2006 1(1) Australian and New Zealand Sports Law Journal 7

Deborah Healey*

A foundation of the sweeping civil liability amendments in Australia is the idea of personal responsibility for optional recreational activities. The civil liability amendments (“CLA amendments”) are not uniform. They create new rules for dealing with risk, which change and clarify the rules on the nature and impact of warnings. They aim to make it easier to enforce exclusions and, in respect of some states, they create special, more restrictive rules for recovery of compensation in respect of injuries incurred in recreational activities1.

8 Warnings and Exclusions Healey

Both tort and contract have the capacity to provide a remedy where injury has been suffered in a recreational context.2 There is a real tension between the philosophy behind the two legal areas in the context of exclusion or waiver of liability.

Tort law is based on a duty not to cause injury and the concept of responsibility for wrongful actions, while contract law is based on the idea of freedom of contract, with any duty arising because of the agreement between the parties. In principle the parties should be able to contract to exclude all responsibility. A contractual relationship does not, however, preclude an action in tort, and, aside from its place as part of the tort scenario, a contractual relationship will only be relevant to the tort claim if the contract on its true construction has the effect of excluding or restricting the tortious claim. This will occur when an exclusion clause in the contract effectively excludes liability for negligence.

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Warning signs only serve a purpose if they are likely to inform a person of something that the person does not already know, or remind the person of something they may have forgotten or overlooked. The obviousness of the danger is important in deciding whether or not a warning is required.5  The erection of a misleading warning sign may create just as many or more problems than no sign.6 Recent decisions on the duty to warn by signage exhibit a trend towards denial of such a duty, although there are some exceptions.7 The High Court has reiterated, however, that whether a warning sign is necessary will depend on all of the circumstances.8

Enforceability of an exclusion clause at common law depends upon whether the clause is incorporated into the contract and whether it is drafted in a way which clearly covers the situation faced by the person seeking to invoke it. Where a document is signed, a person may be bound by the exclusion whether or not he or she has read it.9 The party affected by the clause must have notice of it at the time of signing the contract or at the point of entry when the money is paid. A notice posted inside a stadium or dressing room will not be sufficient, as it will be too late. Previous dealings between the parties may complicate the issue - a regular user of premises may be taken to have accepted such a term. Where documents are not signed the courts will consider whether reasonable notice of the terms has been given.10

3 Rootes v Shelton (1967) 116 CLR 383; see also Fitness First Australia Pty Ltd v Vittenberg [2005] NSWCA

4 See Romeo v Conservation Commission of NT (1998) 151 ALR 263; Vairy v Wyong Shire Council [2005]

HCA 62 (21 October 2005); Shorten v Grafton District Golf Club Ltd [2000] NSWCA 58.

5 Vairy v Wyong Shire Council ,op cit, per Gleeson CJ and Kirby J at para 6 and 7.

7 See, for example, Romeo v Conservation Commission of NT (1998) 151 ALR 263; Nagle v Rottnest Island

Authority (1993) 177 CLR 423 cf Prast v Town of Cottesloe (2000) WAR 474;Vairy v Wyong Shire Council, op

cit; Ballerini v Berrigan Shire Council & Anor. [2005] VSCA 159 (22 June 2005).

8 See Vairey v Wyong Shire Council, op cit, at para 7 and 8 per Gleeson and Kirby JJ; cf Callinan and Heydon

9 L’Estrange v Graucob [1934] 2 KB 394; D H Hill & Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749;

Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors [2004] HCA 52, 11 November 2004.

10 Warnings and Exclusions Healey

If the clause forms part of the agreement between the parties it will be interpreted having regard to its ordinary and natural meaning, read in the context of the contract as a whole, and giving due weight to the context in which it is contained. Ambiguities will be construed against those seeking to rely on the clause.11

Contracts with children and others who lack capacity at law to contract are generally only binding if for their benefit, and it is unlikely that a contractual term excluding liability for personal injury is for a child’s benefit, on its own or in the context of the overall agreement.12

In Bright v Sampson & Duncan Enterprises Pty Ltd13 a man claimed damages arising from a skating accident. He went to the rink with friends and paid for his admission. A sign at the door stated:

“No responsibility is accepted by the management for any injuries to patrons. Skating is at the patron’s own risk, and is a condition of entry.”

10 Thornton v Shoe Lane Parking Co Ltd [1971] 2 WLR 585.

11 Darlington Futures Ltd v Delco (1986) 161 CLR 500; Toll (FGCT) Pty Limited v Alphapharm Pty Limited &

Ors., op cit.

12 See also Minors (Property and Contracts) Act 1970(NSW), which replaces the common law in NSW. Other

states adopt the common law position with some modifications: see Supreme Court Act 1986 (Vic), Div 4 of

Part V; Minors Contracts (Miscellaneous Provisions) Act 1979 (SA).

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Gowan v Hardie14 involved a parachuting accident caused by the pilot of a drop plane who flew too close to the descending parachutist, causing her to panic. As a result, the parachutist fell more quickly and was injured. Identical and extensive exclusion clauses were contained in documents provided by the parachute training school and by the owners of the Parachute Association, both of which were involved in training the woman, setting up and conducting the jump. The clauses explained the dangers of the procedure, and expressly absolved all parties, their members, servants and agents from liability for injury.

