toying between is whether to award costs on County Court scale "D" the Supreme Court scale or, as Mr Appudurai said, on the basis of a solicitor/client indemnity costs.
4. I will deal with the question of indemnity costs first. I do not think that such scale is appropriate in this matter because that type of costs should only be awarded in the rarest of circumstances. I note that in the courts of this State, indemnity costs are only rarely awarded even though costs normally follow the event. Here, costs do not follow the event because of the provisions of s 109. So, I will not award indemnity costs.
5. That leaves me with the question as to whether the costs should be on County Court scale "D" or Supreme Court scale. Before I answer that question, I should say that I have also considered lesser County Court scale but bearing the mind the complexity and difficulty in this proceeding, I do not think that anything less than "D" would be appropriate. However, I believe that while Supreme Court scales is often awarded by this Tribunal in this type of matter, while in my view it was clear that the applicant would have difficulty succeeding, the same was not abundantly clear until at least until the respondent filed and served their material in February. Taking all that into account, I have decided to award costs on County Court Scale "D" on and from 19 December 2008.