Aquagenics Pty Ltd v Break O'Day Council - [2010] TASFC 3

[2010] TASFC 3

COURT: SUPREME COURT OF TASMANIA (FULL COURT)

CITATION: Aquagenics Pty Ltd v Break O'Day Council [2010] TASFC 3

PARTIES:  AQUAGENICS PTY LTD
  v
  BREAK O'DAY COUNCIL
  TASMANIAN WATER & SEWERAGE
  CORPORATION (NORTH REGION) PTY LTD

FILE NO/S: FCA 917/2009
JUDGMENT Aquagenics Pty Ltd v Break O'Day Council (No 2)

APPEALED FROM: [2009] TASSC 89

DELIVERED ON:  10 May 2010
DELIVERED AT:  Hobart
HEARING DATE:  19 November 2009
JUDGMENT OF:  Evans, Tennent and Wood JJ

CATCHWORDS:

Contracts – Building, engineering and related contracts – The contract – Construction of particular contracts and implied conditions – Other matters – Proportionate liability legislation – Applicability – Contracting out.

Civil Liability Act 2002 (Tas), s3A(3).
Aust Dig Contracts [259]

Arbitration – The submission and reference – Submissions as a defence and as a ground for stay of proceedings – Stay of proceedings – Order or refusal to stay – Particular cases in which stay ordered – Applicability of proportionate liability legislation.

Commercial Arbitration Act 1986 (Tas), s53(1).
Civil Liability Act 2002 (Tas), ss3A(3), 43A, 43B.
Aust Dig Arbitration [37]

REPRESENTATION:

Counsel:
             Appellant:  I H Bailey SC
             Respondent:  S B McElwaine
Solicitors:
             Appellant:  Dobson Mitchell & Allport
             Respondent:  Shaun McElwaine

Judgment Number: [2010] TASFC 3
Number of paragraphs: 111

Serial No 3/2010
File No FCA 917/2009

AQUAGENICS PTY LIMITED
v BREAK O'DAY COUNCIL, TASMANIAN WATER & SEWERAGE CORPORATION (NORTH REGION) PTY LTD

REASONS FOR JUDGMENT FULL COURT

EVANS J
TENNENT J
WOOD J
10 May 2010

Order of the Court:

Appeal dismissed.

Serial No 3/2010
File No FCA 917/2009

AQUAGENICS PTY LIMITED
v BREAK O'DAY COUNCIL, TASMANIAN WATER & SEWERAGE CORPORATION (NORTH REGION) PTY LTD

REASONS FOR JUDGMENT FULL COURT

EVANS J
10 May 2010

This is an appeal against an order staying an action pursuant to the Commercial Arbitration Act 1986, s53(1). The action arose from a contract dated 23 February 2006, between the Break O'Day Council and Aquagenics Pty Limited, for the detailed design, construction, testing, commissioning and process approval of a waste water treatment plant for the Council at St Helens. The Council's rights and liabilities in relation to the plant have been transferred to Tasmanian Water & Sewerage Corporation (Northern Region) Pty Ltd ("the Corporation") pursuant to the Water and Sewerage Corporations Act 2008, ss41 and 43. In the contract the Council is referred to as the "Principal". When I use that term in these reasons, it is a reference to the Council until the time of the transfer of its rights and liabilities in relation to the plant to the Corporation and thereafter it is a reference to the Corporation. In the contract Acquagenics Pty Limited is referred to as the "Contractor" and I will adopt that term for Acquagenics Pty Limited in these reasons.

A substantial portion of the work had been completed by July 2007, when a dispute arose between the Principal and the Contractor about the quality of the work. Provisions in the contract entitle the Principal, if the Contractor commits a substantial breach of the contract and the Principal considers that damages may not be an adequate remedy, to give the Contractor notice to show cause as to why the Principal should not take the work remaining to be completed out of the hands of the Contractor or terminate the contract. If the Contractor fails to show reasonable cause within the time specified in the notice, the Principal is entitled to take either of these steps. The Principal gave the Contractor such a notice and when, in the Principal's view, the Contractor failed to show reasonable cause, the Principal took over the work.

The Contractor brings the action, which is the subject of these proceedings, on the basis that it was not in substantial breach of the contract and that the Principal, by so acting, repudiated the contract. In the action the Contractor seeks a declaration that in response to the Principal's repudiation the Contractor has validly terminated the contract, an order for the return of security held by the Principal under the contract, and damages for loss of profit.

The Principal disputes the Contractor's claims and, pursuant to a dispute resolution clause contained in the contract, gave notice of the dispute. The dispute was not resolved in the time provided for by the contract, in which case the contract requires that it be referred to arbitration. As the Principal contends that the dispute should be determined by arbitration, it applied for a stay of the action pursuant to the Commercial Arbitration Act s53(1), which is as follows:

"(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied —
(a)that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b)that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration —

may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit."

Before the Principal applied for a stay, no pleading had been delivered by the Principal in response to the Contractor's statement of claim in the action. Had the Principal taken a step in the action, besides entering an appearance, that Act s53(2),would have applied and required the Principal to obtain leave from the Court before applying for the stay.

Upon the hearing of the stay application before Blow J, it was conceded that the Principal was and remained, ready and willing to do all things necessary for the proper conduct of the arbitration; so the requirement contained in that Act, s53(1)(b), was satisfied. What was in issue is whether the requirement contained in that Act, s53(1)(a), was satisfied, that is, whether there was no sufficient reason why the matter should not be referred to arbitration. Blow J concluded that there was no such reason and exercised his discretion in favour of granting the Principal's application for a stay of the action, see Aquagenics Pty Ltd v Break O'Day Council(No 2) [2009] TASSC 89

This appeal being against the exercise of that discretion, consistent with the Supreme Court Civil Procedure Act 1932, s45(1), this Court may not reverse or vary the stay order unless it appears that:

"(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact;
(c)the adjudication is founded wholly or in part on an erroneous finding of fact or an erroneous determination in point of law."

Central to the Contractor's contention that there is good reason not to refer its dispute with the Principal to arbitration, is the proposition that the dispute is likely to involve novel and difficult questions concerning proportionate liability provisions introduced by amendments made to the Civil Liability Act 2002 (Tas) in 2005 when Pt9A was added to that Act. Those amendments came into effect on 1 June 2005, which is before the making of the contract that is the subject of these proceedings. Prior to those amendments, when a number of wrongdoers were liable in respect of the same damage, a claimant was entitled to recover the whole of the claimant's damage from one only of those wrongdoers. This is because wrongdoers are jointly and severally liable to a claimant for the whole of the claimant's damage. However, in those situations where the proportionate liability provisions of the Civil Liability Act now apply, each wrongdoer responsible for the damage is held to be liable to the claimant for that proportion of the damage that is attributed to that wrongdoer alone, and not for the whole of the damage or loss suffered by the claimant. Similar proportionate liability provisions have been introduced in every Australian jurisdiction, although with some significant differences to which I will refer.

The Civil Liability Act 2002 (Tas), Pt9A, is as follows:

"43A — Application of Part 9A
(1) This Part applies to the following claims ('apportionable claims'):
(a)a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury);
(b)a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1990 for a contravention of section 14 of that Act.

(2) In this Part —
'concurrent wrongdoer', in relation to a claim, means a person who is one of two or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim;
'excluded concurrent wrongdoer' means a concurrent wrongdoer referred to in subsection (5)(a) or (b).

(3) For the purpose of this Part, apportionable claims are limited to those claims specified in subsection (1).
(4) For the purpose of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
(5) Nothing in this Part operates to limit the liability of a concurrent wrongdoer in proceedings involving an apportionable claim if —
(a)the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or
(b)the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.

(6) The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
(7) The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part.
(8) This Part does not apply to civil liability that is excluded from the operation of this Part by section 3B.
(9) For the purpose of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
43B — Proportionate liability for apportionable claims
(1) In any proceedings 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 damage or loss claimed that the court considers just, having regard to the extent of the defendant's responsibility for the damage or loss; and
(b)the court is not to give judgment against the defendant for more than that amount.

(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim –
(a)liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and
(b)liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3) In apportioning responsibility between defendants in the proceedings —
(a)the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and
(b)the court is to have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.
43C — Contribution not recoverable from defendant
(1) A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim —
(a)cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant); and
(b)cannot be required to indemnify any such wrongdoer.

(2) Subsection (1) does not affect an agreement by a defendant to contribute to the damages recoverable from, or to indemnify, another concurrent wrongdoer in relation to an apportionable claim.
43D — Duty of defendant to inform plaintiff about concurrent wrongdoers
(1) If —
(a)a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the 'other person') may be a concurrent wrongdoer in relation to the claim; and
(b)the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about —
(i) the identity of the other person; and
(ii) the circumstances that may make the other person a concurrent wrongdoer in relation to the claim; and
(c)the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim —

the court hearing the proceedings may order that the defendant pay all or any of those costs to the plaintiff.
(2) The court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise.
43E — Subsequent actions
(1) In relation to an apportionable claim, nothing in this Part or any other law prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any damage or loss from bringing another action against any other concurrent wrongdoer for that damage or loss.
(2) However, in any proceedings in respect of any such action the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the plaintiff in respect of the damage or loss, would result in the plaintiff receiving compensation for damage or loss that is greater than the damage or loss actually sustained by the plaintiff.
43F — Joining non-party concurrent wrongdoer in action
(1) The court may give leave for any one or more persons to be joined as defendants in proceedings involving an apportionable claim.
(2) The court is not to give leave for the joinder of any person who was a party to any previously concluded proceedings in respect of the apportionable claim.
43G — This Part does not prevent certain liability, &c
(1) Nothing in this Part —
(a)prevents a person from being held vicariously liable for a proportion of any apportionable claim for which another person is liable; or
(b)prevents a partner from being held severally liable with another partner for that proportion of an apportionable claim for which the other partner is liable; or
(c)affects the operation of any other Act to the extent that it imposes several liability on any person in respect of what would otherwise be an apportionable claim.