Neil v Fallon was a case where a body builder unsuccessfully sued a gym and  its employees for incorrect training methods. He had a pre-existing injury, and he informed the gym and trainers of it prior to contracting and during the several weeks in which he participated in the training. He signed a document which absolved the gym and its trainers from liability. The injury was caused by negligent instruction of a trainer. The court enforced the exclusion, despite the fact that another employee had mis-described the content and the purpose of the clause, and despite there being processes in place for identifying and dealing with “at risk” participants which were not followed.15

In John Dorahy’s Fitness Centre P/L v Buchanan a woman joined a gym, paid a fee and signed a document which was not able to be found for the hearing.

14 Court of Appeal (NSW) (Clarke, Meagher and Handley JJA) 8 November 1991; see also Palmer and

Jamieson t/as Byron Bay Skydiving Centre v Griffin Court of Appeal (NSW) (Meagher, Handley JJA; Brownie

12 Warnings and Exclusions Healey

The contract also contained an acknowledgement by the member that the facilities were used at the member’s own risk. Mahoney JA found that the exclusion clause was effective to exclude liability for negligence but not for breach of contract when the ambiguity in the clause was construed against the party seeking to enforce it. This was despite the fact that the claim was for personal injury.16

In Le Mans Grand Prix Circuits Pty Ltd v Iliadis a person went to a go kart track for a corporate promotion. He signed a document described by organisers as a registration form in a rush. He thought that it would give him a licence to drive a go kart, and also that it was for marketing purposes. He was injured and took action for breach of s52 of the Trade Practices Act 1974(Cth) (Misleading or deceptive conduct), the equivalent s11 of the Fair Trading Act 1985 (Vic), and the tort of negligence. The Court found that there was no contract of hire between the respondent and the victim and there was no evidence that any of the participants were referred to, or asked to read the exclusion clause. The clause, therefore, did not bind the victim.17

In each of these cases, the courts took the traditional approach to incorporation and interpretation of clauses: strict construction and construction contra proferentem (an exclusion clause) - against the person seeking to rely on them. A number of judges seemed reluctant in principle to enforce the clauses as against the injured participant. The cases in which they were enforced related in general to more risky activities.

upheld a claim that the contract was unjust under the Contracts Review Act 1980 (NSW) if he had found that the

found the clause unjust within the meaning of the Contracts Review Act 1980 (NSW) cf Gowan v Hardie op cit

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The background to the extensive amendments to civil liability laws (“CLA amendments”) in Australia, including the difficulties with obtaining insurance and the detailed Ipp Report, is well known and documented and will not be discussed further here18.

The Ipp Report emphasised widespread support in the community for the idea that people who voluntarily participate in recreational activities as participants or officials like referees should take personal responsibility.19

The Ipp Report concluded that a principled reason could be given for treating recreational activities and services as a special category for the purposes of personal injury law, on the basis that people who participate in the activities “…often do so voluntarily and wholly or predominantly for self-regarding reasons.” 20

Ultimately, each state and territory considered its own CLA amendments. The Commonwealth amended the Trade Practices Act (“TPA”) to support the recommended state CLA amendments.21

Under CLA amendments in most states the position in relation to acceptance of risks is modified for all purposes.22 Some additional modifications have been made in some states to cover recreational activity. The recreational activity amendments contain both general and specific provisions which impact upon liability in sport and recreation and impact upon the likelihood of successful use of warnings and waivers.

personal injuries liability reforms” (2005) 13 Torts Law Journal 203; McDonald, B “Legislative Intervention in

Sydney Law Review 443; Commonwealth of Australia, Review of the Law of Negligence Report, Canberra, 2002

21 The amendments relating to the Civil Liability Act 2002 (NSW) (“CLA NSW”) Divisions 4 and 5,

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Categorisation of a risk as obvious, for example, will mean there is no need to warn in most states. Categorisation of risk as inherent means that there is no potential for liability in most states.23 In these circumstances some certainty of analysis would assist organisations and operators to categorise and deal with their risk.

There is no liability in negligence for inherent risks24

“An inherent risk of a situation or activity is a risk that could not be removed or avoided by the exercise of reasonable care. An inherent risk may be obvious, but equally may not be.”25

23 Wrongs Act 1958 (Vic) provides that this provision does not exclude liability in connection with a duty to

24 CLA NSW s5I; Civil Liability Act 2003 (Qld) (“CLA Q”) , s16; Wrongs Act 1958 (Vic) (“WA V”) s55; Civil

Liability Act 2002 (WA) (“CLA WA”) s5P; Civil Liability Act 1936 (SA) s39. WA V does not mention the

25 Ipp Report, op cit at para. 4.14, citing Rootes v Shelton (1967) 116 CLR 383.

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What constitutes an inherent risk in particular circumstances may prove to be more problematical.26  There are few CLA cases to date on the meaning of inherent risk. In one case under the CLA (NSW), for example, the judge talked of the steps which could be taken to alleviate inherent risks of BMX cycling, which under the CLA amendments appears to be a contradiction in terms.27

In the context of a whale watching expedition advertised as gentle activity for a family, the swamping of the deck by a wave due to the negligence of the ship’s captain was not an inherent risk of the activity within s5I of CLA NSW. On the contrary, and in a more logical decision, the court found that want of reasonable care and skill caused the injuries, so that inherent risk could not have been involved.28

There is no duty to warn of an obvious risk 29

Obvious risk is a well accepted concept at common law. As Kirby J stated in Romeo v Conservation Commission of Northern Territory:30

While later judicial comment has confirmed that this statement was not a proposition of law,31 it succinctly explains the rationale for the lack of duty to warn of an obvious risk. Important issues have arisen as to whether obvious risk is relevant to the existence or breach of duty, and importance of obvious risk to the question of breach.32

Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460.

