Insight Vacations Pty Ltd -v- Young 2011 HCA 16
(11 May 2011)
This recent High Court decision shows that care is needed
when drafting an exclusion clause so that the circumstances in
which it applies are not defined too narrowly. Otherwise, it may
work against the party seeking to rely on the clause.
Mrs Young purchased a European coach-tour package from Insight
Vacations (Insight). Mrs Young was injured whilst
on tour. She was standing in the tour bus when it braked
Mrs Young commenced proceedings in New South Wales on the basis
that it was an implied term of her contract that the services
supplied would be rendered with due care and skill., This had not
occurred and, as a result, she had been injured.
Mrs Young succeeded at trial and was awarded damages of $22,371
with costs. Insight appealed to the Court of Appeal of the Supreme
Court of New South Wales, successfully reducing the damages awarded
to $11,500, but its appeal on liability was dismissed. By way of
special leave, Insight appealed to the High Court.
It was not disputed that section 74(1) of the former Trade
Practices Act 1974 (Cth) (TPA) implied a term
that the supply of the coach tour services be rendered with due
care and skill.
However, Insight argued that:
Section 74(1) TPA was subject to section 5N of the Civil
Liability Act (NSW) (CLA) (there is no
equivalent Queensland provision), which excludes liability for
breaches of contract in connection with "recreation
services". Leaving aside whether the tour package was a supply
of "recreation services", the court found that section 5N
of the CLA did not apply because the supply of services was wholly
outside New South Wales, which meant the CLA could not apply.
The following exemption clause in its contract with Mrs Young
Where the passenger occupies a
motorcoach seat fitted with a safety belt, neither
the operators nor their agents or cooperating 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." (our emphasis)
Mrs Young was travelling on a coach that had a safety belt, but
the High Court held the exemption clause did not apply and Insight
was therefore liable for her injuries. By using the word
"seat" with reference to when the exemption applied,
Insight had limited the exclusion only to situations where the
passenger was seated. Had Insight worded their exemption clause so
that it was not so narrow, for example by removing the word
"seat", then the exemption may have applied to exclude
liability for injuries whenever the passengers were on ("or
aboard") a motorcoach fitted with a safety belt.
While it is important that an exclusion clause avoids ambiguity
by being clearly expressed, this case shows how being too specific
may limit liability farther than intended.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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