Australia: Medical claims and the ACL: A few thoughts on exclusion clauses and waivers

Last Updated: 5 July 2018
Article by Bill Madden

It may be that no one much likes reading articles on the Australian Consumer Law (ACL)1 – or trying to navigate the legislation itself. In an effort to overcome that hurdle, this article is confined to a few brief thoughts on some (but not all) issues which may be worth noting in the context of medical claims.

Why plead the Australian Consumer Law in a claim about medical treatment?

ACL claims in the public liability sphere are not uncommonly thought of when seeking to avoid the operation of exclusion clauses. Section 60 provides that 'If 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'. Under s267, a customer may recover compensation for any foreseeable loss suffered as a result of the failure of a person to comply with a guarantee under ss60 or 61 of the ACL.

Alameddine v Glenworth Valley Horse Riding Pty Ltd2 is a good example. Ms Alameddine was injured when she fell off a quad bike while being led by an instructor employed by Glenworth Valley Horse Riding Pty Ltd back to their Administration Centre from their purpose-built quad biking track. She was held to be entitled to compensation under the ACL as a result of the company's failure to comply with the guarantee given to Ms Alameddine as a consumer, under s60, that it would perform its services with due care and skill. The exclusion of liability clause that the company sought to rely on did not form part of its contract with Ms Alameddine as it was contained in a form that was signed after the contract was concluded. There was therefore no contractual exclusion clause whose efficacy was preserved by s5N3 of the Civil Liability Act 2002 (NSW). In any event, the terms of the exclusion clause were not sufficiently broad to extend to the company's negligence – a drafting hurdle which seems to be rarely overcome.

But aren't exclusion clauses often seen in a medical treatment context?

Not often, but sometimes. For example, a form of exclusion clause is referred to in Stefanyszyn v Brown; Brown v Newcastle Private Hospital Pty Limited t/as Newcastle Private Hospital.4 Colleen Stefanyszyn died after elective surgery performed by Dr Oliver Brown at Newcastle Private Hospital. Proceedings were brought against Dr Brown by her husband and two daughters under the Compensation to Relatives Act 1897 (NSW) and for mental harm. Their claims were settled prior to the hearing on terms which the hospital accepted were appropriate. Dr Brown admitted the breach of his duty of care to Mrs Stefanyszyn and that it had resulted in her death. By his cross-claim he sought orders under s5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) against the hospital. The hospital admitted to providing its hospital facilities, nursing services and paramedical services to Mrs Stefanyszyn and that it owed her a duty to exercise reasonable care in providing those services. It claimed that it was Dr Brown (and other medical practitioners retained by or on behalf of patients) who undertake the medical management of patients' medical conditions and that it was Dr Brown who had provided Mrs Stefanyszyn with that management.

Relevantly to this article, the hospital also relied on a disclaimer that Mrs Stefanyszyn had signed which acknowledged, among other things, that she would not hold the hospital responsible or liable for any injury caused by the negligence or breach by her private treating doctor. Such disclaimers appear to be not uncommonly included in patient admission forms, at least by some private hospital groups.5

Contractual waivers are void under s64 of the ACL insofar as they exclude rights under the law.6 The section reads:

'64 Guarantees not to be excluded etc. by contract
  1. A term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying:
    1. the application of all or any of the provisions of this Division; or
    2. the exercise of a right conferred by such a provision; or
    3. any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services.
  2. A term of a contract is not taken, for the purposes of this section, to exclude, restrict or modify the application of a provision of this Division unless the term does so expressly or is inconsistent with the provision.'

Hence the pleading of a claim under the ACL may well be useful in a claim where a patient has signed such an agreement.

In Alameddine, Campbell AJA at [77] noted that the 'guarantee' is not a contractual obligation, but rather a statutorily imposed obligation, concerning which s267 provides a statutory remedy.

Will a patient be classified as a consumer?

