Brown, Julian --- "Wavering Waivers" [2023] PrecedentAULA 54; (2023) 178 Precedent 28

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Wavering waivers

By Julian Brown

Reliance on contractual liability waivers (otherwise described as exception, exemption, or exclusion clauses) in defence of personal injury claims was once quite routine, but in the last few years a few defendants have not been successful. This article examines how and why these clauses have not been as effective as defences in recent cases.

USE OF WAIVERS^[1]

Liability waiver or exemption clauses are common and are especially found in contracts for the provision of recreational services, access to facilities and transportation. Their purpose is to provide defences for breach of contract,^[2] or to alter the parties’ duties and/or obligations,^[3] such as a duty of care owed under the common law.

When approaching a waiver raised by a defendant to a claim for personal injury, it is necessary to determine the contractual situation between the plaintiff and the defendant, including when the contract was made, its terms, and whether any of the contractual terms apply to the events that occurred.

IS THE DOCUMENT A CONTRACT?

At common law a signed contract does not require proof that its particular terms were brought to the notice of the party sought to be bound.^[4] However, there could be a dispute about whether a signed document is a contract at all. This may occur when evidence raises doubt about a document’s effect on the parties’ legal relations. Thus, if a document presented to a consumer purports to be a set of instructions, or appears to be required for another purpose, such as a manifest or headcount on a cruise, then argument may be raised about whether the document is contractual at all.

WHEN IS A CONTRACT MADE?

It is often the case that there is a separation between the payment for an activity and the activity itself, especially where a recreational activity has been booked and paid for in advance. When this has occurred, one could argue that any subsequent document or form signed by a plaintiff was not incorporated into the contract, thus making a waiver contained in it unenforceable.

Such was the case in Lormine Pty Ltd v Xuereb^[5] (Xuereb), where the plaintiff was injured while engaging in a dolphin watching cruise with the defendant. On the previous day the plaintiff booked a tour which included herself and her family. On the day of the tour, she was shown a form and asked to complete the number of people who were in her particular group. She was also informed by the defendant’s representative that the form was for the number of people on the boat.

The defendant relied upon the form, which had a printed section headed ‘Release of Liability, Waiver of Claims’.^[6] The Court found that the waiver was not incorporated into the ‘primary contract that was made either the day before the trip or when the tickets were paid for’ which ‘did not contain the terms of the form, nor did it give notice that there were express terms to be incorporated’.^[7]

Likewise, in Alameddine v Glenworth Valley Horse Riding Pty Ltd^[8] (Alameddine) the plaintiff’s mother telephoned the defendant to arrange a quad bike excursion and paid for the excursion over the telephone. After the family’s arrival at the park the next day, the plaintiff’s sister signed an ‘application form’ purporting to include a waiver. The plaintiff was injured during the excursion when the instructor accelerated away, causing the plaintiff to accelerate her own quad bike, lose control and fall off it.

Although the primary judge held that the contract was made when the application form was signed, the NSW Court of Appeal held that the contract was made when the plaintiff’s mother paid for the activity the day before, and thus the waiver could not be relied upon. There was no evidence that there was any discussion at the time about the signed application form being part of the contract.

In Lightfoot v Rockingham Wild Encounters Pty Ltd^[9] (Lightfoot) the plaintiff was also injured while engaging in a dolphin watching cruise with the defendant. The plaintiff went to the defendant’s website, filled in a standard booking form, made payment, and received an email from the defendant in response. The next day she signed a ‘waiver’ when she collected the tickets from the defendant’s office.

It was argued by the plaintiff that the waiver was not part of the contract as it had been signed after payment was made. However, in contrast to Xuereb, the Court held that at the time of payment, the terms of the website booking made clear that the contract was conditional upon paying the fee, turning up on time and signing a waiver. Thus the subsequent waiver was incorporated into the contract.

WHAT ARE THE TERMS?

It has always been part of the common law that a defendant may exempt themselves by contract from the consequences of negligence on the part of themselves or their agents. However, it has repeatedly been said that such a waiver must be construed strictly, and that clear words are necessary to exclude liability for negligence.^[10] For negligence to be excluded, it must be done by express, plain, and unambiguous terms.^[11]

Generally speaking, an express reference to negligence will be sufficient to exclude liability for negligence.^[12] Where there is no express reference to negligence, the question then becomes whether the parties intended to exclude liability on the basis of the words used.^[13] Clauses purporting to exclude ‘all liability’ or liability for ‘any loss’ have therefore generally been treated as insufficient to exclude liability for negligence.