(2) In subsection (1)(b) —
'partner' means a person who has entered into a partnership, within the meaning of the Partnership Act 1891, with another person."

The impetus for the introduction of the proportionate liability legislation in question into Australia was explained as follows in BHPB Freight Pty Ltd v Cosco Oceania CharteringPty Ltd (No 2) [2008] FCA 1656 by Finklestein J at pars[4] – [5]:

"4 Proportionate liability was introduced into state and federal legislation following an inquiry into the law of joint and several liability established by the Commonwealth and the New South Wales Attorneys-General in 1994. The impetus for the inquiry was the growing number of actions against professionals, particularly auditors, who were being singled out as targets for negligence actions not because of their culpability (which might be small) but because they were insured and had the capacity to pay large damages awards. One consequence was a sharp rise in insurance premiums payable by professionals. The inquiry was conducted by Professor Davis of the Australian National University. He published stage one of his report in July 1994 and stage two in January 1995. In his report Professor Davis recommended that joint and several liability for negligence which causes property damage or economic loss be replaced by liability which is proportionate to each defendant's degree of fault.
5 Draft model provisions that reflected the recommendation of the enquiry were published in July 1996 in the form of a part that could be inserted in appropriate legislation. The Commonwealth, State and Territory governments agreed to amend relevant legislation, based on the draft model provisions, to facilitate the introduction of a nationally consistent proportionate liability regime in respect of claims for economic loss or property damage. To implement its part of the agreement the Commonwealth amended the Australian Securities and Investments Commission Act 2001 (Cth), the Corporations Act 2001 (Cth) and the Trade Practices Act so that proportionate liability applied to claims for damages for economic loss or property damage arising from misleading or deceptive conduct. By amendments to the Wrongs Act, Victoria introduced proportionate liability in respect of claims for economic loss or property damage arising from a failure to take reasonable care."

Speaking generally, where proportionate liability legislation applies, in order for a claimant to recover 100 per cent of the claimant's loss, the claimant must sue each and every wrongdoer who contributed to that loss. No wrongdoer is liable to the claimant for more than that wrongdoer's share of responsibility for the loss. This generalisation is, of course, subject to the terms of the proportionate liability provisions in the particular jurisdiction. For example, an important distinction to be drawn between the legislation in this jurisdiction and New South Wales, when compared with that in Victoria, is that under the Victorian legislation, a court may only have regard to the comparative responsibility of the parties before it, unless the reason for a wrongdoer not being a party is death or, if a corporation, that it has been wound up. In Tasmania and New South Wales, a court apportioning responsibility between defendants to proceedings is to have regard to the comparative responsibility of every concurrent wrongdoer, regardless of whether or not that wrongdoer is a party to the proceedings, see the Civil Liability Act (Tas), s43B(3)(b) and the Civil Liability Act 2002 (NSW), s35(4). To my mind, an important consequence of the application of the proportionate liability legislation to a claim is that it results in the claimant bearing the risk of the insolvency of any concurrent wrongdoer. See the provisions of the Civil Liability Act (Tas), already referred to, coupled with s43A(4). As to the significance of the changes made to the law by the proportionate liability legislation see McDonald B, Proportionate Liability in Australia: The Devil in the Detail (2005) 26 Australian Bar Review 29.

In view of the startling impact of these changes to the proportionate liability of wrongdoers in relation to claims covered by the legislation, it is not surprising that the relevant legislation in this jurisdiction, New South Wales and Western Australia includes a contracting out provision. There is no express provision, either way, as to contracting out in the proportionate liability legislation introduced in the Australian Capital Territory, the Northern Territory, South Australia or Victoria, nor in respect of the Commonwealth provisions contained in the Trade Practices Act 1974. Contracting out is prohibited in Queensland, see the Civil Liability Act 2003 (Qld), s7(3).

The provisions of the Civil Liability Act (Tas), that govern contracting out are s3A(3), (4) and (5); they are as follows:

"(3)   This Act, other than Part 7, does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract in relation to any matter to which this Act applies and does not limit or otherwise affect the operation of such an express provision.
(4)    Subsection (3) extends to any provision of this Act even if the provision applies to liability in contract.
(5)    This Act is not a codification of the law relating to civil claims for damages for harm."

The contract that is the subject of these proceedings was made some months after the proportionate liability legislation came into force in Tasmania, albeit that the contract is substantially comprised of a standard form contract issued by Standards Australia in 1995. The only relevance of this chronology is that pursuant to the Civil Liability Act (Tas), s4(4), Pt9A does not apply to a cause of action that accrued before 1 June 2005.

Counsel for the Contractor submits that an express provision between the parties to the contract to abandon a right under the Civil Liability Act (Tas) would, at the very least, have to include a reference to that Act. This submission does not reflect the terms of s3A(3), and I reject it. The Insurance Contracts Act 1984 (Cth), s8(2), refers to "an express provision to the contrary included ... in the contract". As to those words, in Akai Pty Ltd v People's Insurance CoLtd (1996) 188 CLR 418 at 436, Toohey, Gaudron and Gummow JJ said: "The words 'express provision' in that phrase embrace those provisions of the contract from which, or by recourse to which, it would be determined that the parties to the contract had selected or chosen a proper law which was not the law of a State or Territory". Whilst the context of the use of those words in that Act is quite different to the context of their use in the Civil Liability Act, s3A(3), for the purposes of s3A(3), I am satisfied that it is appropriate to consider those provisions of the contract from which, or by resort to which, it may be determined that the parties made provision for their rights, obligations and liabilities under the contract in relation to any matter to which the Civil Liability Act applies.

The plain purpose of the Civil Liability Act, s3A(3), is to ensure the primacy of express provisions of a contract as to the parties' rights, obligations and liabilities under the contract, over any provision in relation to the same matter in the Act. This purpose does no more than reflect "the paramount policy of the law that people should keep faith and fulfil their promises", Fender v St John Mildmay [1938] AC 1, Lord Wright at 37 – 38 and Hedges v Halliday (1947) 75 CLR 42, Dixon J at 57. Where the changes made to the law by the proportionate liability legislation apply to a dispute in relation to a contract, they have the potential to markedly complicate the resolution of the dispute and impact most adversely on the position of the claimant. That being so, it seems plain that it would be quite inconsistent with the intention of the legislature to contrive to confine the meaning of the terms of the contracting out provision comprised by s3A(3), and fail to give those terms their full scope and effect.

Section 3A(3), preserves the entitlement of the parties to a contract to make express provision for their rights, obligations and liabilities under the contract in relation to any matter to which Pt9A applies. That Part applies to apportionable claims, that is, claims for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury), s43A(1)(a).

Counsel for the Principal submits that the contract expressly, and manifestly, provides for an allocation of liability in respect of the rights, obligations and responsibilities of the parties, which is quite contrary to the scheme of proportionate liability provided for in Pt9A. In support of this submission counsel referred to a number of provisions in the contract and matters which bear on those provisions. Matters that I consider to be of significance are the following:

· The sole parties to the contract are the Principal and the Contractor.
· In a letter dated 20 May 2005, under the cover of which the Contractor submitted its tender to the Principal, the Contractor said:
"As main contractor for the project Acquagenics Pty Ltd is the sole entity contracting the work with Break O'Day Council and undertaking project delivery responsibility."

·     The Australian Standard, General conditions of contract for design and construct, ("the General Conditions") form part of the contract. General Conditions cl 3.1 requires the Contractor to execute and complete the work under the contract in accordance with the requirements of the contract, and it requires the Principal to pay the Contractor for the work.
·     The Tender Documents, Section III, par36.5, requires the Contractor to ensure that all subcontracted works and all materials supplied are in compliance with appropriate quality assurance standards in order to comply with the requirements of the contract.
·     General Conditions, cl 9.1 prohibits either party from assigning the contract or any other benefit or interest there under without the written consent of the other party.
·     Pursuant to the Tender Documents, Section 1, par1.5, the Contractor provided the Principal with a number of warranties including warranties that it was able to furnish sufficient personnel, equipment and all other things necessary for the performance of the whole of the work under the contract, that it had independently verified and satisfied itself in respect of all of the information and material provided by the Principal, and that it had based its tender upon its own investigations and determinations. The Contractor also acknowledged that the Principal did not warrant or represent that any of the information provided by the Principal to the Contractor was accurate, complete or sufficient for tendering purposes, and that the Contractor would have no claim of any nature whatsoever against the Principal in relation to any matter which it could reasonably have discovered had it complied with the warranties. Clauses 4.1 and 4.2 of the General Conditions reiterate some of the above.
·     The contract sum is about $5.5 million. Pursuant to cl 42.2 of the General Conditions, the Principal is obliged to pay the Contractor for unfixed plant and materials if the Contractor has provided the Principal with a bank guarantee in the amount of 30 per cent of the value of those items. Clause 5.1 authorises the Principal to withhold "retention monies … for the purposes of ensuring due and proper performance of the contract" in the amount of 10 per cent of the value of work.
·     Clause 16.1 of the General Conditions makes the Contractor responsible for the care of the whole of the work under the contract until responsibility to the same passes to the Principal. Clause 16.2 provides that if loss or damage occurs to the work during the period the Contractor is responsible for the same, the Contractor shall at its cost, rectify the same. Clause 18 requires the Contractor to effect an insurance policy against loss or damage resulting from any cause whatsoever covering all of the things referred to in clause 16.1. The policy is to be for an amount not less than the contract sum plus a number of further amounts as there specified.
·     Clauses 19 and 21 of the General Conditions, amended as recorded in a letter to the Contractor dated 23 December 2005, require the Contractor to have in place public liability insurance of not less than $10 million and professional indemnity insurance of not less than $5 million, and that the professional indemnity insurance cover be maintained at that amount for three years and then at the amount of $3 million for a further four years.

