Wow, the physics engine is unlike anything i have ever seen before. At the moment there isn't much about Lagoa on the net, but it is publishjed by n artist from Ubisoft in Montreal. From the looks of it, it doesnt seem like a games engine. Heres his blog link, Thiago Costa

Lagoa Multiphysics 1.0 - Teaser from Thiago Costa on Vimeo.