Curtin University of Technology v Woods Bagot Pty Ltd [2012] WASC

Introduction

The Western Australian Supreme Court recently considered whether the Western Australian proportionate liability regime, as provided for in part 1F of the Civil Liability Act 2002 (WA) (Civil Liability Act), applies to commercial arbitrations. Whilst the Court held that the proportionate liability regime does not apply to commercial arbitrations by force of the provisions within the Act itself, the court left open the possibility that arbitration agreements could expressly (or by implication) incorporate a term allowing the arbitrator to apply the principles of proportionate liability.

Background

Curtin University of Technology (Curtin University) and Woods Bagot Pty Ltd (Woods Bagot) were engaged in a dispute that arose from a construction contract. The contract required that any dispute between them be determined by way of arbitration. During the arbitration, Woods Bagot asserted that the arbitrator should apply the principles of proportionate liability as provided for by the Civil Liability Act. Curtin University argued that proportionate liability could not be invoked in arbitration proceedings.

Decision

The Supreme Court concluded that the proportionate liability regime did not apply to arbitrations for the following reasons:

  • the natural and ordinary meaning of the language used in part 1F of the Civil Liability Act, particularly the numerous references to ‘court’, ‘action’, ‘proceedings’, ‘judgment’ and ‘action for damages’, does not comfortably encompass arbitrations;
  • there is no applicable authority which extends the meaning of ‘court’ to include arbitrations;
  • unlike other Western Australian legislation, there is no provision expressly extending the operation of part 1F of the Civil Liability Act to arbitrations and it is open to reason that the parliament therefore did not intend to extend its operation in this way;
  • that arbitrators cannot facilitate the joinder of parties to a dispute other than by consent is a “weighty consideration in militating against” the argument that the proportionate liability regime applies to arbitration proceedings as this is a key power provided to the courts in the proportionate liability regime pursuant to section 5AN of the Civil Liability Act; and
  • section 22 of the Commercial Arbitration Act, requires that arbitrations be conducted according to law and the term “according to law”, in the absence of any authority to the contrary, means “according to the principles of common law” (as held in South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1996) 66 SASR 509).

The Supreme Court left unanswered whether proportionate liability could apply to a commercial arbitration in circumstances where this was provided for expressly or impliedly in the arbitration agreement between the parties.

Implications

The implementation of a uniform proportionate liability regime across the states and territories of Australia is on the agenda of the Standing Council on Law and Justice. In September 2011 the (then) Standing Committee of Attorneys-General released a Consultation Paper in which it recommended that the definition of “court” include arbitrations. Whether the model provisions adopt this definition remains to be seen.