· The preface to the General Conditions contains warnings that include the following:
"1Users of this Australian Standard are warned that Clause 17 (Damage to persons and property) does not limit the liability of parties for special, indirect or consequential losses.
…
Parties wishing to limit their liability should seek legal and insurance advice before entering a contract under this Standard."

The General Conditions, cl 17.1 includes the following:
"The Contractor shall indemnify the Principal against —
(a)loss of or damage to property of the Principal, including existing property in or upon which the work under the Contract is being carried out; and
(b)claims by any person against the Principal in respect of personal injury or death or loss of or damage to any property,

arising out of or as a consequence of the carrying out by the Contractor of the work under the Contract, but the Contractor's liability to indemnify the Principal shall be reduced proportionally to the extent that the act or omission of the Principal, the Superintendent or the employees or agents of the Principal contributed to the loss, damage, death or injury.
This Clause 17.1 shall not apply to —
(i)the extent that the liability of the Contractor is limited by another provision of the Contract;
(ii)exclude any other right of the Principal to be indemnified by the Contractor."

· General Conditions cl 9.3 is:
"9.3 Contractor's Responsibility
Approval to subcontract shall not relieve the Contractor from any liability or obligation under the Contract. Except where the contract otherwise provides, the Contractor shall be liable to the Principal for the acts and omissions of subcontractors and employees and agents of subcontractors as if they were acts or omissions of the Contractor."

General Conditions cl 2, provides that the word "subcontractor" includes a Consultant and that:
"'Consultant' means any person engaged by the Contractor to perform consultancy services in connection with the work under the Contract and includes any consultant of the Principal whose prior contract is novated to the Contractor under Clause 10."

· General Conditions cl 44, details at length the rights of the parties in the event of a default by the other party. Clause 44.4(b) relates to a termination of the contract by the Principal, and cl 44.9 relates to a termination of the contract by the Contractor. More pertinently, cl 44.10 provides:
"44.10 Rights of the Parties on Termination
If the Contract is terminated pursuant to Clause 44.4(b) or 44.9, the rights and liabilities of the parties shall be the same as they would have been at common law had the defaulting party repudiated the Contract and the other party elected to treat the Contract as at an end and recover damages."

· General Conditions cl 47, lays down the steps for the resolution of a dispute or difference between the Contractor and the Principal, and ultimately provides that if the dispute is not resolved it shall be, and is thereby referred, to arbitration.

For purposes relevant to the application of the contracting out provision contained in the Civil Liability Act (Tas), s3A(3), the matter to which Pt9A applies is a claim by the Principal for economic loss or damage to property in an action for damages against the Contractor (whether in contract, tort or otherwise) arising from a failure to take reasonable care. Subject to the application of the contracting out provision, if the Principal pursued such a claim against the Contractor and the Contractor was one of two or more concurrent wrongdoers in relation to that claim, the Contractor could rely on s43B(1) to limit its liability to the Principal to an amount reflecting that proportion of the damage or loss that the Court considered just, having regard to the extent of the Contractor's responsibility for the damage or loss.

Consistent with principles of privity of contract, it is the Contractor to whom the Principal is entitled to look for a remedy referable to the contract. That this is so no doubt has a considerable bearing on the insurance, security and retention money provisions in the contract to which I have referred. From the standpoint of the Principal the utility of those provisions would be greatly diminished if the Contractor could limit its liability in respect of a claim made by the Principal, by identifying other concurrent wrongdoers.

The provisions of the contract establish that a right of the Principal is to look to the Contractor for the full amount of a claim established against the Contractor and that an obligation and liability of the Contractor is to meet the full amount of such a claim, subject to any reduction for contributory negligence. Express provisions of particular pertinence are cls 9.3 and 44.10. Whilst cl 9.3 is not expressed so widely to cover every conceivable entity that might be a concurrent wrongdoer, its intent is plain. That is, that the Contractor shall be liable to the Principal for the acts and omissions of subcontractors, which includes Consultants, and employees and agents of the same. That a concurrent wrongdoer might emerge that is not a subcontractor or an employee or agent of a subcontractor, does not mean that the Contractor is entitled to have its liability to the Principal limited pursuant to Pt9A referable to that concurrent wrongdoer, as this would fly in the face of cl 44.10. The Contractor contends that it has validly terminated the contract pursuant to cl 44.9, and cl 44.10 expressly provides that in the event of such a termination the rights and liabilities of the parties shall be the same as they would have been at common law. This clause recognises that, save as otherwise provided in the contract, the parties' rights and liabilities shall be as they would be at common law. For Pt9A of the Act to apply so as to limit the Principal's common law rights against the Contractor in relation to a claim, and limit the Contractor's liabilities to the Principal in relation to that claim in the event that a concurrent wrongdoer not covered by cl 9.3 could be identified, would not accord with the parties' common law rights and liabilities.

The combined effect of the provisions referred to is just as emphatic for the purposes of s3A(3), as a provision that the rights, obligations and liabilities of the parties under the contract, in relation to any matter to which the Civil Liability Act, Pt9A, applies are governed by the terms of the contract and the common law to the exclusion of that Part.

For these reasons, I conclude that the proportionate liability provisions contained in Pt9A do not apply to the action between the parties. It follows from this conclusion that those provisions have no application to the arbitration between the parties. This consequence follows if those provisions are construed as applying by their own force to arbitrations, as in that case the contracting out provision contained in s3A(3), also applies. It also follows notwithstanding the proposition that a contract that provides for the resolution of disputes by arbitration will ordinarily contain an implied term that the arbitrator is to have the authority to give the parties such relief as would be available to them in a court of law. In the face of my finding, that in this case the parties have contracted out of the proportionate liability provisions, there is no room for implying a term to the contrary in their contract.

In so concluding, I differ from Blow J, who confined his assessment of the contracting out contention advanced by the Principal to the terms of General Conditions cl 9.3 and in consequence limited his finding, as to the extent to which the parties had thereby contracted out of the contract, to damage suffered as the result of the acts or omissions of the Contractor's subcontractors, employees or agents. On this basis, his Honour held that the proportionate liability legislation might still apply in respect of a wrongdoer who was not a subcontractor, employee or agent of the Contractor.

As I have concluded that the parties wholly contracted out of the proportionate liability provisions, with the result that those provisions have no application to the action or the arbitration between the parties, it is not necessary for me to address two further matters dealt with by Blow J. I will however make some observations about the first of these matters.

The first matter is the proposition that the proportionate liability provisions of the Civil Liability Act apply to arbitration proceedings by force of the provisions of that Act. Blow J did not reach a concluded view on this matter. His Honour went no further than observing that it is arguable that the word "tribunal" in the definition of "court" in the Civil Liability Act, s3, should be interpreted so as to include an arbitrator, and that the words "action for damages" in s43A(1) should be interpreted as including arbitration proceedings in which monetary compensation is sought. On the other hand, his Honour observed that it is arguable that such interpretation stretches the language of the Civil Liability Act too far.

A number of aspects of Pt9A suggests that its application is confined to proceedings in a court or tribunal, rather than arbitration proceedings. An aspect of this suggestion is the use of the words "court", "plaintiff", "defendant", and "judgment" in the Part. The Act contains the following definitions in s3:

"'court' includes tribunal and, in relation to a claim for damages, means any court or tribunal by or before which the claim falls to be determined;
'damages' includes any form of monetary compensation."

The Act does not define "tribunal", "action", "plaintiff" or "defendant". The definition of "court" was inserted into the Act by the Civil Liability Amendment Act 2003 (Tas). As explained by Mrs Jackson MHA in her second reading speech in support of the Bill that became that enactment, the purpose of the Bill was to continue the implementation of nationally agreed reforms based on the Ipp Report, the recommendations of a national expert panel appointed to review the law of negligence. She said the recommendations in that Report had been considered at national ministerial meetings and it had been agreed that certain key recommendations would be introduced on a nationally consistent basis. From my cursory review of the available material, it seems that the recommendations dealt with matters as to which tribunals had jurisdiction in some parts of Australia, for example the Victorian Civil and Administrative Tribunal. If so, this may explain the adoption of a definition for "court" that includes a tribunal. The definition of "court" contained in the Civil Liability Amendment Act (Tas) is exactly the same as the definition given to that term in the legislation that deals with the same matters in New South Wales, the Civil Liability Act 2002 (NSW), and in Victoria, the Wrongs Act 1958 (Vic) as amended with effect from 1 January 2004. Whilst no tribunal in Tasmania has jurisdiction in relation to the matters that are the subject of the legislation, it may be that the same definition of "court" was adopted in this State for reasons of comity. In these circumstances I am not inclined to place much weight on the inclusion of a tribunal in the definition of "court".

Other aspects of Pt9A that suggest that it does not apply to arbitration proceedings include, ss43B(5) and 43F. Section 43B(5) provides that a defendant in proceedings includes any person joined as a party, except a plaintiff, whether joined under Pt9A, rules of court or otherwise. Section 43F provides that a court may give leave for persons to be joined as defendants in proceedings involving an apportionable claim.

An arbitrator's powers are derived from the contract between the parties to the arbitration and they can only include the power to join another person to the arbitration where that person is subject to the contract. On this basis, s43F can have no application to an arbitration, and the same applies to s43B(5), which assumes that a person may be joined as a defendant, plaintiff or other party to a proceeding.

