The NSW Court of Appeal has recently considered how the Australia Consumer Law (ACL) interacts with the Civil Liability Act 2002 (NSW) (CLA).

The court found that there are significant limitations preventing a supplier from seeking to contractually exclude a consumer’s rights under the ACL. The Court also confirmed that claims brought under the ACL deprive a defendant of a number (but not all) of the statutory defences which would ordinarily be available to them under the CLA.

It was also held that a successful claim under the ACL permits a plaintiff to elect whether to claim general damages under the ACL, or non-economic loss damages available under the CLA.

Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 (29 July 2015)

Facts

  • On 21 May 2011, the appellant (who was almost 12 years old) went quad bike riding at the respondent’s recreational facility at Glenworth Valley. The appellant’s mother rang the facility on 20 May 2011 to book and pay for the activity. On the day of the quad bike riding and prior to the ride, the appellant’s mother signed a form stating that she acknowledged that quad biking is a dangerous recreational activity and that the respondents are not liable for any injury or loss. There was also a risk warning sign in the waiting area where participants waited before being allocated a bike.
  • There was (contested) evidence that the group had been instructed to “keep up” with the pace set by instructors, whilst also maintaining a set distance between riders. During the ride, Mr Stubbs, the instructor who was leading the group, accelerated to a speed causing others in the group behind him to accelerate in order to keep up. This resulted in the appellant accelerating her speed, losing control of the bike, and falling off.
  • The appellant claimed that the respondents were liable for negligence in conducting the activity unsafely, and for breach of the guarantees provided under sections 60 and 61 of the ACL in relation to the supply of consumer services.
  • The respondents argued three defences under division 5 of the CLA; dangerous recreation activity (section 5L) inherent risk (section 5M), and contractual waiver of liability (section 5N). Each was unsuccessful.

Judgment at First Instance

  • In the District Court, Armitage DCJ directed that judgment be entered in favour of the respondents.
  • The primary judge found that Mr Stubbs accelerated on the quad bike causing the appellant and other riders behind him to also increase their speed resulting in the appellant falling off the bike.
  • The respondent argued that the accident was due to “the materialisation of an obvious risk of a dangerous recreational activity” under s 5L of the CLA, the risk was “of the activity” under s 5M of the CLA and there was a contractual waiver excluding the Respondent’s liability providing a complete defence under s 5N of the CLA.
  • The respondent’s defence under s 5L of the CLA was rejected. His Honour stated that the activity did not pose a significant risk of physical harm, provided that the activity was properly supervised. Therefore, His Honour held that this quad bike riding activity would not constitute a ‘dangerous recreational activity’.
  • The primary judge upheld the respondent’s defence under s 5M of the CLA on the basis that they had warned the appellant of the significant risk of physical harm of the activity, both in the activity application form and on a sign displayed at the venue.
  • In respect of the defence under section 5N of the CLA, the primary judge found that the respondent’s warning sign did not exclude the respondent’s liability because it was shown to the appellant after the contract was formed. It was held that the contract was formed the day before the quad bike riding when the appellant’s mother booked and paid for the activity. However, His Honour found that the application form signed on behalf of the appellant on the day of the activity, included a warning of the risk, and therefore did form part of the contract and also excluded the respondent’s liability.
  • The appellant also submitted that the respondent had not complied with the consumer guarantees pursuant to ss 60 and 61 in the ACL. The primary judge found that the appellant was not a consumer for the purposes of these sections and therefore the ACL claim failed.

NSW Court of Appeal Judgment

  • On appeal, the respondent conceded that the infant was a consumer for the purposes of the ACL, despite not having entered into the contract for services.
  • The court agreed with the findings of the trial judge that the respondent was negligent as a result of Mr Stubbs having accelerated, causing the riders behind him to also accelerate, and resulting directly in the plaintiff’s accident.
  • Each of the respondent’s three CLA defences were rejected. In relation to s 5L, the activity was held not to be a ‘dangerous recreational activity’. Whilst the Court agreed that it may be obvious that a person could suffer injury if they lost control the quad bike, an injury resulting from the instructor increasing his speed causing others to increase to an excessive speed was not inherent in, or incidental to, the activity.
  • The defence under s 5M was rejected on similar ground, namely that the risk which materialised, being the instructor accelerating his speed, was not inherent in the activity as described above. The Court also held that the warnings provided to the Appellant did not extend to the risk that materialised, and that the risk is not one ‘of the activity’ described such that a defence under s 5M did not protect the respondents.
  • In relation to s 5N, it was accepted that the contract was entered into when the appellant’s mother booked and paid for the activity. Therefore, the contractual waiver signed the day of the activity was executed after the contract was formed and could not act as a waiver.
  • In relation to ss 60 and 61 of the ACL, the respondent accepted on appeal that the appellant was a consumer and that in circumstances where a finding of negligence had been made, the guarantee of service being supplied with due care and skill was not complied with.
  • In these circumstances, the Court of Appeal found that the only barrier to the appellant recovering damages from the respondent for non-compliance with s 60 of the ACL would be the alleged contractual waiver and the statutory defences raised under ss 5L, 5N and 5M of the CLA.
  • With respect to the CLA defences, the court considered s 275 of the ACL, Insight Vacations Pty Ltd v Young [2011] HCA CLR 149 and Motorcycling Events Group Australia v Kelly [2013] NSWCA 361, and held that the respondent cannot utilise ss 5M or 5N to defend claims brought pursuant to the ACL.
  • The court accepted that s 5L was an available defence, as it does not expressly purport to exclude a defendant’s liability. However, that defence failed in this particular matter on the basis of the Court’s factual finding that the activity was not a ‘dangerous recreational activity’.
  • The court also found that contractual waivers are void under s 64 of the ACL so far as they seek to exclude a consumer’s rights. Section 139A of the Competition and Consumer Act 2010 (Cth) (CCA) provides an exception for the supply of recreations services, but only for personal injury caused by a supplier’s reckless conduct.
  • It was contested whether general damages should be assessed under the CLA or the CCA. The Court of Appeal held that the CCA does not exclude recovery of non-economic loss under the CLA, simply because the former is Commonwealth legislation and the latter is state-based. The appellant was therefore entitled to choose whether to accept non- economic loss damages awarded under section 16 of the CLA or alternatively general damages pursuant to the CCA. In this instance, damages under the CLA were more favourable to the appellant.

IMPLICATIONS

The court’s decision has significant implications for claims for personal injuries brought pursuant to both the CLA and ACL.

Except in strict circumstances (personal injury resulting from reckless conduct), parties are also precluded from entering into contractual terms that purport to waive consumer’s rights under the ACL.

Claims under the ACL for breach of consumer guarantees will deprive a defendant from relying upon a range of statutory defences under the CLA, including sections 5M and 5N.

Further, a claimant’s entitlement to assessment of damages for non-economic loss under section 16 of the CLA will remain available when a claim is brought successfully under the ACL.

This decision will undoubtedly have an impact on future claims. It is likely that claims will be brought under the ACL when the incident arises out of the supply of consumer services, as it provides more options for a claimant in terms of damages, whilst at the same time also limiting the statutory defences available for defendants.