1. Contents
page 98 A change in the air: workers’ compensation
amendments breathe new life into the ACT
Industrial Court
Caroline Hickey MINTER ELLISON
page 101 Recovery from insurers under the s 601AG of the
Corporations Act — the importance of the insurance
policy terms and conditions — Smart v AAI Ltd;
JKR Realty Pty Ltd v AAI Ltd
Ryan Tozer and Justine Siavelis GILCHRIST
CONNELL
page 104 Consumer law claims for adverse medical outcomes
— questions arising from Perisher Blue Pty Ltd
v Nair-Smith
Bill Madden and Victoria Upton SLATER AND
GORDON LAWYERS
General Editor
Janine McIlwraith Slater & Gordon,
Melbourne
Consulting Editors
Carolyn Sappideen Professor, Faculty
of Law, University of Western Sydney
Prue Vines Professor, Faculty of Law,
University of NSW
Editorial Board
Mark Doepel Partner, Sparke
Helmore
Richard Douglas QC Callinan
Chambers, Brisbane
Bill Madden Slater & Gordon, Sydney
Greg Williams Partner, Clayton Utz
Michael D Wyles QC Aickin
Chambers
Dr Dominic Katter Barrister-at-Law,
35 West Chambers
Andrew Eastwood Partner, Herbert
Smith Freehills
Deborah Templeman Principal,
Gilchrist Connell
Mark Elvy Partner, Ashurst Australia
Robert Crittenden Principal,
Meridian Lawyers
Amanda Stickley Law Faculty
Assistant Dean Learning & Teaching,
Queensland University of Technology
(QUT)
Christine Plevey Special Counsel,
Minter Ellison Lawyers
Anthony Lo Surdo SC 12 Wentworth
Selborne Chambers
2015 . Vol 12 No 6
Information contained in this newsletter is current as at July 2015
2. A change in the air: workers’ compensation
amendments breathe new life into the ACT
Industrial Court
Caroline Hickey MINTER ELLISON
There have been significant reforms to civil proce-
dure in the ACT within the past 12 months. First, there
was the introduction of a docket management system in
the ACT Supreme Court. What followed was a detailed
case management system in both the Supreme and
Magistrates’Courts which revolutionised what had become
an ineffective system of managing cases.
Reforms have now been implemented for workers’
compensation proceedings in the ACT Industrial Court1
through the amendment to Pt 3.13, Div 8 of the Court
Procedure Rules 2006 (ACT) (the rules) which effec-
tively reinvigorates the process for applications for
arbitration. The changes will see workers’ compensation
matters progressing more quickly, without the need for
both parties to agree to a case management hearing or
for a party to file an application in proceeding to achieve
this objective. These amendments coincide with the key
objectives of the new case management system: for
proceedings to be resolved with a minimum of delay and
expense.
From case management to dispute
resolution conferences
The Explanatory Statement accompanying the Court
Procedures Amendment Rules 2015 (No 1) Subordinate
Law SL 2015–12 as issued by the Authority of the
Rule-Making Committee, explains that the purpose of
the dispute resolution conference:
…is to provide early resolution, with the assistance of a
conciliator, to settle any issue in dispute and the amount of
compensation payable, and if the claim is not settled, to
narrow the issues in dispute and to progress the matter to
arbitration as quickly and cost effectively, as possible.
This purpose reflects the change that has been occur-
ring generally in the ACT to improve efficiency within
the courts. Previously, under the earlier rules, both
parties were required to sign a certificate of readiness
before the matter could be listed in the workers’ com-
pensation callover list to obtain a hearing date. If one
party did not sign the certificate the other party could file
an application in proceeding seeking to have the matter
listed in the next callover list. The issue that often arose
was that a party who did not wish to progress the matter
could remain inactive with little consequence.
Under the previous system, at the callover, a matter
would receive a case management conference and a
hearing date at the same time. Often the matter would
resolve at the case management conference, or shortly
thereafter, resulting in the hearing date being vacated.
The court then had difficulty allocating another matter in
its place. This saw a lot of the court’s valuable time
being unintentionally wasted.
Dispute resolution conference
A key change to the rules is the implementation of a
dispute resolution conference (DRC) before a concilia-
tor. When proceedings are filed they are listed for a DRC
in accordance with rule 3947:
(a) if an answer to an application has been filed by the
respondent or third-party respondent — not later
than 3 months after the day the answer was filed; or
(b) if 3 months has passed since the day the application
was filed and no action has been taken by any party
to the application — not later than 1 month after the
3 months has passed.