27 Rigby v Shellharbour City Council & Anor [2005] NSWSC 86 per Dunford J.

28 Lormine Pty Ltd & Anor.v Xuereb [2006] NSWCA 200.

31 Woods v Multi-Sport Holdings Pty Ltd, op cit, per Gleeson J); Hoyts Pty Ltd v Burns [2003]77 ALJR 1934.; c

32 See Romeo v Conservation Commission of Northern Territory, op cit, cf Woods v Multi-Sport Holdings, op

cit; Vairey v Wyong Shire Council, op cit.

16 Warnings and Exclusions Healey

The High Court itself has divided on the categorisation of obvious risk.  In Woods v Multi-Sport Holdings Pty Ltd 34 the High Court Justices made a number of comments in their individual assessments of particular risks in the context of eye injury in a game of indoor cricket. Gleeson CJ described indoor cricket as an inherently risky activity. In relation to whether a warning should have been given about the risks of eye injury, his Honour agreed with the trial judge that the risk was so obvious that no warning was required. In reaching this conclusion his Honour focussed on eye injury, rather than injury generally.

“…under current law failure to guard against an obvious risk may be negligent if the risk is not an inherent one. This makes it clear that the effect of Recommendation 11 may be to relieve a person of liability for failure to remove or avoid a risk that could have been removed or avoided by the exercise of reasonable care on their part… In other words accept a risk that another person will be negligent.”35

33 Canterbury Municipal Council v Taylor & Ors.[2002] NSWCA 24.

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An “obvious risk” is defined under CLA amendments as a risk which would be obvious to a reasonable person or is patent or a matter of common knowledge.  A risk can be obvious event though it has a low probability of occurring or if it is not prominent, conspicuous or physically observable.36 Two state CLA amendments contain additional clarification. Queensland and Victoria provide, in addition to the standard definition, that a risk from a thing is not obvious “… if it is created because of a failure on the part of a person to properly maintain, replace, prepare or care for the thing unless the failure itself is an obvious risk”.37

Injured persons are presumed to be aware of obvious risks unless they prove on the balance of probabilities that they were not aware of the risk. A person is presumed to be aware of the risk even if he or she is aware of the type or kind of risk even if the person is not aware of the precise nature, extent or manner of occurrence of the risk.38

The amendments thus establish a rebuttable presumption that a person suffering harm is presumed to be aware of any obvious risks of harm. Knowledge need not be specific to the risk but exists where the person has a general knowledge of the risk if not the precise risk.39 Clearly the identification of the relevant risk for this purpose will have a great bearing on the application of the provision.

The Victorian provisions are slightly different. If the defence of volenti is raised and the risk of harm is obvious the person is presumed to have been aware of the risk unless he or she proves on the balance of probabilities that he or she was not aware of the risk.40 This means that volenti must be raised as a defence before the presumption applies. A duty to warn of an obvious risk which would arise at common law expressly exists.

Ltd v Hutton-Potts [2006] NSWCA 136. These provisions mirror the views of the Ipp Report, op cit, at para

18 Warnings and Exclusions Healey

There are exceptions to the application of these provisions in most of the amendments- they do not generally apply to circumstances where the plaintiff has requested advice or information about the risk from the plaintiff, or the warning is required by law, or the defendant is a professional.41

• A mother travelling on a “whale watching” vessel with her family was severely injured when the vessel was swamped by a wave. The brochure promoting the activity promised gentle activity, so the court found that the risk was not “obvious”.42

• An experienced child rider competing in motocross was struck by a following vehicle in circumstances where the Court of Appeal agreed that an insufficient number of marshals had been appointed and positioned on the track for the race. General practice was that marshals with flags were positioned at curves and jumps and warned following riders if a fall had occurred. The Court found that the injury would have been avoided if a marshal had been there using a flag. Bryson J, (using language which was a little imprecise as to the distinction between “inherent” and “obvious” risks), distinguished between a collision by an immediately following rider, which could not have been prevented, and collision after a significant interval which could have been prevented. The latter would likely fit the definition of an “obvious risk” as opposed to an inherent risk which is illustrated by the first situation.43

• A seven year old climbed onto a trampoline wearing roller skates early in the morning while staying at the home of a friend. She fell off and was injured. Counsel argued that the concept of obvious risk was to be judged as though the child was an adult, and the concept of reasonableness was to be applied to a generalised reasonable person. Bryson JA44 disagreed with this proposition, stating that the position of the person suffering the harm was relevant. Here this encompassed a child of seven with no previous experience in the use of a trampoline or roller skates who chose to get up early and play unsupervised.45

42 Lormine Pty Ltd v Xuereb [2006] NSWCA 200 (Mason P, McColl JA, Hunt AJA) 16 February 2006.

43 Macarthur Districts Motor Cycle Sportsmen Incorporated & Ors v Ardizzone [2004] NSWCA 20 May 2004

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• A man who was the driver on a night kangaroo spotlighting and shooting expedition with friends was accidentally shot in the leg. He was not there to shoot. His friend left the car and returned with a loaded gun. The friend ignored requests for safe behaviour prior to the accident. The gun went off. A majority of the judges (Ipp and Basten JJA) found that the risk which materialised was not an obvious risk of the activity. Ipp JA decided that the activity for the purposes of risk consideration was that of sitting in the car knowing that from time to time shooters might enter the car with guns which may or may not be loaded. Basten JA determined that the risk which materialised was obvious, but that it was not an “obvious risk of a dangerous activity” for other purposes. Tobias JA (dissenting on this point) thought that the risk of the pistol being discharged in light of assurances about safety would be obvious only if there was reason for the victim to regard the assurances about safety as unreliable. In this case it was an obvious risk.46

Following the detailed discussion of obvious risk in Fallas v Mourlas, the Court of Appeal considered the issue again in reversing the decision of the trial judge in a case involving a teenager diving from a bridge. The Dederer case (Great Lakes Shire Council v Dederer & Anor; Roads & Traffic Authority of NSW v Dederer & Anor)47 involved a more simple factual setting than Fallas v Mourlas. A 14 year old boy diving from a bridge at which jumping and diving were common was catastrophically injured. The bridge was routinely used for jumping and diving despite a “no diving” pictograph sign displayed at each end. 