A further indication that the proportionate liability provisions in the Civil Liability Act (Tas) do not, by force of those provisions, apply to arbitration proceedings is the definitions given to the words "action" and "court" in the Wrongs Act 1954 (Tas), s2, which are as follows:

"'action' includes a counter-claim and proceedings by way of arbitration;
'court', used in relation to a claim, means the court before which the claim falls to be determined, and, except in subsections (6) and (7) of section three, includes an arbitrator before whom the claim falls to be determined."

The Wrongs Act, or as it was originally named, the Tortfeasors and Contributory Negligence Act, deals with proceedings against, and contribution between, persons committing wrongful acts and the apportionment of liability in the case of contributory negligence. In very broad terms, the Wrongs Act touches on the same area of the law as the Civil Liability Act, Pt9A. Had it been the intention of the legislature that Pt9A should extend to proceedings by way of arbitration, it is reasonable to expect that explicit definitions for the words "action" and "court", along the lines of those contained in the Wrongs Act, would have been included in the Civil Liability Act.

Like Blow J, I will not express a final view on this matter, although I should say that I lean to the view that the proportionate liability provisions of the Civil Liability Act are not, by force of those provisions, applicable to arbitration proceedings. For a discussion of this question, see the article written by David Levin, QC, Proportionate liability in arbitrations in Australia? (2009) 25 BCL 298.

Blow J concluded that the proportionate liability provisions of the Civil Liability Act ordinarily apply to an arbitration, as a contract that contains a provision for the resolution of disputes by arbitration will ordinarily contain an implied term that the arbitrator is to have the authority to give the parties such relief as would be available to them in a court of law having jurisdiction with respect to the same subject matter. For this reason, his Honour went on to hold that the proportionate liability provisions would apply to the arbitration between the parties, as if it were applicable in court proceedings between them, and to the same extent that it would apply in court proceedings between them. There is no occasion for me to address this conclusion because, for the reasons I have given, I have concluded that the proportionate liability provisions do not apply to the court proceedings or the arbitration between the parties.

By its notice of appeal the Contractor contends that the learned primary judge erred in:

"(i)finding that the [parties] had, by virtue of the terms of Clause 9.3 of the contract, contracted out of the Civil Liability Act 2002 (Tas) in accordance with section 3A of that Act;
(ii)failing to recognise or consider that the Civil Liability Act 2002 (Tas) does not preclude proportionate liability defences under Part VIA of the Trade Practices Act 1974 (Cth);
(iii)failing to recognise or consider that the evidence disclosed that there was a potential for additional parties or concurrent wrongdoers, other than subcontractors to the [Contractor], who might be joined to the proceedings under the Civil Liability Act 2002 (Tas);
(iii)Afailing to take account of identified complex legal issues which the arbitrator would be left to determine if a stay was granted;
(iv)finding that an arbitrator has jurisdiction to apply the provisions of Part 9A of the Civil Liability Act 2002 (Tas) and that the contract between the [parties] contains an implied term to this effect;
(v)taking into consideration the background to the amendments to the Civil Liability Act 2002 (Tas);
(vi)taking into consideration the undesirability of proportionate liability legislation resulting in a shift away from arbitration as a means of dispute resolution;
(vii)taking into consideration the limited resources of the courts; and
(viii)taking into consideration that the [Principal] ought be entitled to proceed only against the [Contractor]."

Ground (i)

That his Honour erred in:

"(i)finding that the [parties] had, by virtue of the terms of Clause 9.3 of the contract, contracted out of the Civil Liability Act 2002 (Tas) in accordance with section 3A of that Act."

For the reasons that I have given, I agree with his Honour's finding that by virtue of cl 9.3 the parties had, to the extent of that clause, contracted out of the Civil Liability Act. In fact, I have gone further than his Honour insofar as I have not confined the contracting out to the terms of cl 9.3. This has no bearing on the correctness of his Honour's exercise of the discretion, as my finding is more favourable to the grant of a stay than the finding that was made by his Honour.

Ground (ii)

That his Honour erred in:

"(ii)failing to recognise or consider that the Civil Liability Act 2002 (Tas) does not preclude proportionate liability defences under Part VIA of the Trade Practices Act 1974 (Cth)."

I am unable to appreciate the relevance of this ground as drafted. It was not addressed as a separate ground in the Contractor's written submissions, although, in the context of ground (i), it was contended that if representations made by specialist subcontractors/consultants amounted to breaches of the Trade Practices Act, s52, or the Fair Trading Act 1990 (Tas), s14, then cl 9.3 would not preclude that conduct from providing a basis for a proportionate liability defence for loss caused by misleading or deceptive conduct under the Trade Practices Act, s87CB, or the Civil Liability Act, s43A(1)(b). If, and insofar as, this contention involves an assertion that the parties to a contract cannot contract out of the application of the proportionate liability provisions to a claim for economic loss or damage to property in an action for damages under the Fair Trading Act for a contravention of that Act s14, the contention is wrong. The effect of the Civil Liability Act, ss3A(3) and 43A(1)(b), is to the contrary. In his reasons for judgement the learned primary judge quoted a passage from an article by Byrne J, Proportionate liability in construction claims (2007) 23 BCL 10 at 13. That passage includes a reference to claims that may be made under the Trade Practices Act, so it is clear that his Honour was cognisant of the potential for such claims. Whilst it is correct that the learned primary judge did not otherwise expressly address the Trade Practices Act, PtVIA, there was no reason for him to do so. There was no suggestion on the evidence before him that the Principal might assert a claim for economic loss or damage to property against the Contractor for misleading or deceptive conduct. For the same reason there was no need to refer to a claim under the Fair Trading Act s14.

Ground (iii)

That his Honour erred in:

"(iii)failing to recognise or consider that the evidence disclosed that there was a potential for additional parties or concurrent wrongdoers, other than subcontractors to the [Contractor], who might be joined to the proceedings under the Civil Liability Act 2002 (Tas)."

It is simply not correct to assert, as this ground does, that his Honour failed to recognise or consider that the evidence disclosed that there was a potential for additional parties or concurrent wrongdoers, other than subcontractors, who might be joined to the proceedings under the Civil Liability Act. See, for example, pars8, 46, 47, 54 and 55 of the reasons for judgment. Even if this ground was sustainable, in view of my conclusion that the parties have contracted out of the Civil Liability Act, it would have no bearing on the outcome of the appeal.

Ground (iii)A

That his Honour erred in:

"(iii)Afailing to take account of identified complex legal issues which the arbitrator would be left to determine if a stay was granted."

As with ground (iii), it is simply not correct to assert, as this ground does, that his Honour failed to take into account asserted complex legal issues that the arbitrator would be left to determine if a stay was granted. The asserted issues related to the application of proportionate liability provisions to the dispute between the parties. So, as with ground (iii), even if ground (iii)A was sustainable, in view of my conclusion that the parties contracted out of the Civil Liability Act, it would have no bearing on the outcome of the appeal.

Ground (iv)

That his Honour erred in:

"(iv)finding that an arbitrator has jurisdiction to apply the provisions of Part 9A of the Civil Liability Act 2002 (Tas) and that the contract between the [parties] contains an implied term to this effect."

It follows from my view that the parties have contracted out of the Civil Liability Act, that this ground is sustained. However, this has no bearing on the correctness of his Honour's exercise of the discretion, as the finding I have made on this question is more favourable to the grant of a stay than the finding of his Honour.

Ground (v)

That his Honour erred in:

"(v)taking into consideration the background to the amendments to the Civil Liability Act 2002 (Tas)."

Nothing put before this Court suggests that, insofar as his Honour took into consideration the background to the amendments of the Civil Liability Act, his Honour erred.

Grounds (vi) and (vii)

That his Honour erred in:

"(vi)taking into consideration the undesirability of proportionate liability legislation resulting in a shift away from arbitration as a means of dispute resolution;
(vii)taking into consideration the limited resources of the courts."

In par52 of his reasons for decision, his Honour said:
"In my view it would be undesirable for the introduction of proportionate liability legislation to result in courts more readily refusing stay applications under the Commercial Arbitration Act, s53(1), and thereby redistributing work from arbitrators to the courts. If the new legislation leads parties to choose arbitration as a dispute resolution mechanism less frequently, that is another matter. But courts have limited resources, and arbitrations have advantages including privacy, efficiency, finality and the expertise of specialist decision-makers. It would be regrettable if courts were to take on new burdens, and if courts were to move work away too readily from a dispute resolution system that has worked well for many years."

His Honour did not err in paying regard to these matters and there is no basis for suggesting that he gave them undue weight. Considerations, such as the limited resources that are committed to the administration of justice and competing claims for court time, are commonly referred to when these matters have some bearing on the exercise of a discretion, see Aon Risk Services Aust Ltd v ANU (2009) 83 ALJR 951 at pars[25] and [26].

Ground (viii)

That his Honour erred in:

"(viii)taking into consideration that the [Principal] ought be entitled to proceed only against the [Contractor]."

In par53 of his reasons for judgment, his Honour described the Principal as the principal claimant and said the Contractor was the only entity against whom the Principal wished to pursue a claim, and went on to say that stronger grounds for the refusal of a stay would exist where there might otherwise be two or more sets of parallel proceedings. This involves no error. Moreover, to my mind, it is significant that the contract between the parties contained provisions that involved an acceptance that the Principal could pursue the Contractor alone in relation to claims arising under the contract, and provided for such claims to be referred to arbitration. There is a wealth of authority to the effect that parties should be held to their contract and there is no injustice in this being so. See Hedges v Hallilday (supra) at 57; Huddart Parker Ltd v The Ship Mill Hill (1950) 81 CLR 502 at 509; Akai Pty Ltd v People's Insurance Co Ltd (supra) at 438, and Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9. Consistent with these authorities, it has long been held that in deciding whether or not there is no sufficient reason why a matter should not be referred to arbitration, a court is to give great weight to the consideration that the parties, by their contract, have agreed that arbitration should be the forum for settling any disputes which may arise. See Tasmanian Pulp and Forest Holdings v Woodhall Ltd [1971] Tas SR 330 at 332, 335 and 344, and Blackman & Co v Oliver Davey Glass Co [1966] VR 570 at 574 – 575.

