The NSW Civil Liability Act and Community Participation Events

by General Insurance News

Following the demise of HIH and the enactment of New South Wales's Civil Liability Act ("CLA") specialist insurance solicitors at Abbott Tout increasingly are being asked about the liability implications of community participation programmes and events.

While perhaps many of the CLA provisions do no more than restate the common law, the CLA does break new ground in relation to liabilities for recreational activities, dangerous recreational activities, risk warnings and waivers.

The problems associated with minors and the heightened potential for, and the difficulty of avoiding or reducing, such liability are not new but they are of particular importance in relation to community based events. This article examines some of the liability issues which may arise.

Recreational Activities

The exclusion

Section 5K of the CLA defines recreational activities to include:
    "(a)any sport (whether or not the sport is an organised activity); and

    (b) any pursuit or activity engaged in for enjoyment, relaxation or leisure; and

    (c) any pursuit or activity engaged in at a place (such as a beach, park or other pursuit or open space) where people ordinarily engage in sport or in any pursuit or activity for enjoyment, relaxation or leisure."
The extraordinary breadth of that definition is no doubt immediately apparent and is wide enough to embrace a wide variety of community-based events such as fun-runs, walkathons, as well as fund raising activities such as car washing, community clean-ups, land care and tree planting programmes and other similar activities.

Section 5L provides a complete exclusion of liability if an obvious risk inherent in a dangerous recreational activity materialises and causes harm. This exclusion applies whether or not the injured person was aware of the risk.

What is a dangerous recreational activity?

Section 5K says that "dangerous recreational activity" is a recreational activity "that involves a significant risk of physical harm", which suffers from a lack of clarity. It is assumed that the significant risk concept indicates a risk greater than a "not insignificant risk" (an expression which appears in the test for whether a general duty of care exists) while not necessarily indicating a risk which is more probable than not. Additionally, the "significant risk of physical harm" test probably refers also to the magnitude of the potential harm.

In many cases perhaps, significant risk of physical harm may denote some inherent quality in the recreational activity. For instance, while some may argue that skydiving is a dangerous recreational activity, devotees might well argue that it is less dangerous than catching a bus. Is jumping or diving off rock platforms into the sea a dangerous activity? Just how courts will answer these questions and where they will draw the line as to when the recreational activity is a dangerous one remains to be seen. However that question is answered over time, it nevertheless seems unlikely that many, if any, community based events will be categorised as dangerous recreational activities.

Risk Warnings

Section 5M of the CLA provides that if a "risk warning" is given there is no duty of care owed to a participant in a recreational activity in respect of the risk the subject of that warning.

A "risk warning" is a warning "given in a manner that is reasonably likely to result in people being warned of the risk before engaging in the recreational activity". A risk warning can be given orally or in writing including by means of a sign. A defendant is not required to establish that the plaintiff received or understood or was capable of receiving and understanding the warning although a risk warning can only be given to an incapable person (such as a child) if it was given to a legally competent parent or other person who was in control of or accompanied the incapable person. This is important because provided the warning is given to a parent, guardian or other adult supervisor, negligence liability to a child can be avoided by giving a risk warning.

It seems that there must be some coincidence between the risk which materialises and the risk against which the warning was given before liability is excluded. Even so, a risk warning "need not be specific to the particular risk and can be a general warning of the risks that includes the particular risk concerned (so long as the risk warning warns of the general nature of the particular risk)" - section 5M(5).

A risk warning cannot be relied on if contradicted by other representations. A defendant cannot rely on a risk warning unless it is given by or on its behalf or by or on behalf of the occupier of the place where the recreational activity is undertaken. A risk warning cannot be relied on where there is contravention of a statutory code or regulatory protocol for protection of personal safety, eg WorkCover codes and regulations. Risk warnings cannot be relied on if the plaintiff was required to engage in a recreational activity by the defendant although what degree of power, authority and compulsion is necessary is not made clear.

In relation to any particular programme or event, if it is possible to devise a risk warning which gives a general warning of the particular risks, then liability for negligence will not be imposed if these risks occur.

Waivers

Section 5N of the Civil Liability Act purports to validate liability waiver clauses in recreational services contracts which exclude liability for the breach of an express or implied warranty that services will be provided with reasonable care and skill. Recreational services means services supplied to a person "for the purposes of, in connection with or incidental to the pursuit by the person of any recreational activity". The definition uses some fairly broad connecting expressions such as "for the purposes of", "in connection with" or "incidental to" but nevertheless the connection must be with the pursuit by the person of any recreational activity. The words "pursuit of any recreational activity" do suggest a close relationship between the services and the recreational activity.

In the corresponding amendments to the Trade Practices Act, section 68B of that Act defines recreational services in a slightly different and narrower fashion. Under the Trade Practices Act, recreational services means services that consist of 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 purpose of recreational enjoyment or leisure.
Section 5N of the CLA does not specify in detail what is required to constitute an effective waiver but it does say that a term to the effect that the customer engages in recreational activities at his own risk shall operate to exclude liability for the breach of express or implied warranties that the services will be provided with reasonable care and skill.

Clearly then, to take advantage of the changes to contractual obligations introduced by the CLA and the amendment to the Trade Practices Act, documents such as entry forms and applications will have to be reviewed and carefully redrafted.

Waiver by Minors

However, children present a particular problem when dealing with contract issues because it is doubtful whether they can contract to waive a contractual liability and parents or guardians cannot successfully do so on their behalf.

A related question on each occasion will be whether the minor has actually entered a contract in the first place. In NSW, the capacity of minors to contract is governed by the Minors (Property and Contracts) Act 1970. Sections 18 and 19 provide that as long as having sufficient maturity to understand what he/she is doing a minor can be bound by a contract which is to his/her benefit. The legislation does not provide guidelines on how it should be determined whether a contract is for the minor's benefit.

It has to be doubted whether a contract to participate in a community based event which includes the waiver would be enforceable by or against a minor. It seems unlikely that the courts would regard a contract, where the only enduring obligation is the waiver of liability, as a contract beneficial to the minor. However, clearly this is an issue which will require clarification by the courts or the parliament.

Conclusion

The provisions of the Civil Liability Act relating to risk warnings of recreational activities provides an excellent opportunity for limiting negligence liability in general, but in particular to minors where otherwise there is not much scope for such liability limitation strategy. Subject to the qualification concerning a minor's power to contract, carefully thought out, well documented systems for registering participants including risk warnings, waivers and other statements of what the participants can and cannot expect from the organisers, will considerably reduce the potential liabilities faced by organisers of such events, and may facilitate obtaining affordable insurance cover in what is currently a most difficult market.


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