Contracting out



The various proportionate liability regimes are not uniform. In New South Wales, Western Australia and Tasmania there is an express ability to contract out of proportionate liability. Parties may include in their construction contract a clause which stipulates that the contract is not governed by proportionate liability. Absent an express provision contracting out, a court may find that the parties to a construction contract have contracted out of the proportionate liability regime.

In Queensland, the legislation prohibits contracting out by the parties. The legislation in the other regimes is silent concerning contracting out, which suggests that it is not permitted.

CASE STUDY



Aquagenics Pty Ltd v Break O’Day Council (No 2)

[2009] TASSC 89



Facts


  • Aquagenics contracted with the Council to upgrade and commission its waste water treatment plant.
  • Prior to completion of the works, the Council took the work out of Aquagenics' hands and gave it to a third party subcontractor, alleging that Aquagenics had committed a substantial breach.
  • Aquagenics sued for damages on the basis of repudiation. The Council sought a stay of proceedings so that the matter could be referred to arbitration.
  • Aquagenics argued that a stay should not be granted due to the complex questions likely to arise regarding proportionate liability.
  • The Council argued that the Civil Liability Act 2002 (NSW) (Act) did not apply as the parties had contracted out if it.

Result


  • Full Court granted the stay of proceedings on the basis that the parties had contracted out of the proportionate liability provisions despite there being no express reference to the Act in the contract. It was clear on the terms of the contract that the Council could pursue Aquagenics alone in relation to contractual claims.

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