The trial judge found that the obvious risk in this context was a reference to the risk of harm i.e. the injury resulting from the danger. Here the risk was not obvious when judged with respect to the position of a 14 year old seeing a large number of people jumping off the bridge without attempt by anyone to stop them.

On appeal, Ipp JA (with whom Handley and Tobias JJA agreed on this point)  found that the risk in the circumstances as an obvious risk of a dangerous recreational activity and hence there was no duty of care owed by the Council.48

45 Doubleday v Kelly [2005] NSWCA 151 (Bryson JA; Young CJ in Eq and Hunt AJA) 12 May 2005.

46 Fallas v Mourlas, op cit.

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His Honour cited from the judgment of Tobias JA in Fallas v Mourlas49, to the effect that the test for determining this issue was to look at the particular circumstances in which the victim suffered harm and ask whether the risk would have been obvious to a person in his position. In this case, Ipp JA found that the risk in question was the risk of serious spinal injury flowing from the act of diving. Whether that risk was obvious had to be tested looking objectively at the position of a notional reasonable 14 and a half year old with the knowledge of the area and conditions possessed by the victim at the time.

His Honour concluded that the findings fell within the meaning of s5G (2) – that the person was “…aware of the type or kind of the risk, even if the person was not aware of the precise nature, extent or manner of occurrence of the risk”.

The cases indicate that the issue of “obvious risk” is an objective consideration based on the reasonable person in the circumstances of the victim.50 This is not a surprise but, as with the common law, the judges are far from unanimous in their consideration of the same circumstances - see particularly the individual judges in Fallas v Mourlas, and the reversal of the trial judge in Dederer, both discussed in detail above.

49 Fallas v Mourlas op cit at para 98. Ipp JA also referred to the judgment of Tobias JA in Wyong Shire Council

v Vairy; Mulligan v Coffs Harbour City Council (2004) ATR 81-754 at p 65,892 to similar effect.

50 Macarthur Districts Motor Cycle Sportsmen Inc , op cit; Dederer, op cit.

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In Fallas v Mourlas52 Ipp JA distinguished between obvious risk of an activity and gross negligence, and said that the latter was not likely to have been accepted by a plaintiff. This is particularly interesting in light of his influence in the process of reform and the fact that the issue of gross negligence is not canvassed at all in the Ipp Review. His Honour suggests that it has some significance in the context of analysis of what is an obvious risk, the implication being that the risk of gross negligence cannot be an obvious risk.

Some states have included consideration of gross negligence in their approach to CLA amendments, but most have not53.

Determination of risk cannot take place without pinpointing the relevant activity. Some judges have taken a broad approach to identification of the relevant activity and thus the risk, while others have focused on a more specific aspect of an activity in considering the issue.54 One judge considered the relevant risk to be the risk of the specific harm which was suffered, although this was overturned on appeal and a broader approach taken.55

A number of the CLA amendments are specifically aimed at recreational activities.56

54 See for example at common law different judges in Woods v Multi-Sport Holdings Pty Ltd, op cit; Fallas v

Mourlas, op cit; Mikronis v Adams [2004] 1 DCLR (NSW) Dodd DCJ.

55 Dederer Roads and Traffic Authority, op cit; Great Lakes Shire Council v Dederer & Anor, op cit.

22 Warnings and Exclusions Healey

A “recreational activity” is defined by the amendments in each state except Victoria very broadly.57 In NSW, for example, it includes:

•     any sport, whether or not an organised activity;

•     any pursuit or activity engaged in for enjoyment, relaxation or leisure; and

•     any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people engage in sport or any pursuit or activity for enjoyment, relaxation or leisure.58

This range of activities is very broad and contains many activities which have no particular risk profile. It appears to include walking (possibly as long as it is not to work), shopping if for enjoyment, going to the opera, dancing, swimming laps, as well as the more risky pastimes which were the target of the legislation.59 CLA NSW was drafted to give the broadest possible exclusions of liability in a recreational context.

A “dangerous recreational activity” means a recreational activity that involves a significant risk of physical harm in NSW and WA, but a “significant degree of risk of physical harm” in Queensland and Tasmania.60.It is not clear whether “significant” in this context will be measured by way of likelihood of injury or severity of outcome, although the placement of the words suggests the former.

