The respondent, Mrs Young, decided to go to Europe for a holiday with her husband. In February 2005, she bought a European tour package from the appellant, Insight Vacations Pty Limited. In October 2005, Mrs Young and her husband joined the tour in London. While travelling by coach from Prague to Budapest, Mrs Young got out of her seat to retrieve something from a bag she had stowed in the overhead compartment. The coach braked suddenly, and Mrs Young fell backwards, suffering injury.
Mrs Young's claim was first heard in the District Court of NSW before Rolfe DCJ. Mrs Young succeeded in her claim and judgment was entered in her favour for $22,371 plus costs. Insight successfully appealed to the NSW Court of Appeal as to the quantum of damages awarded, but by majority, the appeal against liability was dismissed. By special leave, Insight appealed to the High Court.
Mrs Young alleged that by virtue of section 74(1) of the Trade Practices Act 1974 (Cth) ('the TPA'), there was an implied term of her contract with Insight that the services supplied would be rendered with due care and skill, that Insight had failed to do so, and as a result she suffered injury.
In response, Insight relied upon an exemption clause within the contract with Mrs Young which denied liability for any instance of death or personal injury where safety belt was not being worn at the time of such accident or incident. Insight alleged that it could rely on the exemption clause because firstly, its supply of the service of transportation by coach was the supply of a 'recreation service' within the meaning of section 5N of the Civil Law Liability Act 2002 (NSW) ('the Civil Liability Act') and secondly, section 5N was picked up and applied as a surrogate federal law, by operation of section 74(2A) of the TPA. The exemption clause could then be given effect.
The High Court had to consider the following issues:
- Did section 74(1) of the TPA apply?
- Did section 74(2A) of the TPA operate, and if so, how?
- If 'yes' to the above, is section 5N of the Civil Liability Act a law which meets the description given in section 74(2A) of the TPA and thus applied?
- If section 5N does meet the description given in Section 74(2A), does it apply to a contract for the supply of recreation services, where the supply occurs outside of NSW?
- If section 5N of the Civil Liability Act is engaged, and if in consequence Insight may rely on its exemption clause, does that clause operate, on its proper construction, as an answer to Mrs Young's claim?
The High Court dismissed the appeal with costs for the following reasons:
- Section 74(2A) of the TPA did not pick up section 5N of the Civil Liability Act, as the section did not, in itself, provide any exclusion, restriction or modification of liability. It merely permitted parties to contract for the exclusion, restriction or modification of liability
- Even if section 5N of the Civil Liability Act had been picked up and applied by section 74(2A) of the TPA, it would not have been applicable to the facts and circumstances of this matter. The High Court noted that section 5N applied only to contracts for the supply of recreation services in NSW. Insight's contract with Mrs Young was to supply recreation services to her outside of NSW
- The exemption clause, on its true construction, did not apply to the events that transpired. The exemption clause should be construed as engaged only when a passenger was seated, and as having no application when the passenger was standing or moving about in the coach.
The High Court's ruling raises some interesting discussion points relating to the relationship between the Civil Liability Act and the TPA. The High Court considered the Civil Liability Act's construction when forming their
judgment. Having regard to the earlier sections of the Act, the High Court noted that the Act made no express provision for any extra territorial operation. Therefore, the High Court considered section 5N, as it was drafted, was subject to geographical limitations when read in terms of the Act's statutory context.
Further, section 74(2A) of the TPA should not be construed as picking up and applying section 5N of the Civil Liability Act as a surrogate federal law provision, as it was not a law of the kind described in section74(2A).
The High Court's interpretation of the exemption clause was also notable. The first part of the exemption clause read 'where the passenger occupies a motor coach seat fitted with a safety belt' (emphasis added).
The first part of the clause was given its ordinary meaning, being that it applied when the passenger was seated. The contract did not require passengers to remain seated at all times while the coach was in motion, as there
were often circumstances when that would occur. The High Court considered that if the exemption clause had omitted the word 'seat', it might have been possible to say that the clause applied to any occasion when the passenger was aboard a coach fitted with seatbelts. However, this was not how the clause was written, such that it did not apply.
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