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The law governing liability arising from personal injuries occurring in the course of recreational activities is exceedingly complex.1 One of the complexities is that statutory guarantees that services be provided with due care and skill under the Australian Consumer Law (ACL) can be excluded via s139A Competition and Consumer Act 2010 (Cth) (CCA), limited in its application to Commonwealth jurisdiction. Importantly, therefore, the exclusion provision is not contained in the ACL itself, nor are there equivalent provisions in the State FairTrading Acts or the CLAs.2 Photo copyright © Bill Madden nder previous consumer protection laws, and the most accurate legal descriptor of contract terms that exclusion clauses were effectively invalid, which exclude or limit liability is ‘exemption’ or ‘exception’ clauses). meant that someone injured in the course of Given the significant number of injuries that occur in the recreational activities always had the option to context of recreational activities, and the widespread use of sue for breach of consumer service guarantees.3 waivers, it is worth exploring when, precisely, such waivers UNow, if an exclusion clause is successfully incorporated are effective to deprive users of recreational services of their into a contract, such a clause will effectively preclude a rights to sue. Unless carefully drafted and appropriately negligence action. Therefore, recreational service providers provided to a customer, such clauses may not in fact exclude, can seek to minimise the risks of legal liability for injuries by avoid or limit the legal liability, even where the law permits means of contract terms that exclude or limit liability, that is, such exclusion clauses. waivers’ or ‘disclaimers’ as they are commonly called in the recreational sport and fitness industry (though the strict legal CONTRACT EXCLUSION ISSUES meanings of these terms differ to their more common usage Although the law of contract is critical if a recreational service » JULY/AUGUST2013 ISSUE 117 PRECEDENT 53 IINJURY LIABILITY IN RECREATIONAL ACTIVITIES provider seeks to use an exclusion clause against a legal claim exempt the service provider for liability for the fundamental for a personal injury, it shornld be noted that the ‘ordinary breach that had occurred. law of contract presents vairious significant obstacles’ to the Another example in which the defendants attempted to rely limitation or exclusion of Inability4 in general. on a badly drafted exclusion clause is Belna Pty Ltd \ Irwin.14 In this context, three issiues arise: In that case, Belna Pty Ltd (owner of Femwood Fitress (1) is the clause a part of tlhe contract; that is, has it been Centres) relied on a clause in the contract between lelna Pty incorporated as a term of tlhe contract (‘incorporation’)? Ltd and Ms Irwin, that stated: (2) does it effectively exclmde the liability that arises in the ‘It is my expressed interest in signing this agreement, to circumstance; that is, does the natural meaning of the clause release Femwood Fitness Centre, its Directors, Fnnchises, cover the circumstances (‘iinterpretation’)? Officers, Owners, Heirs and assigns from any and all claims (3) if the exclusion clause fhas been incorporated and for professional or general liability, which may ari;e as a excludes the liability in question, can an argument be made result of my participation, whether fault may be atributed that the contract is, as a ressult, unfair, and hence able to be to myself or its employees. I understand that I am totally challenged under consumed protection laws dealing with responsible for my own personal belongings whilst at the ‘unfair contracts’? Centre. I also understand that each member or guest shall be liable for any property damage and/or persona injury INCORPORATION while at the Centre.’15 The law on the incorporatiion of exclusion clauses into The judgment of Ipp JA devoted little time to the contracts is not straightforward. Where an ostensibly interpretation of this clause, in part because it failed on so contractual document has Ibeen signed, there is a presumption many fronts adequately to exclude liability. The use of the that its terms are binding, (even where the parties have not term ‘release’ was inappropriate: it is a technical legd term read the terms and conditions.5 For example, in Totman that generally applies to a plaintiff ‘releasing’ anothe' for v Pyramid Riding Stables Ltcd,6 an exclusion clause was a liability that has already occurred, rather than one that incorporated by the partiess’ signature in relation to a contract applies to exclusion of future liability that may occur. In for horse-riding services. other words, the statements: ‘I will exclude you frorr liability Nonetheless, an exclusion clause might not be binding for any breaches of your contract over the next two years' if the signed document is mot, on its face and from its or ‘I am releasing you from your liability for the breach of appearance, contractual in nature. For