Not all jurisdictions draw the distinction between “recreational activities” and “dangerous recreational activities”. Those which do draw the distinction impose strict limits on the latter claims.61

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• The judge in Dederer62, the case involving a young boy seriously injured when diving from a bridge into a river, found that diving from the bridge was a dangerous recreational activity without much further discussion.63

• A whale watching expedition described as gentle and suitable for a family was not a dangerous recreational activity.64

• Trail riding, not horse riding, was identified as the activity in a situation relating to a horse riding accident. Trail riding was a recreational activity but not a dangerous recreational activity.65

• A person run over by a speed boat while spear fishing in a well-known fishing spot was not engaged in a dangerous recreational activity.66

Falvo v Australian Oztag Sports Association & Anor.67 involved the sport of Oztag, a ball sport similar to rugby where there is no tackling and a participant is “caught” when a tag is pulled from his or her shorts by an opposing player. A participant was injured playing the sport on a local field which was topped up with sand where grass had worn away. The case involved a decision by Ipp JA, one of the authors of the influential Ipp Report68. His Honour69 stated that the definition of “dangerous recreational activity” in CLA NSW s5K had to be read “as a whole”, giving due weight to the word “dangerous”, and with the word “significant” bearing on both “risk” and “physical harm”. His Honour noted that neither an activity involving a significant risk of insignificant harm, nor an activity where the risk was slight even if the harm would be catastrophic, would fall within the definition. This activity involved everyday risks attendant on games which involve a degree of athleticism, with no tackling and no hard ball, so it was not a dangerous recreational activity.70

64 Lormine & Ors. v Xuereb, op cit.

65 Mikronis v Adams, op cit.

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A more complex set of circumstances and analysis was occurred in Fallas v Mourlas, the case involving spotlight shooting of kangaroos where the victim, Mourlas, was not a shooter but stayed in the car.71 In the New South Wales Court of Appeal, Ipp and Tobias JJA found that Mourlas had engaged in a “dangerous recreational activity”. Ipp and Basten JJA found that the risk that materialised was not an “obvious risk” of the dangerous recreational activity. The reasoning of each judge was different.

Ipp JA stated that whether an activity is “dangerous”, and that “significant” in the s5K definition is an objective decision, on a standard somewhere between trivial risk and risk likely to materialise.72 His Honour looked at the interaction between risk concepts in s5K and s 5L, distinguishing between a “significant risk” and an “obvious risk” in relation to the s5K definition. Factors such as time, place, competence, age, sobriety, equipment and even the weather may make dangerous a recreational activity which would not otherwise involve a risk of harm, and to ignore such factors would lead to unreliable, unfair and unjust outcomes. While a cliff walk in daytime may be safe, it may be dangerous at night. The relevant activity was the limited activity of sitting in the vehicle holding the spotlight for shooters outside, on the basis that at various times the shooters may enter the vehicle with guns which were or were not loaded. His Honour found that there was a significant risk that another man while getting in or out of the vehicle would handle a loaded weapon in a negligent manner, and hence it was a “dangerous recreational activity”. The injury did not, however, result from an obvious risk of that activity.73

Tobias JA agreed that the activity was a dangerous recreational activity, and that the injury resulted from an obvious risk of a dangerous recreational activity.74.

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•     On the basis of comments made by the court in Falvo, it seems that sports involving tackling, or a risk of being struck by a hard ball, are likely to fall within the definition of “dangerous recreational activity.”

•     On the basis of Ipp JA in Fallas, particular activities and circumstances resulting in the harm are relevant to determining whether an activity is dangerous.

•     Whether there is an essential relationship between the obvious risk and the risk which makes an activity a dangerous recreational activity is unclear.

•     The place of gross negligence in NSW is unclear.

Following the amendments, in NSW and WA, a defendant does not owe a duty of care in respect of a recreational activity if it is the subject of a risk warning 75

26 Warnings and Exclusions Healey

In Dederer, the case involving a 14 year old boy diving from a bridge with catastrophic results, there were “no diving” pictographs posted at each end of the bridge in clear view of all potential jumpers. Dunford J found that these were not warning signs and in fact found that the defendants were in breach of their duty by failing to put up warning signs as the prohibition signs which had been posted were clearly ineffective. On appeal, in the context of overturning the trial judge’s decision and finding that the risk in the circumstances was obvious, Ipp JA (with whom Handley and Tobias JJA agreed on this point) his Honour referred to a number of common law cases relating to warning signs76, and concluded:

“… the pictograph sign went so far as to prohibit swimmers from entering the water head first. It was generally ineffective. But it was a sign that, in my view, would have warned a reasonable fourteen and a half year old that diving into the water was dangerous.”77

76 Nagle v Rottnest Island Authority, op cit; Vairy v Wyong Shire Council (High Court per Gleeson CJ and Kirby J.) op cit.

77 Dederer, op cit, at para 170.

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In Mikronis v Adams78 the plaintiff fell off the horse on the trail ride when the saddle slipped because it was not properly secured. The activity was found to be a “recreational activity” (although not a “dangerous recreational activity”) and the Judge identified the risk as “the risk of the saddle slipping”79.

“… the warning can be put on a sign that the person never sees or reads before engaging in the activity but will only be given to the person if it is reasonably likely that the person will be warned of the risk. A clear example would be if the person is told to read a sign and does not do so. There will be situations that are not so clear.”80

A sign had been fixed to the stable walls stating that horse riding was a dangerous activity, that all care and precautions were taken, but the activity was undertaken at a person’s own risk. Safety equipment was necessary for those under 18, as was a parent’s signature. The Judge found that even if the wording were sufficient, there was no evidence that the plaintiff had seen the sign or that her attention was directed to it. The Judge concluded that anyone could be forgiven for missing or ignoring the sign either because it was not seen or because it did not appear to be a warning. His Honour clearly found that the sign was not one in which was likely to result in the plaintiff being warned81.