Subject to the applicability of the Australian Consumer Law (ACL), in Lightfoot, the following waiver was held to have validly excluded a suit in negligence:

‘I release, indemnify and hold harmless Dolphin Watch Pty Ltd ... its servants and agents, from and against all and any actions of claims which may be made by me or on my behalf or by other parties for or in respect of or arising out of any injury, loss, damage or death caused to me or my property whether by negligence, breach of contract or in any way whatsoever.’^[14]

In Alameddine, the Court of Appeal held that the following clause did not exclude liability in negligence because the clause did not refer to that basis of liability:

‘You further agree that GVOA including its officers, employees or agents shall not be liable to any person whether in contract, tort, under statute or otherwise for any injury, loss, damage, death, economic loss whatsoever suffered by you, whether consequential, direct or indirect, caused by or connected with your participation in the activity (collectively referred to as the “harm”).’^[15]

Practitioners are also reminded of the contra proferentum rule which states that a term may be interpreted against the party who put the term forward and for whose benefit the term operates.^[16] It is only available in the case of a genuine ambiguity.^[17] It is a rule of ‘last resort’, when all other means of interpreting fails.^[18]

In Alameddine, a statement within the waiver that injury may result ‘not only from your actions including physical exertion but also from the action, omission, or negligence of others’^[19] was held to be ambiguous, in the sense that it was unclear that the term ‘others’ included the defendant, and thus interpreted as not extending to the negligence of the defendant.

PRIOR OR SUBSEQUENT STATEMENTS

Where there is a fraudulent misrepresentation which induced entry into the contract, an exclusion clause within the same may not be relied upon.^[20]

A subsequent statement inconsistent with reliance on a waiver by the defendant may also prevent a defendant from relying on the same.^[21] In Xuereb, the oral communications did not convey that the document was contractual in intent or was a variation of an existing contract. Indeed, any contractual impact was misrepresented by the statement regarding head count.

DOES THE TERM APPLY TO THE ACTIVITY?

In Xuereb the following waiver was signed by the plaintiff:

‘In consideration of participating in SCUBA diving and/or snorkelling activities, as well as the use of any facilities and the use of the equipment of the Forster Fishermans Wharf Dive Centre, I hereby agree to waive and release any and all claims that I may have in the future against the Forster Fishermans Wharf Dive Centre.’^[22]

The Court held that this waiver did not apply to the plaintiff’s claim as it was ambiguous both in its overall context and in the inability of the Court, standing alone, to construe it as a release of claims for injury stemming from ‘sightseeing’. A preamble confined its scope to SCUBA diving and snorkelling and the references to ‘use of ... facilities and ... equipment’ were read as references to facilities and equipment in connection with those activities, and not sightseeing.

In Insight Vacations Pty Ltd v Young,^[23] the High Court was required to interpret the following wavier:

‘Where the passenger occupies a motorcoach seat fitted with a safety belt, neither the Operators nor their agents or co-operating organisations will be liable for any injury, illness or death or for any damages or claims whatsoever arising from any accident or incident, if the safety belt is not being worn at the time of such accident or incident.’^[24]

Mrs Young was injured when, while travelling on the defendant’s coach tour between Prague and Budapest, she got out of her seat to get something from a bag she had stowed on the overhead luggage shelf. The coach braked suddenly, and she fell backwards and suffered injury.

The High Court noted that the phrase ‘where the passenger occupies a motorcoach seat fitted with a safety belt’ should be given its ordinary meaning, and therefore limited the time to which the clause applied to when the passenger was seated, not to the times when the passenger stood up to move around the coach. As she was not sitting when she fell, the waiver was held not to apply.

EFFECT OF THE ACL ON WAIVERS

As a general rule, where there are recreational services purchased or an entry fee paid for an activity, there will almost always be a simultaneous supply of services in trade or commerce, on which relationship the ACL superimposes a number of ‘consumer guarantees’. Unlike the former statutory warrantees introduced under the old Trade Practices Act 1974 (Cth), consumer guarantees arise independently of contract.^[25]

Section 60 of the ACL provides that ‘[i]f a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill’.

The ambit of ‘services’ covered by the due care and skill guarantee is not delimited by the terms of the contract between the supplier and the consumer.^[26] Section 267 of the ACL provides that a consumer may take action to recover loss and damage as the result of a failure to comply with a guarantee where it was foreseeable that the consumer would suffer that loss as a result of the failure.

Section 64 of the ACL declares as ‘void’ any term in a contract which ‘purports to exclude, restrict or modify ... any liability of a person for failure to comply with a guarantee that applies ... to a supply of goods or services’.

However, s139A of the Competition and Consumer Act 2010 (Cth) states that this exclusion does not apply to contracts for the supply of ‘recreational services’. The term is defined in s139A(2) quite broadly to include ‘participation in:

(a) a sporting activity or similar leisure time pursuit; or

(b) any other activity that:

(i) involves a significant degree of physical exertion or physical risk; and

(ii) is undertaken for the purposes of recreation, enjoyment or leisure’.

Practitioners should however note s139A(3), which states that an exclusion clause restricting the s60 statutory guarantee will only be valid if the exclusion clause is limited to death or personal injury (which includes aggravation or disease). In Motorcycling Events Group Australia Pty Ltd v Kelly,^[27] the NSW Court of Appeal held that an exclusion clause which purported to exclude ‘any claims or liability for death, personal injury or property damage howsoever caused’ was not valid because it was not limited to personal injury or death, which was a requirement of the former iteration of the provision in s68B(1)(d) of the Trade Practices Act 1974 (Cth).