In practice, all applications for arbitration will be
automatically listed for a DRC within certain time limits
once the application is filed. Parties are expected to be in
a position to resolve the matter at the time of the DRC.
This will place pressure on practitioners to move matters
along to ensure that they comply with this strict timeframe.
It will also mean that applicants will need to be better
prepared with supporting evidence before commencing
an application for arbitration.
The conciliator is likely to be a member of the court
registry, who adopts an advisory rather than determina-
tive role for the conference, to assist the parties’ to
achieve resolution. Registrar Amanda Nuttall of the
australian civil liability July 201598
3. ACT Magistrates Court, previously responsible for man-
aging the workers’ compensation callover list, has indi-
cated that this role will be fulfilled by senior deputy
registrars.2
The injured worker must attend the DRC along with
a representative for each party. The DRC is confidential,
giving parties freedom to negotiate openly in an attempt
to resolve the claim.3
Information to be provided prior to the
DRC
Rule 3948 outlines a number of documents that are to
be provided to both the court and the other party not later
than five days before the DRC including:
(a) a statement of issues;
(b) a summary of the evidence on which the party
intends to rely at the arbitration;
(c) if the party intends to rely on expert evidence at the
arbitration but the party has not yet obtained that
evidence — details of what arrangements have been
made by the party to obtain the evidence.
According to Registrar Nuttall the court is not overly
concerned with the format of how this information is to
be provided and the information can be contained in
either the same or separate documents. The preference is
for the documents to be succinct and kept to between
one and two pages in length.
A statement of issues
While the statement of issues appears to be similar to
the procedure adopted in the Administrative Appeals
Tribunal (AAT), Registrar Nuttall has pointed out that
this document should be brief and aimed at narrowing
the issues in dispute. This is in contrast to the detailed
information provided to the AAT in its proceedings.
A summary of the evidence on which the party
intends to rely
This is intended to be a brief outline of all expert and
lay witness evidence to be relied upon at the arbitration.
For example, Registrar Nuttall has explained that a brief
statement of the injuries sustained by a worker from a
medical expert including their name and profession,
would be sufficient for assisting both parties and the
court.
Future expert evidence
If the party intends to rely on expert evidence but has
not yet obtained that evidence they are required to
outline the arrangements they have made to obtain that
evidence and any issue that the evidence may relate to.
The profession or area of expertise of the expert should
also be included.
If the matter does not settle at the DRC the conciliator
will decide whether the parties should participate in
another DRC based on the prospects of success. Other-
wise, the conciliator will make directions at the conclu-
sion of the DRC and give the matter a hearing date as
soon as possible.
Conclusion
While the amendments to the rules are relatively new
the court is optimistic they will be adopted quickly by
practitioners, as has been the case with the new case
management procedures. These amendments should see
a reduction in matters waiting to be progressed or
resolved, with the benefit of freeing up valuable court
time. This should also reduce legal costs for all parties
with matters potentially resolving within four months
from filing. If a matter is resolved at the DRC before
being listed for a hearing the expense of preparing a
matter for hearing will be avoided.
Finally, these amendments should benefit injured
workers looking to resolve their matter, improving their
chances of re-entering the workforce sooner rather than
later.
Caroline Hickey
Solicitor
Minter Ellison
Footnotes
1. The Industrial Court was established by the Magistrates Court
Act 1930 (ACT) and commenced on 8 November 2013.
2. The author would like to acknowledge the assistance of
Registrar Nuttall in writing this article.
3. Rule 3948A Court Procedure Rules 2006 (ACT).
australian civil liability July 2015 99
5. Recovery from insurers under the s 601AG of
the Corporations Act — the importance of the
insurance policy terms and conditions — Smart
v AAI Ltd; JKR Realty Pty Ltd v AAI Ltd
Ryan Tozer and Justine Siavelis GILCHRIST CONNELL
The Supreme Court of New South Wales case of
Smart v AAI Ltd; JKR Realty Pty Ltd v AAI Ltd1
involves
a failed attempt by the plaintiffs to establish the liability
of an insurer under s 601AG of the Corporations
Act 2001 (Cth) (Corporations Act). The case is also
notable for Beech-Jones J’s reliance on the recent High
Court decision of Selig v Wealthsure Pty Ltd2
to limit the
application of the proportionate liability regimes.
Facts
Q1 Financial Services Pty Ltd (Q1) was a business
acting as a mortgage/finance broker with a sole director,
George Carthy. Carthy held half of the shares in Q1 with
Damian Lynch. Lynch was the “General Manager” of
Q1.