28 Warnings and Exclusions Healey

“…if all care and precautions had been taken [the saddle] would have been properly fastened. If it had been properly fastened it would not have slipped.  In my view therefore the representation by the riding centre that all care and precautions are taken contains by strong implication the representation that the saddle will not slip. Therefore the defendant would not be able to rely on the notice on the form even if it were held to warn of the relevant risk.”82

A risk warning in NSW may now be given to the parents or carer of a child or other person who is incapable in the eyes of the law of understanding such a warning and will be effective.83 This means that previous difficulties in relation to children and others lacking capacity at law to appreciated the nature and quality of risk have been overcome. This means that if the parent or guardian of a child is given the risk warning, the child may be bound by it. A risk warning may also be given in WA, but not in respect of children under the age of 16.84

The standard provision on warnings does not apply if the injured person has requested advice or information about the risk from the defendant, if the defendant is required by law to warn or if the defendant is a professional and the risk is risk of death or personal injury to the person.85 There is no indication as to the way this provision applies to professional coaches or fitness trainers as the word professional is not defined.

85 As happened, for example, in Neil v Fallon, op cit.

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Some states provide that a defendant is not liable in negligence for harm suffered by another person as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the plaintiff. This provision negatives the duty which the defendant might otherwise owe to the participant in the dangerous recreational activity. This is so whether or not the plaintiff was aware of the risk.86

The kangaroo shooting case under NSW CLA, Fallas v Mourlas87, involved interpretation of “dangerous recreational activity” and “obvious risk” with differing views being expressed by the Court of Appeal judges (Ipp, Tobias and Basten JJA).

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Following the Civil Liability amendments, a new s68B was inserted into the Trade Practices Act. It allows providers of “recreational services”, as defined in s68B(2), to limit liability.88 Recreational services are defined very broadly. For the purposes of the section, they are services:

“… that consist of participation in:

88 The Consumer Affairs and Fair Trading Act (NT) provisions are similar to the TPA. See s66 (Warranties in relation to the supply of services), and s68A (Limitation of liability in relation to supply of recreational services). The latter allows limitation in the context of recreational services in relation to liability for death or personal injury if the exclusion etc is made known to the consumer when entering into the agreement and the person has a reasonable opportunity to consider whether or not to enter the contract on that basis.

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Issues are likely to arise of constitutional inconsistency between state and territory laws and this provision. There statutory provisions in other states and territories which exclude liability where injury is caused by obvious risk of a dangerous recreational activity potentially conflict with these provisions. There are provisions which deal with treatment of otherwise non excludable warranties in relation to the supply of services which potentially conflict with these provisions.89

From a policy perspective, issues of acts of gross negligence are again relevant to these considerations, although this time not as to their likely acceptance by participants in the context of “obvious risk” but rather the fairness and logic of allowing protection for them by the sweeping exclusions which are likely to be allowed under these provisions. Under these provisions there is little incentive for suppliers to take care or engage in risk management. It is interesting that the limited exclusions which were always allowed by s68A in respect of acquisition of goods or services based solely on value are not enforceable if the person to whom the goods or services were supplied establishes that it was not fair or reasonable for the supplier to rely on that term. There are no such ameliorating provisions in relation to recreational services.90 Prior to the enactment of s68B the Australian Competition and Consumer Commission (“ACCC”) argued that a better balance would be achieved between consumers and suppliers by ensuring that suppliers exercised a basic level of skill, requiring them to submit to an appropriate level of safety regulation, and adequately disclosing the risks of the activity.91

89 See Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388. These issues are too complex to canvas here but when combined with procedural and substantive differences between the jurisdictions are likely to lead to litigation.

91 Australian Competition and Consumer Commission, Submission to the Principled review of the law of Negligence, August 2002 at p23. See also comments of the Senate Economics Legislation Committee in relation to the Trade Practices Amendment (Liability for Recreational Services) Bill 2002 where similar views were put.

32 Warnings and Exclusions Healey

In CLA NSW persons are not prevented from express provision of their rights and obligations even for liability in contract eliminating due care and skill in its performance. Section 5N provides that a contract for the supply of recreation services may exclude, restrict or modify any liability resulting from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. It also provides that nothing in the written law renders such a term void or unenforceable or authorises a court to refuse to enforce such a term or to declare the term void. Lastly s5N provides that a term of a contract which provides that the person engages in recreational activity at his or her own risk operates to exclude liability for failure to exercise due care and skill. 92

Lormine v Xuereb93 involved a mother who went “whale watching” with her family as part of a group of 20 people, including children. The vessel was swamped by a large wave. She and others were sitting on the front deck. She was washed to back of boat and severely injured. The tour brochure described the waters as “calm” and claimed that the cruise was “suitable for all ages”.

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On appeal, it was argued that this was the wrong approach, relying on the decision of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd94, where the High Court had affirmed earlier law that, absent other factors such as misrepresentation, a person contracting is bound by a signed contract regardless of whether or not they have read it. The victim invoked principles on strict construction of ambiguous wording in exemptions and also the contra proferentem rule95.

•     The primary contract made the day before the cruise or on the day of the cruise did not contain the exclusion terms, nor was notice given that there were express terms to be incorporated;

•     The oral communications that lead the plaintiff to sign the clause did not convey that the document was contractual or a variation to the existing contract- any contractual impact was misrepresented by the statement about head count;

•     The clause relied upon was so ambiguous in context and standing that it was not a release from claims relating to sightseeing. It focussed onSCUBA diving and snorkelling and references to use of facilities and equipment should be read as references in connection to those activities.

95 These rules are set out in cases such as L’Estrange v Graucob (2004) 219 CLR 165; Wallis, Son & Wells v Pratt [1911] AC 394; Council of City of Sydney v West (1965) 114 CLR 481, which were not referred to by the Court of Appeal.