example, in Lormine your contract that occurred last week’ are meaningfu and Pty Ltd & Anor v Xuereb, a < document containing an exclusion clear statements; whereas a statement such as ‘I will release clause signed by the passemger of a cruise was held not to be you from any breaches of your contract in the future’ is contractual in intent.7 The document had been represented as not. Other difficulties included the use of the phrast ‘my being about ‘passenger nuimbers’. Further, an exclusion clause expressed interest’ which the court considered to be a concept might not be binding, or nnight not take effect to the full of ‘indeterminate meaning’;16 and the phrase ‘claimsfor extent of its terms, if there: has been any misrepresentation as professional or general liability’ did not necessarily encompass to its effect or meaning.8 negligence.17 The court agreed with the conclusion hat ‘[t] Where a contract has no)t been signed or, if it has, the he clause is not merely ambiguous, it is likely unintelligible’ term that is sought to be rtelied on is not part of that signed and that it was ‘so vague as to be meaningless’.18 Wlat is document, then further difficulties in incorporation arise. evident here is that the court sought to interpret the terms Incorporation by notice mtay be difficult,9 especially where the in the clause in a technical way, giving them their le*al, strict term is particularly harsh tand oppressive.10 This is illustrated or narrow meanings, even though it may have been drafted by cases concerning terms' on tickets, or on notices. (perhaps deliberately) using broad and loose language. INTERPRETATION UNFAIR CONTRACT TERMS Even if the clause is part o>f the contract, the courts have As part of the ACL, all jurisdictions now have provisions traditionally taken a cautious approach to interpreting that allow for remedies in relation to unfair contraci terms exclusion clauses widely. Iin theory, a clause of a contract can (Part 2-3 ACL). Specifically, an ‘unfair term of a corsumer exclude liability for almostt any type of breach (except for contract’ is void under s23 and compensation for lcs and reckless conduct under si.'39A CCA) as long as its natural other remedial orders can be sought (see, for example, s237 meaning encompasses suclh breach or conduct.11 As a and s239 ACL). Such a term must be contained in ; ‘standard practical matter, however, it would need to be well drafted form contract’ under s 27. Any contract that is allegd to and unambiguously expressed. This is all the more so where be a standard form contract is presumed to be so (s? 7(1)). the contract is one entered! into by a client or consumer Given the sort of factors that are relevant to determning and a business entity. Clautses are not effective to exclude whether a contract is a standard form contract (s272)), the liability for negligence, or for a serious breach of contract, vast majority of recreational service contracts are lilely to be unless the words unambiguously encompass such conduct.12 standard form consumer contracts. Thus, in Mouritz v Hegeduss,13 a clause stating that a service The question that thus arises is: even where an exdusion provider would not be helld ‘responsible in any way’ in case of clause is permitted by sl39A CCA, can an injured consumer accident, damage or any other mishap, was not sufficient to argue that the clause is an ‘unfair term’ under Part -3 ACL? 54 PRECEDENT ISSUE 117 JULY/AlUGUST 2013 INJURY LIABILITY IN RECREATIONAL ACTIVITIES Taking s24 first: fact that a contract contains an exclusion clause does not ‘24 Meaning of unfair render it ‘unjust’: ‘there are legitimate commercial reasons’ for (1) A term of a consumer contract is unfair if: including such a provision.21 Nonetheless, Mahoney P focused (a) it would cause a significant imbalance in the parties’ both on the substantively unfair operation of the clause (its rights and obligations arising under the contract; and width) and factors such as that the diocument was tendered (b) it is not reasonably necessary in order to protect without explanation or expectation t hat the customer would the legitimate interests of the party who would be read it.22 Interestingly, the Court reached the conclusion that advantaged by the term; and the exclusion clause was unjust even though relevant factors (c) it would cause detriment (whether financial or such as those in paras (a) and (i) of s 2 5 (l) ACL (set out otherwise) to a party if it were to be applied or relied above) were not in the Contracts Reviiew Act. on. That decision can be compared wi th Gowan v Hardie,23 (2) In determining whether a term of a consumer contract where the existence of a wide-ranging exclusion clause was is unfair under subsection (1), a court may take into not a factor that on its own rendered! the contract ‘unjust’ in account such matters as it thinks relevant, but must take the circumstances (a trainee parachu tist suffering injury from into account the following: defendant’s negligence).

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