On several occasions in late 2007 and early 2008,
Lynch persuaded Nathan Smart and Robyn Kanters (sole
director of JKR Realty Pty Ltd (JKR)) (together, the
Plaintiffs) to transfer money into Q1’s bank accounts.
Lynch told the Plaintiffs the money was to be used for
short-term loans to Q1’s clients, although there was
significant dispute surrounding Lynch’s representations
as to the nature of those transactions. The Plaintiffs’
understanding was that the principal would be repaid to
them at the end of the loan period.
The Plaintiffs never recovered the funds they trans-
ferred to Q1, although they did receive some “interest”
payments from time to time. Lynch did not give evi-
dence, however, Beech-Jones J was satisfied that Lynch
misappropriated the funds.
Q1 was deregistered in 2011, but was insured under a
claims made insurance policy for the period 31 May
2007 — 31 May 2008 (Policy) underwritten by AAI Pty
Ltd (then Vero).
The Plaintiffs bought proceedings for direct recourse
against Vero pursuant to s 601AG of the Corporations
Act. Section 601AG of the Corporations Act provides
that:
A person may recover from the insurer of a company that
is deregistered an amount that was payable to the company
under the insurance contract if:
(a) the company had a liability to the person; and
(b) the insurance contract covered that liability immedi-
ately before deregistration
It was not seriously disputed that Q1 had a liability to
the Plaintiffs, however, Vero contended that the Policy
did not cover Q1’s liability on five grounds. Vero was
successful in establishing three of the five grounds.
Findings as to liability
The nature of Q1’s liability to the Plaintiffs was
directly relevant to whether the Policy responded to that
liability. Beech-Jones J found that Q1 was liable to the
Plaintiffs for breach of contract (Contract Claim) and
that they had a right of recovery under s 82 of the Trade
Practices Act 1974 (Cth) (TPA) for misleading and
deceptive conduct under s 52 of the TPA (TPA Claim).
Beech-Jones J found that Q1’s was liable to the
Plaintiffs for damages in respect of the lost principal
loan amount with interest at the rate prescribed in the
Civil Liability Act 2002 (NSW) (CLA).
Proportionate liability
Consistent with the decision of Almario v Allianz
Australia Workers Compensation (NSW) Insurance Ltd,3
Beech-Jones J found that Vero was entitled to “stand in
the shoes” of Q1 and raise the same defences as Q1
could have raised in any action against it by the
Plaintiffs. His Honour therefore found that s 601AG of
the Corporations Act allowed Vero to rely on contribu-
tory negligence and proportionate liability, however the
availability of such claims ultimately offered Vero no
relief.
Beech-Jones J found that the Contract Claim was not
an “apportionable claim” for the purposes of the propor-
tionate liability provisions of the CLA, because the
Contract Claim did not arise from a failure to take
reasonable care.
australian civil liability July 2015 101
6. Although the TPA Claim fell within the proportionate
liability provisions of the TPA, Beech-Jones J found it
unnecessary to determine the application of proportion-
ate liability to the TPA Claim because of his finding that
the Contract Claim was not an apportionable claim.
Applying the principles in Selig, his Honour held that
the TPA did not collate apportionable claims (such as the
TPA Claim) with non-apportionable claims (the Contract
Claim) to form a “single apportionable claim” notwith-
standing that the claims were based on the same facts
and resulted in the same loss. Whether the TPA Claim
was apportionable was therefore irrelevant as the Plain-
tiffs were entitled to recover their loss in full in the
Contract Claim.
Likewise, his Honour found that as contributory
negligence did not apply to the Contract Claim (because
the contractual duty breached was not concurrent and
co-extensive with a duty of care in tort)4
it was unnec-
essary to decide whether the defence of contributory
negligence was available with respect to the TPA Claim
under s 82(1B) of the TPA. The Plaintiffs would be
entitled to take the superior remedy (Perpetual Trustee
Co Ltd v Milanex Pty Ltd (in liq)).5
Did the Policy respond to the liability?
The insuring clause of the Policy required Vero to
indemnify Q1:
…against civil liability for compensation and claimant’s
costs and expenses in respect of any Claim or Claims first
made against the Insured and notified to the Insurer during
the Period of Insurance resulting from the conduct of the
Professional Services …
“Claim” was defined in the Policy as “any demand by
a third party upon the Insured for compensation, how-
ever conveyed, including a writ, statement of claim,
application or other legal or arbitral process”.
The schedule of the Policy defined Q1’s Professional
Services as “Mortgage Broker/Finance Broker/
Mortgage Originator/Mortgage Manager and Debt Reduc-
tion”.
