"(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.

"(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.

"(iii)A failing 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.

"(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.

"(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.

"(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] HCA 27; (2009) 83 ALJR 951 at pars[25] and [26].

"(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] HCA 43; (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] VicRp 77; [1966] VR 570 at 574 - 575.

44 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.

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

46 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 Act 1986, s53

"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."

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

49 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.

50 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.

51 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.

52 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.

53 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.

54 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.

55 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.

56 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.

57 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).

1">58 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.

59 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.

60 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."

61 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..."

62 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] HCA 25; (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

63 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.

'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.

'partner' means a person who has entered into a partnership, within the meaning of the Partnership Act 1891, with another person."

64 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

"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 Act 2002 (Tas) in accordance with s3A of that Act;".

66 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'."

"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."

68 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.

69 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."

70 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.

71 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.

72 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.

73 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".

"failing to recognize 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);".

76 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.

"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 Act 2002 (Tas);".

78 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.

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

80 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.

"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 appellant and the first respondent and/or the second respondent contains an implied term to this effect;".

82 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.

83 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.

84 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 ...".

85 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] HCA 9; (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] HCA 9; (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."

86 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."

87 The Atkinson-Leighton case also did not involve any issue about the potential for claims involving multiple parties.

88 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.

89 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.

90 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?

91 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."

92 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.

93 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.

94 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.

95 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.

96 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.

97 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.

98 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.

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

100 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.

"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; "

103 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.

104 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.

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

107 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.

108 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.

109 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.

110 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.

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

111 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.