Aquagenics Pty Ltd v Break O'Day Council

Aquagenics Pty Ltd (the applicant) sought leave to appeal from a decision of the Supreme Court of Tasmania that dismissed its application to set aside an arbitration award made in favour of Break O'Day Council (the respondent). The dispute concerned a contract for the construction of a wastewater treatment plant, where Aquagenics alleged defects in the design and construction. The arbitration had proceeded on the basis that the proportionate liability provisions of the *Civil Liability Act 2002* (Tas) applied, which limited the Council's liability to its proportionate share of the loss.

The primary legal issues before the Full Court of the Supreme Court of Tasmania were whether the arbitration agreement effectively excluded the application of the proportionate liability provisions of the *Civil Liability Act 2002* (Tas), and consequently, whether the arbitrator had erred in law by applying those provisions. Aquagenics argued that the contract contained an implied term that it would be liable for the full extent of any loss caused by its breach, thereby contracting out of the proportionate liability regime.

The Full Court held that the arbitration clause in the contract did not operate to exclude the application of the *Civil Liability Act 2002* (Tas). The Court reasoned that the Act's provisions, including those relating to proportionate liability, were general in their application and would apply unless there was a clear and unambiguous intention to contract out. The Court found no such intention in the arbitration clause, which merely provided for the resolution of disputes by arbitration. The Court further held that the arbitrator had not erred in law by applying the proportionate liability provisions, as they were applicable to the dispute.

Leave to appeal was refused.