34 Warnings and Exclusions Healey

His Honour made no specific reference in his decision to CLA NSW s5N,96 discussed previously, which provides a court with a specific mandate to enforce exemptions of the kind attempted in the case.

The traditional judicial limits on what a court will be prepared to enforce seem to remain if the Xuereb97 case is any indication. Although the inappropriate wording and inconsistent procedures were clearly important to the decision, no reference was made to s5N.

Refocussing on acceptance of risk, be it subjective at common law or objective under CLA, the “own risk” provision contained in s5N(3) is at odds with s5M(5), which provides that a risk warning must at least disclose the general nature of the particular risk to apply. Section 5N applies in contractual situations, and the logic of the provision appears to be that freedom of contract should allow persons to waive their rights or accept some kind of exemption or exclusion if they choose to do so. In practice, however, documents seeking to exclude liability are usually on a “take it or leave it” basis, so the participant has no real choice: there is little agreement. On the other hand, the operator seeking to enforce the waiver or exclusion would say that he or she would not be prepared to provide the activity except on the basis of some exclusion or modification of liability. Section 5M98 specifically negates any duty of care in tort which might otherwise exist. In reality it provides a voluntary assumption of risk, without the traditional need for the acceptance of risk in full knowledge and appreciation of the risks, because the warning need not have been read or in some circumstances may be given to another on the participant’s behalf.

There is potential for overlap of the two situations in relation to the same recreational activity and there is likely to be some confusion about the extent of the requirement to specify either the risk, a risk of that nature or no particular risk. In neither of the two cases considered above was s5N considered, so there has, as yet, been no consideration of the relationship between s5N and s5M. All that can really be said is that at this stage the courts are still focussed on the traditional common law approach to interpretation of warnings and waivers.99

99 See also Dederer v Roads and Traffic Authority, op cit.

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The Victorian provisions are contained in the Fair Trading Act100. They are similar to the TPA provisions in their application by price ($40,000) and the nature of services supplied (goods of a kind ordinarily acquired for personal, domestic or household use or consumption) although the contracts are not specifically designated as consumer contracts.

Various terms are implied into these contracts, including conditions that services will be supplied with due care and skill, and that they will be fit for the purposes of services of that kind (s32J).101 Provisions which purport to exclude, restrict or modify the terms implied, rights created by them and liability of suppliers for breach are void. (s32L). Subject to s32MA and s32N, a contract is also void if it excludes, restricts or modifies the liability for damages, the amount of damages, purports to limit damages, requires a purchaser to indemnify a supplier for damages received or imposes other obligations as a prerequisite to the award of damages (s32LA). As with the TPA, where the goods or services falls within the scope of the provisions merely because of being below the price threshold, redress can be limited to the resupply of goods or services at the option of the supplier, unless the purchaser establishes that this is unconscionable (s32MA).

•     is limited to liability for death or personal injury; and

•     the term contains the prescribed particulars (if any), and is in the prescribed form (if any) or is specified or is of a class specified in an Order made by the Governor in Council under s32NA (if any); and

•     if there is a prescribed form for the term, the supplier has not made a false or misleading statement as to a material particular in relation to the term; and

•     the term has been brought to the notice of the purchaser prior to the supply of the recreational services (s32N(1), (2)).

36 Warnings and Exclusions Healey

The Fair Trading (Recreational Services) Regulations set out the acceptable wording for such waivers. It allow suppliers of recreational services to obtain express or implied consent to waive their rights under the FTA by including specified wording on a sign displayed at the place where the recreational services are supplied, in a notice given to the purchaser of recreational services, or in a signed waiver form. The wording warns the purchaser about what is being done, sets out the rights which are being foregone, and states that the waiver of rights does not apply to situations involving gross negligence.

South Australia has taken a novel approach to the issue of liability in a recreational context by linking negligence to adherence to an established code of practice.103

For the purposes of the provisions, “recreational service” is interpreted in the same way as the corresponding provision of the TPA104. Activities such as horse riding, bungee jumping and other similar activities will fall within the definition.105 Persons providing recreational services may apply to the Minister to have a code of practice setting out measures which ensure a reasonable level of protection for participants registered for a particular undertaking. The Minister may modify or cancel a code.

Once a code is registered, after a process of transparent review,106 providers of recreational services on a commercial or non-commercial basis may register an undertaking to comply with the code.

103 See Recreational Services (Limitation of Liability) Act 2002. The position in SA is discussed in Keeler J, “Personal responsibility and reforms recommended by the Ipp Report: ‘Time future contained in time past’”

(2006) 14 Torts Law Journal 48.

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“Americans are under the false impression that the requirement of signing such forms is just a futile exercise by the provider to instil fear in the participant; that these forms are invalid in the eyes of the law, and that the participants’ rights remain intact after signing a release. However, in the context of recreational activities, many jurisdictions are upholding the validity of these exculpatory agreements.”107

107 Arango M and Trueba W, “The Sports Chamber: Exculpatory Agreements under Pressure” (1997) U. Miami

Ent. & Sports L. Rev.1. See also Yasser, R Sports Law Cases and Materials 4th ed 2000 Anderson Publishing Co Ohio.

38 Warnings and Exclusions Healey

Enforceability is often considered by courts under criteria set out in Tunkl v Regents of University of California,109 which was a case involving a hospital admission and a liability release. The plaintiff claimed injuries were suffered as a direct result of a negligent physician. The release in that case was found to be invalid as against public policy because hospital was providing an essential public service that placed users in a position of inferior bargaining strength.