In Alameddine, the waiver was also held to be too broad to be captured by s139A as it referred to ‘any injury, loss, damage, death, economic loss whatsoever suffered by you’. As such, this clause which purported to limit liability for liability under statute was void by reason of s64.

In Lightfoot, the Court found that the waiver (stated above) which also referred to property damage was also too broad, which meant that it was ineffective, not only in relation to any ACL claim, but the claim in negligence as well. It appeared in Lightfoot that the terminology in s64 of ‘any liability’ was taken to mean not only ACL liability, but also concomitant contractual or tortious liability.^[28]

Practitioners should also take note of s139A(4) which also states that an exclusion clause restricting the s60 statutory guarantee will not be valid if the conduct of the supplier of recreational services was reckless. Reckless conduct is defined in s139A(5) to be where ‘the supplier:

(a) is aware, or should reasonably have been aware, of a significant risk that the conduct could result in personal injury to another person; and

(b) engages in the conduct despite the risk’.

CAN PARENTS WAIVE THE RIGHTS OF CHILDREN?

At common law, majority was attained on the day before a person’s 21^st birthday.^[29] The common law has been modified for most purposes by statute to lower the age of majority to 18 years.^[30]

Other than some statutory exceptions,^[31] contracts with minors are voidable at his or her election. However, adults contracting with minors are still bound to the contract and cannot plead the minor’s lack of capacity as a defence.^[32] A contract necessarily prejudicial to a minor is generally void and not subject to ratification,^[33] thus prima facie any wavier entered into by a minor is void.^[34]

In Alameddine, it was also confirmed by JC Campbell AJA that a parent or sibling will likewise not have authority to act as the agent of a child in entering a contract that binds a child. It follows that if a minor cannot be bound to a contract, he or she cannot appoint another person, such as a parent or sibling, to be their agent.

It follows that it is virtually impossible to enforce waivers signed by, or on behalf of, a minor.

Julian Brown is a special counsel in the Queensland injuries practice at Maurice Blackburn Lawyers. PHONE [phone]. EMAIL [e-mail].

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^[1] The scope of this article is limited to liability waivers which appear in personal injury cases. Different principles apply to the interpretation of commercial contracts.

^[2] Owners of SS Istros v FW Dahlstroem & Co [1931] 1 KB 247.

^[3] Sydney City Council v West [1965] HCA 68; (1965) 114 CLR 481, 495–6.

^[4] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.

^[5] [2006] NSWCA 200 (Xuereb).

^[6] Ibid [13].

^[7] Ibid [20].

^[8] [2015] NSWCA 219 (Alameddine).

^[9] [2017] WADC 62 (Lightfoot).

^[10] Davis v Pearce Parking Station Pty Ltd [1954] HCA 44; (1954) 91 CLR 642, 649.

^[11] Price & Co v Union Lighterage Co [1903] UKLawRpKQB 56; (1903) 1 KB 750, 752.

^[12] Canada Steamship Lines Ltd v R [1952] AC 192.

^[13] Davis v Pearce Parking Station Pty Ltd [1954] HCA 44; (1954) 91 CLR 642.

^[14] Lightfoot, above note 9, [20].

^[15] Alameddine, above note 8, [5].

^[16] Wallis v Pratt [1911] UKLawRpAC 21; [1911] AC 394.

^[17] Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500, 510.

^[18] McCann v Switzerland Insurance Australia Limited [2000] HCA 65; (2000) 203 CLR 579, 602; [2000] HCA 65, [74].

^[19] Alameddine, above note 15.

^[20] Jennings v Zilahi-Kiss (1972) 2 SASR 493, 510.

^[21] Mendelssohn v Normand Ltd [1970] 1 QB 177.

^[22] Xuereb, above note 5, [13].

^[23] [2011] HCA 16; (2011) 243 CLR 149 (Young).

^[24] Ibid [3].

^[25] Castle v Perisher Blue Pty Limited [2020] NSWSC 1652.

^[26] Scenic Tours Pty Ltd v Moore [2018] NSWCA 238.

^[27] [2013] NSWCA 361, [5].

^[28] In Lightfoot, the plaintiff failed however because the plaintiff was unable to prove primary negligence.

^[29] King v Jones [1972] HCA 44; (1972) 128 CLR 221.

^[30] In Queensland, the Age of Majority Act 1974 (now s17 Law Reform Act 1995).

^[31] For example, s199(2) Life Insurance Act 1995 (Cth) a 16 year old is deemed to have the same capacity to make a contract for life insurance as a person who has attained the age of 18 years.

^[32] Zouch v Parsons [1765] EngR 89; (1765) 3 Burr 1794.

^[33] Viditz v O’Hagan [1900] UKLawRpCh 87; [1900] 2 Ch 87.

^[34] In NSW, the ability of minors to make contracts is regulated by statute.