To a large extent the decision of the High Court of Australia today in Insight Vacations Pty Ltd v Young [2011] HCA 16 (11 May 2011) http://www.austlii.edu.au/au/cases/cth/HCA/2011/16.html will mainly be of interest to Australian lawyers interested in the twists and turn of our "tort reform" legislation. But it does have one or two comments which may intrigue those interested in statutory interpretation and the geographical limits of legislation. And it may be something of a recent record for there to be two successive torts/contracts judgments from the High Court in favour of an injured plaintiff! (Following last week's decision in Kuhl.)

Mrs Young entered in NSW into a contract for a European coach tour. On the road from Prague to Budapest the coach driver decided to speed up at one point when she was standing to get something from her bag on an overhead shelf. Her subsequent fall led to injuries, for which she sued the travel company, claiming they had an implied contractual duty to provide a safe trip. It seems to have been conceded that they would in other circumstances have indeed been in breach of a term of their contract with her, which would have been implied  by virtue of s 74(1) of the Trade Practices Act 1974 (Cth). Such a term, under s 68(1)(c) of the Act, could not be excluded by agreement between the parties.

Insight Vacations wanted to rely on an exclusion clause in their contract with Mrs Young, however, which said that where "the passenger occupies a motorcoach seat fitted with a safety belt", the firm would not be liable for harm if the belt was not being worn.

For three reasons the High Court upheld the decisions of the lower courts that the exclusion clause did not operate to preclude an award of damages:

(1) that the NSW legislation being relied on by Insight was not the sort of legislation "picked up" as an exception to the normal TPA reading in of a non-negotiable warranty of reasonable skill and care; (2) that in any event the NSW legislation did not operate where the relevant "recreation services" were being provided outside NSW; and (3) that in the end the circumstances in which Mrs Young was injured did not fall within the exclusion clause.

(1) The first point is relatively straightforward once the labyrinth of legislation is navigated. The TPA, s 74A(2), provided that the normal rule that warranties of this sort could not be excluded, would not operate where "the law of [a] State or Territory applies to limit or preclude liability for the breach". But s 5N of the Civil Liability Act 2002 (NSW) was not a law of that description. It did not directly operate to "limit or preclude" liability; it simply said that under the law of NSW parties themselves could agree to so limit or exclude liability. Hence s 5N was not "picked up" by the Federal law, and the usual rule of non-exclusion applied. {Perhaps the only general comment one can make is that it is obvious that the courts will continue to read "exclusionary" provisions fairly narrowly where possible, and this is a Good Thing in my view.}

(2) The second point was that, even if s 5N was otherwise able to operate, as a law of NSW it had to have some geographical limits. After discussing whether it should be the "proper law" of the contract or some other limits, the court concluded that the context of the legislation, dealing with contracts for supply of "recreation services", should mean that the provision only operated where the recreation services were to be supplied in NSW. To be honest I am still a bit unclear as to why this rule was chosen, but it would clearly preclude the section from affecting liability for a contract to be performed in Europe.

(3) Finally, in what provides a neat illustration of the tendency of the courts to read exclusion clauses narrowly, the HC held that since Mrs Young was not in fact "seated" at the time of the incident, and the clause said that it only operated where someone "occupied a motorcoach seat", her injury was not covered by the exclusion clause in any event. Again I think this must be right- as the Court says, the coach was equipped, as most such coaches are, with lavatories up the back, and so it cannot have been assumed that passengers would always be seated.

Regards

Neil