Following the introduction of proportionate liability regimes
across Australia in the middle of last decade, a number of
important questions arose and remained undecided. One of those was
the question of whether the proportionate liability regimes would
apply to disputes that were the subject of arbitration.
The Full Court of the Supreme Court of Tasmania in the case of
Aquagenics Pty Ltd v Break O'Day Council  TASFC
3 touched on the question without reaching a final view.
The WA Supreme Court has determined the question (at least in
part) in the case of Curtin University of Technology v Woods
Bagot Pty Ltd  WASC 449. The parties were in arbitration
under the Commercial Arbitration Act 1985 (WA) (CAA) as a
consequence of a dispute that arose under a construction contract
entered into between them.
The court was called upon to answer the following question of
Does Part 1F of the Civil Liability Act 2002 (WA) (CLA)
apply to commercial arbitration proceedings pursuant to the
Justice Beech found that the regime did not apply to such
proceedings. He noted five reasons as the basis for his
The natural meaning of the language 'court',
'action for damages' and 'judgment' favoured the
principal's (Curtin) contention that the language did not
naturally encompass arbitrations.
The word 'court' in sections 5AN and 5AA does not
extend to an arbitrator.
The absence of a power of an arbitrator to join other
concurrent wrongdoers was indicative that Part 1F does not apply to
A proportionate liability regime may be achieved through an
implied term in the arbitration agreement. There was no need to
give the language in Part 1F an extended meaning to achieve this
Nothing in the entirety of Part 1F referred to arbitrations,
unlike past statutory regimes.
Justice Beech reserved a significant issue to the arbitration
itself, namely whether there was an implied or expressed term of
the arbitration agreement that could invoke the operation of Part
1F over the CLA.
In reaching his decision, Justice Beech discussed the primary
differences between arbitration and curial processes. Although he
accepted there was some doubt as to whether the phrase
'according to law' in section 22 of the CAA was limited to
meaning 'according to the principles of the common law' as
stated in South Australian Superannuation Fund Investment Trust
v Leighton Contractors Pty Ltd (1996) 66 SASR 509 he
considered the decision was not 'plainly wrong'.
It follows that section 22 of the CAA and its equivalents in
other jurisdictions cannot of itself make Part 1F of the CLA apply
to an arbitration.
This decision is significant for:
Contracting parties in determining what method of dispute
resolution should be included in contracts, particularly where that
party assumes a liability greater than it would ordinarily assume
such as a lead design consultant.
Professionals and professional indemnity insurers in that a
professional, having agreed to arbitrate a dispute, will be placed
in a significantly different position to that which exists where
the dispute is before a court or tribunal.
Legislators, as the decision has the potential to undermine the
intent of the legislation to limit a defendant's liability to
an amount proportionate to its degree of fault rather than its
financial capability to fund an award or judgment.
The decision will also be of interest to the proponents of
domestic arbitrations as this will be yet another reason why some
contracting parties will seek to avoid arbitration in order to
protect their rights under the proportionate liability regimes.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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