For the purposes of the outcome of this appeal the key difference between my findings and those of Blow J, is that his Honour confined his finding that the parties had contracted out of the Civil Liability Act (Tas) to the terms of General Conditions cl 9.3, whilst I have found that the parties wholly contracted out of the proportionate liability provisions of the Act. My finding undermines the proposition that the arbitration of the parties' dispute is likely to involve novel and difficult questions concerning proportionate liability. That proposition is central to the Contractor's contention that there is good reason not to refer the dispute to arbitration. As my finding is more favourable to the grant of a stay than the finding of his Honour, this difference between us has no bearing on the correctness of his Honour's exercise of the discretion to grant the stay.

I would dismiss the appeal.
File No FCA 917/2009

AQUAGENICS PTY LIMITED
v BREAK O'DAY COUNCIL, TASMANIAN WATER & SEWERAGE CORPORATION (NORTH REGION) PTY LTD

REASONS FOR JUDGMENT FULL COURT

TENNENT J

10 May 2010

These proceedings

This is an appeal from a decision of a single judge made pursuant to the Commercial Arbitration Act 1986 ("the CA Act"), s53, to stay an action brought by a party to a commercial dispute, and require the parties to go to arbitration to resolve the dispute between them.

The Commercial Arbitration Act1986, s53

This relevantly provides as follows:

"53. Power to stay court proceedings
(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied –
(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration –

may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit.
(2) An application under subsection (1) shall not, except with the leave of the court in which the proceedings have been commenced, be made after the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance."

Before the learned judge, it was accepted that s53(1)(b) had been satisfied.

Background

On 23 February 2006, Aquagenics Pty Ltd ("the appellant") and the Break O'Day Council ("the Council") entered into a contract. Pursuant to the contract, the appellant was to design and construct upgrade works to the Council's waste water treatment plant at St Helens. On 1 July 2009 the Council's rights and liabilities in relation to that treatment plant were transferred to Tasmanian Water and Sewerage Corporation (Northern Region) Pty Ltd. In these reasons, I will use the term "the respondent" to refer to the Council from the date of contract to the date upon which its rights and liabilities in respect of the treatment plant were taken over by the water corporation, and thereafter to refer to that corporation.

Clause 5 of the contract provided for security, retention moneys and performance undertakings which were for the purpose of ensuring the due and proper performance of the contract. Pursuant to the clause, the appellant paid a sum by way of security to the respondent. The respondent also came to hold a sum by way of retention of amounts from progress payments.

Clause 44.2 of the contract provided that if the appellant committed a substantial breach of the contract, and the respondent considered that damages may not be an adequate remedy, the respondent could give a notice to show cause to the appellant. Clause 44 otherwise provided for what was to be contained in a notice to show cause and the consequences of a failure to show cause. The respondent could, in certain circumstances, take work, intended to be performed by the appellant under the terms of the contract, out of its hands.

On 30 July 2007, the respondent issued a notice to show cause to the appellant. The appellant responded to the notice in the form of a detailed letter. In substance, the appellant maintained it had not committed a substantial breach of the contract, but that, even if it had, damages would have been an adequate remedy. The appellant's position was that the notice was invalid.

On 30 August 2007, the respondent wrote to the appellant. It advised that it considered the appellant had failed to show cause notwithstanding its letter, and purported to take certain works, intended to be done by the appellant pursuant to the contract, out of its hands. That work was identified as "pre-commissioning and commissioning works". The appellant maintained that the respondent was not entitled to take that work out of its hands, either pursuant to the contract or otherwise.

Clause 44.7 of the contract provided that if the respondent committed a substantial breach of the contract, and the appellant considered that damages may not be an adequate remedy, the appellant could give the respondent a notice to show cause. On 17 October 2007, the appellant issued a notice to show cause to the respondent. While the respondent responded to the notice by letter, the appellant asserted that it did not, by that letter, show reasonable cause in respect of the matters dealt with by the notice. On 12 December 2007, the appellant purported to terminate the contract. It asserted that the actions of the respondent in issuing the notice to show cause in August 2007, and purporting to remove certain works from the appellant, constituted a repudiation of the contract, which it accepted. The appellant sought a return of the security provided pursuant to the contract. The respondent refused to return that security.

On 8 August 2008, the appellant issued proceedings in this Court by which it sought a declaration that it had validly terminated the contract. It sought the return of the security previously identified, and damages in the sum of $878,500. On 12 August 2008, prior to the delivery or filing of any further pleadings, the respondent filed an interlocutory application in the proceedings by which it sought, pursuant to the CA Act, s53, that the proceedings commenced by the appellant be stayed.

On 2 October 2009, following a hearing of that application, an order was made by the Court that the proceedings be stayed and that the matter be referred to arbitration.

The decision at first instance

Blow J determined, by reference to the CA Act, s53, that there was no sufficient reason why the matter of dispute between the parties should not be referred to arbitration. In coming to that conclusion, he considered a number of issues. These were:

(a) the proportionate liability provisions of the Civil Liability Act 2002 ("the Act") generally;
(b) whether the proportionate liability provisions applied to proceedings before an arbitrator;
(c) the intended scope of the Act;
(d)whether a foreshadowed claim by the respondent could amount to a claim for "economic loss" within the meaning of the Act, s43A(1)(a);

(e)whether a foreshadowed claim by the respondent contained an assertion of "a failure to take reasonable care";
(f)whether cl 9.3 of the contract between the parties amounted to a "contracting out" as provided for in the Act, s3A;

(g) the vicarious liability provision in the Act, s43G(1)(a).

His Honour made a finding that the proportionate liability provisions in the Act could apply to proceedings before an arbitrator, and further found that cl 9.3 of the contract did amount, in part, to a "contracting out". He, however, declined to make findings in relation to the matters covered by points in (d), (e) and (g), recognizing that these were issues of law which may need to be dealt with by an arbitrator.

In reaching his ultimate conclusion, his Honour determined that the major factors weighing in favour of a stay were that:

·the parties to the contract had agreed that questions of both fact and law should go to an arbitrator;
·that agreement was entered into even though claims involving multiple parties were the norm when disputes arose in relation to engineering and construction projects;
·the institution of one or more other proceedings was a possibility, rather than a certainty; and
·it would be undesirable for the introduction of proportionate liability legislation to result in a significant shift away from arbitration as a means of dispute resolution.

His Honour also considered other issues. He said at pars 50 - 55:

"50      The likelihood that questions of law might arise in arbitration proceedings is not necessarily a sufficient reason to refuse a stay since, by their agreement, the parties to the contract committed questions of both fact and law to the decision of an arbitrator: John Churcher Pty Ltd v Mitsui & Co(Australia) Limited [1974] 2 NSWLR 179; Dillingham Constructions Pty Ltd v Downs (1969) 90 WN (NSW) (Pt1) 258; Qantas Airways Ltd v Dillingham Corporation (1985) 4 NSWLR 113; Allied Constructions Pty Ltd v Novacoal Australia Pty Ltd (1991) 25 NSWLR 54 at 66. However I think courts should more readily refuse stays if the questions of law likely to arise in an arbitration are particularly difficult, or of particular public importance.
51        If the dispute between these parties goes to arbitration it is likely that, by the time the arbitrator conducts a hearing, the case law in relation to proportionate liability legislation might have developed significantly. Unanswered questions are likely to have been answered by judges, and ambiguities in the legislation are likely to have been resolved, at least to some extent.
52        In my view it would be undesirable for the introduction of proportionate liability legislation to result in courts more readily refusing stay applications under the Commercial Arbitration Act, s53(1), and thereby redistributing work from arbitrators to the courts. If the new legislation leads parties to choose arbitration as a dispute resolution mechanism less frequently, that is another matter. But courts have limited resources, and arbitrations have advantages including privacy, efficiency, finality and the expertise of specialist decision-makers. It would be regrettable if courts were to take on new burdens, and if courts were to move work away too readily from a dispute resolution system that has worked well for many years.
53        One consequence of the proportionate liability legislation is that claimants are tending to proceed against larger numbers of defendants in order to avoid the risk of recovering incomplete damages from an incomplete collection of concurrent wrongdoers. However this is not such a case. Although the plaintiff was the first to commence proceedings, the principal claimant is the defendant company, and the plaintiff is the only entity against whom it wishes to pursue a claim. Stronger grounds for the refusal of a stay exist when there might otherwise be two or more sets of parallel proceedings. For example, in Tasmanian Pulp and Forest Holdings Ltd v Woodhall Ltd (supra) there was a possibility of three parallel proceedings — an arbitration between the appellant and the respondent, a building company; a second arbitration between the appellant and the partners in an engineering firm; and an action between the appellant and the supplier and installer of some machinery.
54        If an arbitration proceeds, and the defendant company fails in all its claims, there need be no further proceedings. If an arbitration proceeds, the defendant company succeeds, and the plaintiff persuades the arbitrator (as it has sought to persuade me) that the proportionate liability legislation applies, there will be no basis for the plaintiff to pursue contribution proceedings against any concurrent wrongdoer. If the defendant company succeeds, and the proportionate liability legislation is held to be wholly or partly inapplicable, then there are likely to be contribution proceedings between the plaintiff and other corporations. It is only in that situation that the plaintiff could suffer as the result of being involved in more than one set of proceedings. There is no evidence before me as to whether any of the plaintiff's subcontracts contain arbitration clauses. There is therefore no evidence that the plaintiff is at risk of being involved in more than two sets of proceedings.
55        If the plaintiff were to pursue contribution proceedings after an arbitration, there would be a risk of inconsistent findings. Similarly, if the defendant company were to succeed against the plaintiff but have its damages reduced under the proportionate liability legislation, it might want to start new proceedings against concurrent wrongdoers, and such proceedings could also result in inconsistent findings."