In Alameddine, Campbell AJA only briefly discussed at [77] the meaning of 'consumer'. Section 3(3) provides a broad definition of consumer in relation to services, including a general 'catch-all' phrase that a person is taken to have acquired particular services as a consumer if the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

What of 'In Trade or Commerce'?

Section 2 of the ACL provides that 'trade or commerce' means trade or commerce within Australia; or trade or commerce between Australia and places outside Australia, and includes any business or professional activity, whether or not carried on for profit. 'Services' includes any benefits, privileges or facilities provided, granted or conferred in trade or commerce including those provided, granted or conferred under a contract for or in relation to the performance of work (including work of a professional nature), whether with or without the supply of goods.

Although it seems likely that many medical services will fall within the above definitions, a directly applicable precedent appears not to exist as yet. Templar v Watt (No. 3)7 addressed the extended definition of conduct in trade and commerce under the ACL. Although providing a good overview of the law on 'in trade or commerce', the Templar decision is perhaps of limited use as a precedent on the provision of health services generally, or at least private health services. It focused on the sending of an email by a medical practitioner to the NSW Department of Education and Communities, expressing concern about the provision of hearing tests in schools by a particular provider. Justice McCallum at [109] noted that the email was sent by a medical practitioner who, by virtue of his position and for reasons concerned with the public interest, fell under a professional duty to impart information.

How will damages be assessed?

Returning again to Alameddine, Macfarlan JA stated at [72] that:

'The Competition and Consumer Act provides for compensation in respect of causes of action arising under that Act. It does not purport to, nor have the effect of, excluding recovery of non-economic loss damages under the Civil Liability Act, notwithstanding that the causes of action may arise out of the same factual circumstances. On my findings, the appellant's causes of action are available to her under both Acts. She is entitled to choose that which is more favourable, being that which is available under the Civil Liability Act.'

That analysis may overlook an aspect of the legislation. Although the Competition and Consumer Act 2010 (Cth) includes restrictions on personal injury damages awards under Part VIB, those restrictions appear not to apply to claims under s60 of Schedule 2 (the ACL). That is because Part VIB by s87E(1)(a) relevantly applies only to proceedings that relate to Part 2-2, 3-3, 3-4 or 3-5, or Division 2 of Part 5-4 of the ACL. Section 60 of Schedule 2 is in Part 3-2; it is not within the Parts listed in s87E(1).

Absent the application of Part VIB, the starting point for damages would appear to be damages of a 'full contractual liability' type, as referred to in Perisher Blue Pty Ltd v Nair-Smith,8 as modified by the applicable civil liability legislation of a state or territory.

Concluding remarks

We do not as yet have the benefit of a court decision applying the s60 guarantee in a medical treatment context. Hopefully the opportunity for such a decision will present itself soon, to assist practitioners in understanding the manner in which it should be applied.

Footnotes

1 Competition and Consumer Act 2010 (Cth), Schedule 2.

2 [2015] NSWCA 219 (Alameddine).

3 Section 5N provides: 'Despite any other written or unwritten law, a term of a contract for the supply of recreation services may exclude, restrict or modify any liability to which this Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill.'

4 [2015] NSWCA 90, [192].

5 Newcastle Private Hospital forms part of the Healthscope Ltd group, which describes itself as a leading private healthcare provider in Australia with 45 hospitals as well as a market leading international pathology operations across Malaysia, New Zealand, Singapore and Vietnam. See < HTTP://WWW.HEALTHSCOPE.COM.AU/ >, viewed on 18 March 2018.

6 See Alameddine, [65]. Section 139A of the Competition and Consumer Act provides an exception for terms in contracts relating to the supply of recreational services. The exception only applies if the exclusion of liability is limited to personal injury (s139A(3)) and does not apply if the defendant's conduct has been reckless (s139A(4)).

7 [2016] NSWSC 1230 (Templar).

8 [2015] NSWCA 90, [192].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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