The Tunkl test has not been uniformly adopted throughout the United States.110

Cases are, however, generally considered on the basis of public policy, with releases being upheld where activities are not “of great importance” or of “practical necessity”.111

Cases involving sports are not generally in the public interest. The case of Banfield v Louis112 is referred to by a number of commentators. There a cyclist competing in a race which was an essential part of US Olympic selection was severely injured in circumstances involving an exclusion clause as a condition of competing. She had previously complained to officials about the behaviour of the inexperienced competitor who ultimately caused her injury. The court characterised her activity as not essential, but a voluntary part time leisure activity, and enforced the exclusion. The conduct of competing was not in the performance of a public service, despite the fact that she was aiming to represent her country at a prestigious international sporting event.

It is suggested that in the sports context, courts are upholding exculpatory agreements as not against public policy focusing their analysis on both the sanctity of freedom to contract and the voluntary nature of the participant’s involvement.113

Rules on the nature of clauses and the way they must be brought to the attention of the participant appear similar to those in Australia114.

110 Casenote (1989) 102 Harvard Law Review 721 at 732.

113 Arango, op cit, at p9, citing Banfield v Louis, op cit; Kotovsky v Ski Liberty Operating Corp. 603 A.2d 663

(Pa. Super.Ct.); Marshall v Blue Springs Corp.641 N.E.2d. 92 (Ind.Ct.App. 1994).

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The agreement must give the participant a general understanding of the inherent dangers involved.115  Although the concept of assumption of risk assumes that the participants assume only known risks, some courts have held that knowledge of a particular risk is unnecessary when there is an express agreement to assume all risk.116  Of interest, some cases suggest that a release may not, as a matter of law apply to gross negligence.117

Exclusions are almost always against public policy if they are signed by a parent on behalf of a child118 and the predominant case law indicates that they will not be enforced119 although there have been cases where such waivers have been upheld120.

The position in the United Kingdom is more restrictive than under the TPA and in most Australian states. Section 2 (1) of the Unfair Contract Terms Act (1977) expressly prohibits contracting out of liability for negligence resulting in death or injury. Negligence is defined to include the common law duty to take care or exercise reasonable skill, obligations arising from express or implied terms to take reasonable care, and occupier’s liability at common law. The provisions apply where the provider is carrying on business in supplying the services. The provisions do not apply where death or personal injury results from a breach of contract or duty that can be or is committed without negligence. Terms which achieve the same result in a roundabout way are also prohibited. There is some scope for indemnities. Where the claim is not for personal injury or death a test of reasonableness is applied Certain listed types of contracts, such as contracts of insurance, certain land dealings and certain contracts dealing with intellectual property rights are exempted from the provisions of the Act.121

1289 6th ed 1990; Paralift, Inc v Superior Court 23 Cal. App. 4th 748, 755 (Cal.Ct. 1993).

115 Arango, op cit at p10, citing Paralift, Inc v Superior Court 23 Cal.App.4th 748 (Cal Ct. App. 1993).

116 Boyce v West 863 P.2d 592 598 (Wash.App.1993)

117 Wade v Watson 527 F.Supp.1049 (N.D.Ga.1981)

118 Wagonblast v Odessa School District 758 P 2d 968, Scott v Pacific West Mountain Resort 834 P.2d. 6, 11-12 (Wash 1992); Cooper v Aspen Skiing Co 48 P.3d 1229 (2002)“Parents can’t waive child’s right to sue for skateboard park injuries” New Jersey Law Journal (March 21, 2005) although it has been argued that this should not be the case: Nelson, R.S. “The Theory of the Waiver Scale: An argument why parents should be able to waive their children’s tor liability claims” 36 U.S.F. L. Rev. 535(2002))

119 Childress v Madison County 777 S.W.2d. 1(Tenn. Ct. App. 1989); Santangelo v City of New York 66A.D. 2d 880, 411 N.Y. S 2d 666 (1978).

120 Hohe v San Diego Unified School District 274 Cal.Rptr.647 (Ct App. 1990).

121 See Treitel, Law of Contract, 11th ed, Thomson/Sweet & Maxwell, London 2003 at p246ff. The Unfair Contract Terms Act 1977 also operates alongside the Unfair Terms in Consumer Contracts Regulations 1999, which give effect to EC Council Directive 93/13/EEC. They apply to contract terms which have not been individually negotiated, and are proferred in the course of the supplier’s business. If terms are found to be unfair they are not binding on the consumer.

40 Warnings and Exclusions Healey

“Why governments would wish to allow commercial recreational providers to exclude liability for negligence including even the grossest failure to take care, and shift the costs of their negligence onto the public purse rather than bear them is at best puzzling… those who suffer from negligence could include the most vulnerable in our society: our children. It seems offensive to the fundamental values of a modern civilised society to include this shedding of responsibility in a ‘personal responsibility’ program.”122

•      What is a recreational activity for the purpose of the relevant legislation?

•      What is the relevant risk in the circumstances and what is its nature?

•      How do I determine the approach to take?

        - if it is an inherent risk there is no liability?123

•      Is the activity dangerous?

•      If a warning is given, is it sufficiently specific to objectively inform a participant of a risk of the general kind which eventuates?

•      Does my exclusion appropriately cover the type of risk involved?

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• Can the exclusion apply to a minor in my jurisdiction?

•     Is the tension between voluntary assumption of risk and freedom of contract in balance in these amendments?

•     Do different rules apply to gross negligence? Should consideration be given to further amendment to deal with gross negligence?

•     As a matter of principle, and as a community, do we wish to exclude liability in a way which may diminish the inclination of organisations and operators to take care, to the detriment of risk management processes which might prevent accidents and injuries?