The nature of this appeal

The appeal is to be considered having regard to the terms of the Supreme Court Civil Procedure Act 1932, s45(1). That section relevantly provides that:

"45 (1) A Full Court, on the hearing of any appeal from any judgment, order, or other determination (whether final or otherwise) of a judge, shall not reverse or vary any adjudication of the judge which is, or purports to be, only the exercise of a discretion which the judge was entitled by law to exercise, unless it appears to the Full Court that –
(a) the judge has, in fact, declined or failed to exercise the discretion;
(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact;
(c) the adjudication is founded wholly or in part on an erroneous finding of fact or an erroneous determination in point of law; or…"

Counsel for the appellant accepted that the approach to be adopted by this Court was correctly identified by Crawford J in Tasmanian Pulp and Forest Holdings Ltd v Woodhall Ltd [1971] Tas SR 320 at 337 where he said:

"Of course it is not sufficient for me to conclude that I would have exercised my discretion in a way differently from that in which it was exercised by Nettlefold J. Before disturbing the exercise of the discretion. I must be satisfied that there was no sufficient reason why the matter should not be referred to arbitration in accordance with the submission."

His Honour made reference in his reasons to a decision of the High Court in Rodgers v Rodgers (1964) 114 CLR 608 where at 619 - 620, their Honours McTiernan, Taylor and Owen JJ said:
"The principles applicable in appeals from orders involving discretionary judgments have been stated and restated in a multitude of cases and a convenient summary is to be found in the reasons of Kitto J in Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621, at p 627 : 'I shall not repeat the references I made in Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513, at pp 532-534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v The King [1936] HCA 40; (1936) 55 CLR 499, at pp 504, 505'."

The Act

A consideration of some of the provisions of this Act and whether they applied in arbitrations formed a significant part of the matters considered by Blow J. The provisions specifically referred to were the following, namely ss3A, 43A, 43B, 43F and 43G. These provide as follows:

"3A Provisions relating to operation of Act
(1) This Act does not create or confer any cause of civil action for the recovery of damages.
(2) A provision of this Act that gives protection from civil liability does not limit the protection from liability given by another provision of this Act or by another Act or law.
(3) This Act, other than Part 7, does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract in relation to any matter to which this Act applies and does not limit or otherwise affect the operation of such an express provision.
(4) Subsection (3) extends to any provision of this Act even if the provision applies to liability in contract.
(5) This Act is not a codification of the law relating to civil claims for damages for harm.
43A Application of Part 9A
(1) This Part applies to the following claims (apportionable claims):
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury);
(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1990 for a contravention of section 14 of that Act.

(2) In this Part –
'concurrent wrongdoer', in relation to a claim, means a person who is one of two or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim;
'excluded concurrent wrongdoer' means a concurrent wrongdoer referred to in subsection (5)(a) or (b).

(3) For the purpose of this Part, apportionable claims are limited to those claims specified in subsection (1).
(4) For the purpose of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
(5) Nothing in this Part operates to limit the liability of a concurrent wrongdoer in proceedings involving an apportionable claim if –
(a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or
(b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.

(6) The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
(7) The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part.
(8) This Part does not apply to civil liability that is excluded from the operation of this Part by section 3B.
(9) For the purpose of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
43B Proportionate liability for apportionable claims
(1) In any proceedings 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 damage or loss claimed that the court considers just, having regard to the extent of the defendant's responsibility for the damage or loss; and
(b) the court is not to give judgment against the defendant for more than that amount.

(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim –
(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and
(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3) In apportioning responsibility between defendants in the proceedings –
(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and
(b) the court is to have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.
43F Joining non-party concurrent wrongdoer in action
(1) The court may give leave for any one or more persons to be joined as defendants in proceedings involving an apportionable claim.
(2) The court is not to give leave for the joinder of any person who was a party to any previously concluded proceedings in respect of the apportionable claim."
43G This Part does not prevent certain liability, &c
(1) Nothing in this Part –
(a) prevents a person from being held vicariously liable for a proportion of any apportionable claim for which another person is liable; or
(b) prevents a partner from being held severally liable with another partner for that proportion of an apportionable claim for which the other partner is liable; or
(c) affects the operation of any other Act to the extent that it imposes several liability on any person in respect of what would otherwise be an apportionable claim.

(2) In subsection (1)(b) –
'partner' means a person who has entered into a partnership, within the meaning of the Partnership Act 1891, with another person."

Grounds of appeal

The grounds of appeal expressed as grounds 1(a) and (b) were in effect a re-statement of the wording in part of the Supreme Court Civil Procedure Act, s45(1). They did not assert any particular error. Ground 1(c), on the other hand, asserted that the judgment of Blow J was founded wholly or in part on eight erroneous findings of fact or erroneous determinations in point of law. I will deal with each in order.

Ground 1(c )(i) – the "contracting out" finding

It is asserted that his Honour erred in:

"finding that the appellant and the first respondent and/or the second respondent had, by virtue of the terms of Clause 9.3 of the Contract, contracted out of the Civil Liability Act2002 (Tas) in accordance with s3A of that Act;".

The Act, s3A (set out in par18 of these reasons) permits parties to in effect "contract out" of the Act. While the ground of appeal asserts that his Honour made a finding that the parties had, in their contract, contracted out of the operation of the Act by reference to cl 9.3, in fact he did not make a finding in such broad terms. He said at par46 that:

"It is therefore not possible for me to reach a conclusion as to whether cl9.3 has resulted in a complete 'contracting out'."

Clause 9.3 of the contract provided as follows:

"9.3 Contractor's Responsibility
Approval to subcontract shall not relieve the Contractor from any liability or obligation under the Contract. Except where the Contract otherwise provides, the Contractor shall be liable to the Principal for the acts and omissions of subcontractors and employees and agents of subcontractors as if they were acts or omissions of the Contractor."

Counsel for the respondent submitted before Blow J that the parties had, by reference to that clause, contracted out of the Act entirely, and that, as a consequence, the proportionate liability provisions of the Act did not apply. Counsel for the appellant, on the other hand, had submitted that cl 9.3 did not disclose an intention to contract out and was insufficient, on its own, to exclude the proportionate liability provisions in the Act.

His Honour disagreed with counsel for the appellant and said at par45:
"Clause 9.3 is an express contractual provision. It added to the rights of the council and the liabilities of the plaintiff, and thus affected their rights and liabilities. One of the matters to which the Civil Liability Act applies is the liability of concurrent wrongdoers for apportionable claims. If, in relation to a particular claim, the plaintiff is a concurrent wrongdoer, and there are one or more concurrent wrongdoers amongst its subcontractors and their employees and agents, then there is an inconsistency between the clause and s43B(1). It follows that, in accordance with s3A(3), the plaintiff is liable to the defendant company for the whole of any damage suffered as the result of the acts or omissions of its subcontractors and their employees and agents, and that s43B(1) does not apply in respect of any damage caused by their acts and omissions."
What in fact his Honour determined was that cl 9.3 did operate as a contracting out provision to the extent of its application to the acts or omissions of subcontractors (the definition of which included consultants) and the employees and agents of those subcontractors. He did not find that cl 9.3 operated as an absolute "contracting out" clause. His Honour accepted that there might be entities which fell outside the definition of subcontractors, against which the respondent might want to pursue apportionable claims on the basis they were concurrent wrongdoers. He said that it was not possible for him to identify, on the basis of the evidence before him, the status of a number of these entities, that is whether they were subcontractors, employees or agents of subcontractors, or something else. The proportionate liability provisions of the Act might still apply to alleged concurrent wrongdoers who were not subcontractors.

As to that part of his Honour's decision to the effect that cl 9.3 operated as a "contracting out" provision in respect of claims against subcontractors, I agree with his conclusion. The evidence discloses that the contract was signed early in 2006. The provisions of the Act, s3A, were already in force by that date, although Pt9A was not introduced until 2005. The standard form conditions which formed the basis of the contract appear to have been brought into use in 1995. The document used in this case refers to an amendment in 2000 but nothing since. There is no evidence of any change to the conditions to reflect the introduction of the Act, Pt9A. It would have been open to the parties to excise cl 9.3 had they wished to do so and replace it with another. As his Honour correctly pointed out, the Act, s3A, does not require parties to use any particular form of wording to effect a contracting out. The section simply provides that the Act does not prevent parties to a contract:

·making express provision in that contract;

·for their rights, obligations and liabilities;
·in relation to any matter to which the Act applies.

Clause 9.3 is an express contractual provision. It makes provision with respect to the rights, obligations and liabilities of the parties to the contract. The only remaining question was whether it related to a matter to which the Act applied.

It is relevant when considering the effect of cl 9.3 to look at the context in which it appears in the contract. The heading of cl 9 is "Assignment and Subcontracting". Clause 9.2 prevented the appellant from subcontracting specified work and allowing an existing contractor to assign work without the approval of a superintendent. It provided:

"9.2 Subcontracting (Including Work Performed by Consultants)
The Contractor shall not without the written approval of the Superintendent, which approval shall not be unreasonably withheld –
(a)allow a subcontractor to assign a subcontract or any payment or any other right, benefit or interest thereunder; or
(b)subcontract or allow a subcontractor to subcontract any work described in Annexure Part A.

