4 December 2012  David Levin QC

In an article published in 2009 [1] I explored the vexed question of whether the various proportionate liability regimes established under Commonwealth and State laws applied to arbitrations conducted under the various Commercial Arbitration Acts (CAAs).  I suggested that at some time it would be determined that proportionate liability established under the various apportionment regimes across the country would be found not to apply to the applicable CAA.

Shortly after publication of the article the Tasmanian Full Court published its judgment in Aquagenics Pty Ltd v Break O’Day Council, [2]In that decisionall three judges in the Full Court rejected the argument that, given the definition, there was a reasonable argument that ‘tribunal’ in the includes arbitrations. Evans J reasoned as follows: [3]

“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’.

Although the views of the Tasmanian Court on this issue were strictly obiter, the implication of the decision is that the proportionate liability regime enacted in Tasmania does not apply to commercial arbitrations commenced in that State.

The Supreme Court of W.A. has now addressed the issue directly, answering a question posed by the Claimant with the consent of the arbitrator pursuant to s.39 of the Commercial Arbitration Act 1985 (WA).  The question on which opinion was sought was as follows:

‘Does Part 1F of the Civil Liability Act 2002[3] apply to commercial arbitration proceedings pursuant to the (CAA)?’

Beech J analysed the proportionate liability provisions enacted in Part 1F, firstly by considering the text and language used.  In the Civil Liability Act 2002 (WA) the word ‘court’ is not defined.  The judge determined that the word did not ‘comfortably encompass arbitrators’[.4] He found that the location of the word in the statute was significant, in that where it appears in the substantive operative provision of s.5AK the phrase ‘apportionable claim’ is defined by reference to ‘actions for damages’, a description not naturally used to include a claim in an arbitration.[5] He favoured a construction of the word ‘court’ which was consistent across the statutory provisions and held that it was clear that in s.5AN the word did not include an arbitrator. [6]

He considered the philosophical basis of arbitration, being a voluntary process of dispute resolution unlike that in a curial setting.  He did not find attractive the argument raised, relying on s.22 of the CAA, that an arbitrator was required to make the determination ‘according to law’ and that this phrase imported Part 1F into arbitral proceedings.  He followed the decision of the Full Court of SA [7] which held that the word in s.22 meant ‘according to the principles of common law’. [8]

A further important consideration against the construction of Part 1F contended for by the Respondent was the inability of the arbitrator to compel joinder of parties alleged to be also responsible for the damage but who refused to consent to being subject to an arbitration.  The absence of a power to join a party risked causing injustice or hardship to a claimant, who might have to initiate other proceedings before a different tribunal and risk inconsistent outcomes. [9] Beech J also found support from differences between sections of the Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act 1947 (WA), as had Evans J and Tennent J in Aquagenics. [9].  In s.3 of that Act ‘action includes an arbitration’ and ‘court includes an arbitrator’.  Had Parliament intended the 2002 Act to apply to arbitrations, Beech J concluded that it would have included like provisions to those found in the 1947 legislation. [10]  

Finally Beech J found support from judicial views expressed obiter in other decisions in other States and answered the question posed in the negative, concluding that in Western Australia, at least, the proportionate liability regime did not apply to arbitrations by force of statute alone.

Perhaps now the issue is laid to rest unless the draft uniform proportionate provisions released by the Standing Council on Law and Justice (SCLJ) for comment in September 2011 [11] (now described as being under reconsideration in the light of submissions received) are implemented in their present form. ____________________________________________________________________________________