Contractual Waivers in Recreational Activities

On 29th July 2015, the NSW Court of Appeal delivered its decision in Alameddine v Glenworth Valley Horse Riding Pty Ltd.

The case considers, among other things, the effective use of exclusion clauses in contracts for the provision of recreational activities.

Lesley Woodmore, Partner at Winter Hilditch & Fotheringham, Insurance and Commercial Lawyers, looks at the case.

Facts
On 20th May 2011, the appellant’s (Alameddine) mother booked and paid for a quad biking excursion for her family (including Alameddine, who was two days short of her 12th birthday) at the respondent’s facility (Glenworth).

The family attended Glenworth the following day and were instructed on how to use the quad bikes and given an opportunity to test ride them.

Glenworth’s instructor (Stubbs) observed each of the riders and assessed their skill level. Stubbs was satisfied with the family’s performance and led them along the riding track.

While being led by Stubbs back to Glenworth’s Administration Centre, Alameddine fell off her bike suffering injury.

Alameddine sued Glenworth in the District Court claiming it was liable to her:

• In negligence; and
• For its non-compliance with the supply of services guarantees provided for by sections 60 and 61 of the Australian Consumer Law (ACL).

The District Court
The District Court rejected Alameddine’s claim.

Despite finding Alameddine had established Glenworth was negligent, it upheld Glenworth’s defence under section 5N (waiver of contractual duty of care for recreational activities) of the Civil Liability Act 2002 (NSW) (the CLA) because an application form signed on Alameddine’s behalf excluded Glenworth’s liability due to the breadth of its exclusion clauses.

In addition, Alameddine’s claim based on sections 60 and 61 of the ACL failed because the Court found she was not a 'consumer' for the purposes of those sections.

Alameddine appealed the decision.

The Appeal
The issues of whether Glenworth was negligent arose on appeal.

The Court held:
• Stubbs accelerated his bike to an excessive speed and following Stubbs’ instruction to maintain a fixed distance between their bike and the one in front, participants had no choice but to accept Stubbs’ dictation of speed; and
• On the balance of probabilities, Alameddine’s excessive speed, brought about by the need to keep up with Stubbs, caused or contributed to Alameddine’s accident.

Accordingly, Glenworth was found guilty of negligence.

Whether section  5L of the ACL (no liability for harm suffered from obvious risks of dangerous recreational activities) excluded Glenworth’s liability Section 5L of the ACL provides “a person is not liable in negligence from 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.”

Section 5K of the CLA defines “dangerous recreational activity” as “a recreational activity that involves significant risk of physical harm”. Whether a recreational activity may be dangerous will often depend on the totality of the particular circumstances (time, place, competence, age, weather, etc.).[1]

The Court of Appeal held:

• The activity Alameddine engaged in was not a ‘dangerous recreational activity’ with Glenworth portraying quite the contrary impression on its website and in the instructions given describing quad biking as ‘easy’.
• Section 5L was also not applicable as Alameddine’s injury did not result from the ‘materialisation of an obvious risk’ of an activity engaged by her. The risk would have to be inherent.
• The risk of injury resulting from an instructor riding faster than was safe and effectively giving participants no real choice but to also do so, was not a risk inherent in or incidental to the quad bike riding activity.

To uphold a defence under section 5L a plaintiff must be injured:

• While engaging in a recreational activity and;
• As a result of the materialisation of a risk which should have been reasonably obvious to them.

Whether section 5M of the ACL (no duty of care for recreational activity where risk warning) excluded Glenworth’s duty of care Section 5M of the ACL provides “a person does not owe a duty of care to another person who engages in a recreational activity to take care in respect of a risk...if the risk was the subject of a risk warning...”

The Court of Appeal held while Glenworth warned Alameddine (application form and signage) of the risks of riding a quad bike, the risk that materialised was not inherent in that activity. As a result, even if the warnings Glenworth gave extended to the risk that occurred, section 5M did apply because the risk was not inherent in the recreational activity.

Whether a term of the contract excluded Glenworth’s liability under s 5N of the ACL (waiver of contractual duty of care for recreational activities) Pursuant to section 5N of the ACL “a term of a contract for the supply of recreation services may exclude, restrict or modify any liability...”

The District Court held the contract between Alameddine and Glenworth encompassed the application form signed on Alameddine’s behalf on 21 May 2011 (which included an exclusion of liability clause).

The Court of Appeal disagreed and found the contract was formed on the previous day when Alameddine’s mother arranged the activity and paid Glenworth for it.

It was held:

• There was no evidence there was any discussion at that time about the application form forming part of the contract.
• The application form, when signed, did not purport to constitute the contract.
• The application form did not refer to the price of participating in the activity and simply purported to waive liability without consideration.
• There was no basis for concluding the application form varied the terms of the contract made the previous day to include its terms (namely the exclusion clauses).

The application form therefore did not result in Alameddine waiving Glenworth’s liability.

Whether Alameddine was entitled to compensation for Glenworth’s failure to comply with the guarantees under sections 60 and 61.

The ACL creates a guarantee that services provided to a consumer will be rendered with due care and skill (s 60) and will be reasonably fit for its purpose (s 61).

Section 267 of the ACL entitles a consumer to recover compensation if a guarantee is not complied with.

The only barrier to Alameddine recovering compensation under the ACL was:

• The alleged contractual waivers; and
• Possible defences under sections 5M and 5N of the ACL.

As the Court found:

• Glenworth’s contractual waivers had no application; and
• Glenworth’s defences under sections 5M and 5N of the ACL had failed, Alameddine was entitled to compensation.

Despite this, the Court made the following observations of note:

• Contractual waivers are void under section 64 of the ACL.
• However, section 139A of the Competition and Consumer Act 2010 (Cth) provides an exception for terms in contract relating to the supply of recreational services.
• The section 139A exception applies only if the exclusion of liability is limited to personal injury and does not apply if the defendant’s conduct has been reckless.
• As the clauses in Glenworth’s application form clauses were not limited to personal injury but extended to property damage, the section 139A exception did not apply. Accordingly, the clauses were void under section 64 and would not have been a barrier to Alameddine’s claim for compensation.

Conclusion
The Court of Appeal:

• Allowed the appeal;
• Set aside the District Court’s judgment; and
• Awarded Alameddine $136,075.

Implications
Recreational activity suppliers can exclude, limit or modify their liability for personal injury through contractual waivers. To have effect, suppliers must ensure:

• The waiver is effectively worded;
• The waiver forms part of the contract for the provision of the recreational activity; and
• Liability is limited for personal injury only.

This article was written by Lesley Woodmore, partner and Sherryn Russell, associate. 

[1] Fallas v Mourlas[2006] NSWCA 32; 65 NSWLR 418 and Campbell v Hay [2014] NSWCA 129.

Disclaimer: This article is the opinions of their authors with the contents published  for general information. It is not intended as professional advice - for that interested parties should consult a solicitor, barrister, or other suitably qualified professional. 

Australian Leisure Media Pty Ltd and Winter Hilditch & Fotheringham expressly disclaims all liability for any loss or damage arising from reliance upon any information in this article.

Images published for representative purposes only. Courtesy of Facebook.

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