With a request for approval, the Contractor shall provide to the Superintendent particulars in writing of the work to be subcontracted and the name and the address of the proposed subcontractor.
The Contractor shall provide to the Superintendent other information which the Superintendent reasonably requests, including the proposed subcontract documents without prices.
Within 14 days of a request by the Contractor for approval, the Superintendent shall notify the Contractor of approval or the reasons why approval is not given.
Approval may be conditional upon the subcontract including –
(i)provision that the subcontractor shall not assign or subcontract without the consent in writing of the Contractor;
(ii)provisions which may be reasonably necessary to enable the Contractor to fulfil the Contractor's obligations to the Principal;
(iii)provision that if the Contract is terminated and upon the subcontractor being paid the sum certified by the superintendent as owing to the subcontractor, the Contractor and the subcontractor shall, after the Principal has done so, promptly execute a deed of novation in the form of Annexure Part D.
For the purposes of effecting such novation only, the Contractor hereby irrevocably appoints the Superintendent to be the Contractor's attorney with authority to execute such documents as are necessary to give effect to the novation and to bind the Contractor accordingly; and
(iv)where the subcontractor is a Consultant, provision that the subcontractor shall effect and maintain professional indemnity insurance on the same terms as are required of the Contractor under Clause 21."

Clause 9.3 immediately followed with the first words being "Approval to subcontract shall not relieve the Contractor from any liability or obligation under the Contract." The remainder of the clause, as counsel for the appellant pointed out, is a re-statement of the common law which provides for a contractor to be responsible for the acts and omissions of its subcontractors. It is clear that what the clause was designed to achieve was the removal of any concern that, simply because a superintendent had approved a subcontract, that might change in some way the primary liability of the appellant.

A subcontractor of the appellant could, within the Act, be a potential concurrent wrongdoer. The Act deals with the potential liability of concurrent wrongdoers. Clause 9.3 deals with the liability of subcontractors and states a position contrary to the Act. Clearly the clause deals with a matter to which the Act applies. In this context, I cannot see that his Honour made an error in determining to the limited extent that he did that cl 9.3 amounted to a "contracting out".

This ground of appeal should in my view fail.

Ground 1(c )(ii)

It is asserted his Honour erred in:

"failing to recognize or consider that the Civil Liability Act2002 (Tas) does not preclude proportionate liability defences under Part VIA of the Trade Practices Act1974 (Cth);".

This ground in my view must fail. It is clear that his Honour considered (see pars35 - 40) in the context of what was an apportionable claim, the sorts of claims which might fall for consideration under the Act. From the material to which he referred, it is plain his Honour was mindful that claims under various pieces of legislation, which included trade practices legislation could be brought within the meaning of "apportionable claims" in the Act. His Honour was also mindful that, at the early stage of proceedings with which he was dealing, he simply could not know precisely what sort of claims might arise, and that it could be up to an arbitrator to determine if a particular claim was an apportionable one.

Ground 1(c)(iii)

It is asserted that his Honour erred in:

"failing to recognize or consider that the evidence disclosed that there was a potential for additional parties or concurrent wrongdoers, other than subcontractors to the appellant, who might be joined to the proceedings under the Civil Liability Act2002 (Tas);".

This ground should also fail. His Honour did recognise that there was a potential for additional parties or concurrent wrongdoers other than subcontractors to the appellant. He said so at par46. The fact that there may be other potential concurrent wrongdoers, and that his Honour was unable on the evidence before him to determine whether named entities fell within this category, was a specific reason why he did not make a concluded finding about the effect of cl 9.3.

Ground 1(c)iiiA

It is asserted that his Honour erred in:

"failing to take account of identified complex legal issues which the arbitrator would be left to determine if a stay was granted;".

This ground should also fail. It asserts that his Honour failed to take account of certain matters. A reading of his Honour's judgment discloses that he identified a number of complex legal issues during its course, and was conscious of the fact that these issues might have to be dealt with by an arbitrator. There is no basis for asserting that his Honour did not consider this factor in the exercise of his discretion. In any event, as his Honour correctly pointed out at par50, the likelihood that questions of law might have to be considered by an arbitrator was no reason to refuse a stay, since the parties had committed questions of law to an arbitrator by their agreement.

Ground 1(c)iv

It is asserted that his Honour erred in:

"finding that an arbitrator has jurisdiction to apply the provisions of Part 9A of the Civil Liability Act2002 (Tas) and that the contract between the appellant and the first respondent and/or the second respondent contains an implied term to this effect;".

For the purpose of considering this ground, I have accepted Blow J's conclusion that cl 9.3 may not have amounted to an absolute "contracting out". His Honour accepted that both counsel were doubtful that the proportionate liability provisions in Pt9A applied in arbitration proceedings. However, he ultimately determined at par25 that:

"I therefore hold that the proportionate liability legislation would apply in arbitration proceedings between these parties if it were applicable in court proceedings between them, and to the same extent that it would apply in court proceedings between them."

His Honour's determination arose from his conclusion at par21 that:
"… a contract that contains a provision for the resolution of disputes by arbitration will ordinarily contain an implied term that 'the arbitrator is to have the authority to give the claimant such relief as would be available to him in a court of law having jurisdiction with respect to the subject matter'."

In other words, his Honour determined that, if either party were able to persuade an arbitrator that their dispute involved an apportionable claim within the meaning of the Act, then the provisions of the Act would apply. He recognized, in making this determination, that this would most likely result in the arbitrator having to interpret terms in the Act such as "concurrent wrongdoer", "claim for economic loss" and "failure to take reasonable care" and make findings as to their role in this dispute.

Neither party apparently made submissions about the possibility of an implied term as found by the learned judge, nor did they seek a finding as to whether proportionate liability provisions applied in arbitration proceedings. From the appellant's point of view, counsel identified the complex problems which might have to be considered by an arbitrator in relation to the Act, and left the matter at that. Now being faced with a specific finding by the learned judge, counsel for the appellant submits it is wrong.

His Honour commenced his consideration of the issue, about whether proportionate liability legislation could apply in an arbitration between these parties, by a consideration of some of the terms in the Act. In particular, he considered the scope of the word "court". He conceded that there were arguments both ways as to whether that term could include an arbitration, and whether the phrase "action for damages" could include arbitration proceedings in which monetary compensation was sought. He then went on to make the determination I have already referred to from par21, prefacing his determination with the words "Regardless of the meanings of 'tribunal' and 'action for damages', I consider …".

In reaching the conclusion that an implied term was warranted in the terms as identified, his Honour referred to two authorities in particular. These were Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 and Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture (1981) 146 CLR 206. In Francis' case, the court was required to consider whether an arbitrator had jurisdiction to determine a claim for damages in respect of a contravention of the Trade Practices Act 1974 (Cth), s52. In the Atkinson-Leighton case, the court was required to consider whether an arbitrator had power to award interest. The High Court determined that the arbitrator did have the power. The learned judge in the present case quoted passages from judgments of judges in the majority in the Atkinson-Leighton case. In Francis' case, at 167, Gleeson CJ, with whom Meagher and Sheller JJA agreed, said:

"In Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture (1981) 146 CLR 206 at 246, Mason J identified as the central question, which was resolved affirmatively, whether there was to be implied in the parties' submission to arbitration a term that the arbitrator is to have the authority to give the claimant such relief as would be available to him in a court of law having jurisdiction with respect to the subject matter. The same question is central to the present case, and is to be answered in the affirmative."

In Francis' case, the court was required to determine, having accepted that an arbitrator had power to deal with claims under trade practices legislation, whether the particular clause in the parties' contract, by which a dispute was to be referred to arbitration, was broad enough to encompass a trade practice claim. The court determined that the particular clause was broad enough. The complicating factor in the case was that any arbitration was to be conducted in London. The court was therefore required to address what it described as a subsidiary issue which was whether the claim of the party under Australian trade practices legislation was amenable to arbitration in London. The court concluded, following the words which I have quoted in the preceding paragraph, that there was no reason in principle why the whole dispute would not be amenable to arbitration in London. No issue arose about the potential for claims involving multiple parties. Nor was there any issue raised about the capacity of an English arbitrator to exercise specific powers under the relevant Australian legislation. Indeed Mason J said at 164:
"It is to be assumed, for the purposes of the argument, that a litigant has invoked the provisions of the Act in a forum which may properly give effect to them."
The Atkinson-Leighton case also did not involve any issue about the potential for claims involving multiple parties.

Blow J did not examine the terms of the clause providing for the reference to arbitration, that is cl 47 in the contract. He did not make any determination as to whether the clause was broad enough to encompass the application of proportionate liability legislation. Clause 47(1) provided:

"47.1    Notice of Dispute
If a dispute or difference (hereafter called a 'dispute') between the Contractor and the Principal arises in connection with the Contract or the subject matter thereof, including a dispute concerning –
(a)       a direction given by the Superintendent; or
(b)       a claim –
(i)        in tort;
(ii)       under statute;
(iii)for restitution based on unjust enrichment; or
(iv)for rectification or frustration,

then either party shall deliver by hand or send by certified mail to the other party and to the Superintendent a notice of dispute in writing adequately identifying and providing details of the dispute.
Notwithstanding the existence of a dispute, the Principal and the Contractor shall continue to perform the Contract and, subject to Clause 44, the Contractor shall continue with the work under the Contract and the Principal and the Contractor shall continue to comply with Clause 42.1."

The notice provided for by cl 47, subject to certain other preliminary steps which could be taken to resolve any dispute between the parties, would form the basis for the dispute which would ultimately go to arbitration.

Not surprisingly, counsel for the appellant submitted that cl 47 in the parties' contract was different and much narrower than that in Francis' case. He submitted that while the reference to a claim "under statute" would permit claims for misleading and deceptive conduct, it would not include a proportionate liability defence. Also not surprisingly, counsel for the respondents argued to the contrary. With respect, as to the breadth of the clause, regard should more properly be had to the opening words of the clause which refer to a dispute arising "in connection with the Contract or the subject matter thereof". Those words show an intention to include a wide range of matters which could be the subject of any dispute. There is nothing in the wording of the clause which suggests those words should be limited by the references to specific matters which could be included in matters the subject of dispute. In principle, the terms of the clause would not appear to exclude a proportionate liability defence.

While, in principle, there can be no argument with the manner in which his Honour interpreted the authorities to which he referred, there is, in my view, an issue with the application of those authorities to the present case. One consequence of the implication of the term framed by the learned judge is that an arbitrator, because he or she would have no power to join a third party to the arbitration proceedings, would be precluded from exercising at least one of the powers conferred by the Act, Pt9A, that is the power to join a potential concurrent wrongdoer. Can therefore an implied term such as that found to exist be implied in circumstances where the intended forum cannot give effect to the law sought to be invoked?

Because of this difficulty, this is in my view not a situation where, as suggested by counsel for the respondent, it was appropriate for the learned judge to simply ignore the principles contained in BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266. At 282, Lord Simon of Glaidsdale, who delivered the majority judgment of the Privy Council, said:

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express terms of the contract."

Applying those principles to the present case, while it might be said that conditions 4 and 5 are satisfied, it cannot be said that the remainder are. The appellant and the Council entered into a contract. There were no other parties to that contract. The parties agreed that any dispute between them would be referred to arbitration. As the learned judge pointed out, the parties must have anticipated, given the nature of the project in which they became involved, that there would be other parties involved in the project and that perhaps disputes might arise which involved those parties. Notwithstanding that, they still provided that any dispute between them should go to arbitration, with the attendant restriction that they would be the only parties to the arbitration, and hence potentially left to become involved in other disputes depending on the outcome of the arbitration.

There is no basis for any conclusion that the implied term found by his Honour was reasonable and equitable, that it was necessary to give business efficacy to the contract because the contract was ineffective without it, and that it was of a nature that it was so obvious that it went without saying. In my view, his Honour made an error when he found that an implied term existed. It follows that, insofar as his determination that proportionate liability provisions could apply in an arbitration between these parties is predicated upon the existence of that implied term, his Honour has made an error.

In pars17- 20 of his reasons, his Honour dealt briefly with some provisions of the Act. His Honour recognised that there were difficulties in interpreting the terminology in the Act so that its provisions would cover what was to be dealt with in an arbitration between these parties. While he did not determine whether, by reference to those concerns, the terminology could be interpreted as widely as it would need to be, he made brief reference to the Acts Interpretation Act 1931, s8A(1), and inferred that the provisions perhaps should be interpreted broadly. He did not make any definitive finding because he proceeded to rely on the existence of an implied term. The question remains as to whether the terms in the Act with which his Honour dealt could and should be interpreted to extend the operation of the Act to arbitration proceedings, absent any implied term.

It is not strictly necessary to reach a concluded view about whether the Act, Pt9A, applies generally to arbitrations. However, a number of factors exist which support the contention that it does not. There is nothing in the Act which expressly makes its terms applicable in arbitrations. There is no provision in the CA Act which makes the provisions of the Act applicable in arbitrations. An arbitration is dealt with by an arbitrator. At no point in the CA Act is a hearing conducted by an arbitrator likened to proceedings in a court. Throughout the Act, Pt9A, the term "court" is used. That word is defined in the Act to include a tribunal, and "in relation to a claim for damages, means any court or tribunal by or before which the claim falls to be determined." The term "damages" is defined to include any form of monetary compensation.

There is no definition of "tribunal" in the Act. Part 9A applies to "apportionable claims". The definitions of what are defined to be such claims both expressly refer to claims "in an action for damages". An arbitrator does not deal with an action. An arbitrator deals with a dispute. The Act, Pt9A, contemplates court proceedings involving a number of parties, and the court is empowered to join non-party concurrent wrongdoers. An arbitrator has no power to join parties not directly involved in the dispute being dealt with, although he or she can consolidate arbitrations with the consent of the parties. Further, an arbitrator's powers are derived from the agreement between the parties to send a matter to arbitration.

The Acts Interpretation Act, s8A(1) provides:
"(1) In the interpretation of a provision of an Act, an interpretation that promotes the purpose or object of the Act is to be preferred to an interpretation that does not promote the purpose or object."
The object of the Act is to "effect civil liability reforms". The second reading speech at the time Pt9A was introduced makes reference to the implementation of national reforms. Blow J set out in his reasons at par12 some paragraphs from a judgment of Finkelstein J in BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 2) [2008] FCA 1656 where his Honour dealt with the background to that national implementation. There is nothing in those comments suggestive of any intent to extend the provisions of the Act to arbitrations.

Another factor which might be relevant is the terms of legislation which preceded the Act. In the Wrongs Act 1952 (Tas), legislation which dealt with issues of contribution between parties to litigation, the words "court" and "action" are defined. Those definitions are in the following terms:

"'court', used in relation to a claim, means the court before which the claim falls to be determined, and, except in subsections (6) and (7) of section three, includes an arbitrator before whom the claim falls to be determined;
'action' includes a counter-claim and proceedings by way of arbitration;"

Both specifically refer to arbitration proceedings. It might be expected that had Parliament intended the Act to apply in arbitration proceedings, it might have said so. It has not, instead choosing consistently to use the term "court". I am not persuaded that, in all the circumstances, Parliament intended when it enacted Pt9A, that that part would apply to proceedings before an arbitrator.

Ground 1(c)(v)

It is asserted his Honour erred in:

"taking into consideration the background to the amendments to the Civil Liability Act2002 (Tas);"

This ground was not argued either in the appellant's counsel's written or oral submissions. What it appears to amount to is an assertion that his Honour erred in law in considering the background to the amendments to the Act which resulted in the introduction of Pt9A when considering its effect. There was no reason given as to why his Honour could not do this. What his Honour did at par12 of his reasons was refer to two paragraphs from the decision of Finkelstein J in the BHPB Freight case (supra) where Finkelstein J discussed the background to the introduction nationally of proportionate liability legislation. In the present case, his Honour specifically disregarded other material as to background which counsel would not agree he could consider.

I am unable to see any merit in this ground.

Ground 1(c)(vi) and (vii)

It is asserted his Honour erred in:

"taking into consideration the undesirability of proportionate liability legislation resulting in a shift away from arbitration as a means of dispute resolution; and
taking into consideration the limited resources of the courts; "

It is convenient to deal with these grounds together. As pleaded, the appellant does not assert that these considerations were irrelevant ones. Again, counsel for the appellant did not address these specific grounds in either his written or oral submissions. I can only assume that what is asserted is that in taking these matters into consideration, his Honour made erroneous determinations in point of law or erroneous findings of fact.

I have already set out his Honour's remarks at par52. There has been nothing put before the Court to demonstrate that these comments by his Honour were not valid comments or indeed that they were matters that he could not remark upon. Indeed, as counsel for the respondent pointed out, it is not uncommon for courts to consider the availability and desirability of a particular court dealing with a particular matter.

These grounds have no merit in my view.

Ground 1(c)(viii)

It is asserted his Honour erred in

"taking into consideration that the second respondent is the principal claimant and ought be entitled to proceed only against the appellant."

It is difficult to determine just what error is being asserted by this ground. His Honour identified at par53 that, although the appellant initiated the court proceedings, any proportionate liability considerations would only arise by virtue of a counterclaim by the respondent. The respondent had indicated it had no wish to pursue anyone other than the appellant. His Honour went on to say that stronger grounds for a refusal of a stay might exist if there were two or more sets of parallel proceedings. His Honour was clearly mindful of the background to this case, identifying a contrast with the circumstances in Tasmanian Pulp and Forest Holdings Lt v Woodhall Ltd (supra). I am unable to see that counsel has identified any error by this ground.

Outcome

A significant part of the argument put by the appellant was that this case potentially involved many complex and difficult questions of law, primarily involving the Act, and that it was not appropriate that such questions be left with an arbitrator. I have concluded that his Honour's finding that, by reference to an implied term the Act, Pt9A, could apply in any arbitration proceedings between the parties, was incorrect. I am also not persuaded that Pt9A could apply to an arbitration in any event. These conclusions, without more, are more favourable to a determination that there be a stay.

Further, the parties in this matter, as I have said before, agreed that any dispute between them could go to arbitration. They did so in the knowledge that they were entering into a significant and complex legal relationship, that that relationship would involve other parties carrying out some of the work needed to fulfil their contract, and that disputes might arise. They also did so against a background which already included the Act, Pt9A.

In all the circumstances, I am unable to be satisfied that there is any sufficient reason why this matter should not be referred to arbitration. I would dismiss the appeal.
File No FCA 917/2009

AQUAGENICS PTY LIMITED
v BREAK O'DAY COUNCIL, TASMANIAN WATER & SEWERAGE CORPORATION (NORTH REGION) PTY LTD

REASONS FOR JUDGMENT FULL COURT
WOOD J

10 May 2010

I have had the advantage of reading the reasons for judgment of Evans J and Tennant J. I would also dismiss the appeal. For the reasons stated by Evans J, I conclude that the proportionate liability provisions contained in the Civil Liability Act 2002, Pt 9A, do not apply to the action or the arbitration between the parties as they wholly contracted out of those provisions. I agree with the reasons of Evans J in their entirety and there is nothing I would wish to add.