The Policy excluded liability for claims:
• “arising directly or indirectly from or in respect of
any dishonest, fraudulent, criminal or malicious
act or omission by the insured” (Fraud Exclusion);
and
• “arising directly or indirectly from or in respect of
any liability which is assumed by the Insured
outside of the normal course of the Professional
Services” (Assumption of Liability Exclusion).
The Policy also included a “write back” to the Fraud
Exclusion that required Vero to indemnify Q1 for any
Claim/s or first made against Q1 during the Period of
Insurance that resulted from any dishonest, fraudulent,
criminal or malicious act or omission by any employee
occurring or committed in connection with the Profes-
sional Services (Write-Back).
Vero argued the Policy did not respond to Q1’s
liability in this instance due to the following five
reasons:
• The Plaintiffs did not establish a “civil liability
for compensation” within the meaning of the
Policy.
Vero contended that the liability was essentially a
debt rather than a civil liability for compensation.
His Honour found that Q1’s liability arose from a
breach of duty or an obligation, being the obliga-
tion to use the Plaintiff’s funds to effect the lending
transaction, and therefore, the Policy responded.
• No claim (as defined in the Policy) was made
against Q1 during the period of insurance.
The Plaintiffs submitted that a statutory demand
sent to Q1 by Smart on or about 5 May 2008 and
an email sent to Lynch on 27 May 2008 amounted
to “claims” as defined in the Policy.
His Honour found those communications were
attempts to merely invoke a contractual right to
recover money and did not amount to a “claim” as
defined in the Policy. To meet the definition of
claim, the Plaintiffs needed to assert a breach of
duty and/or obligation and that Q1 was respon-
sible for that breach. There was therefore no
“claim” within the period of insurance and the
Policy did not respond.
His Honour held that it is not sufficient just to
show that the policy covered that liability irrespec-
tive of when the “claim” was made, quelling some
of the uncertainty arising from comments made by
Adamson J in Sciacca v Langshaw Valuations Pty
Ltd.6
• The matters pleaded by the Plaintiffs did not
result from conduct relating to the Professional
Services of Q1.
Vero contended that Q1 was not acting as a broker
(the “professional service”) when Lynch commit-
ted the fraud.
His Honour took a broad view of the connection
between “claim” and Q1’s conduct (through Lynch)
because under the Policy the claim was merely
required to “result from” the conduct of Q1’s
professional business. There was no requirement
for the professional services to actually be pro-
vided in relation to the very transaction that gave
rise to a claim.
His Honour found that, given the Plaintiffs approached
Q1 in its capacity as a broker and Lynch initially
australian civil liability July 2015102
7. promoted a form of broking transaction to them,
the claim resulted from Q1’s Professional Busi-
ness of broking as prescribed in the schedule.
• The Fraud Exclusion (and Write-Back)
His Honour accepted Vero’s contention that Q1’s
liability to the Plaintiffs was not covered by the
Policy because it arose directly or indirectly from
dishonest, fraudulent, criminal or malicious acts
and/or omissions by Lynch. The Plaintiffs then
contended that the Write-Back applied and the
central issue became whether Lynch could be
categorized as an employee of Q1.
His Honour accepted evidence from Carthy and
found that the arrangement between Carthy and
Lynch was suggestive of a quasi-partnership as
they shared the profits and were expected to
contribute equally to any losses Q1 incurred.7
His Honour concluded that the Write-Back was
not engaged and the Policy did not cover Q1’s
liability due to the dishonest actions of Lynch.
• The Assumption of Liability Exclusion
Vero contended that Q1 (through Lynch’s actions)
assumed the Plaintiffs’ liability outside of the
normal course of its Professional Services.
Vero established the application of this exclusion
by adducing expert evidence from an experienced
banker to the effect that once Q1 received the
Plaintiffs’ funds, Q1 ceased to be acting as a
mortgage and/or finance broker. His Honour found
that the scheme was akin to a managed investment
where investors’ funds were pooled and lent to
clients by Q1.
His Honour found that the liability Q1 assumed to
the Plaintiffs was outside of the normal scope of
the professional services specified in the Policy.
Summary
Beech-Jones J found that the Policy did not cover the
liability of Q1 for three reasons (rejecting the remaining
two) being:
• the Plaintiffs did not make a “claim” as defined in
the Policy on or before 31 May 2008 to engage the
insuring clause of the Policy;
• the liability of Q1 was excluded from cover
because Q1 assumed that liability “outside the
normal course of the Professional Services” as
defined in the Policy; and
• Q1’s liability was not covered by the policy
because of the dishonest and fraudulent acts of Q1.
As a result of those findings, the requirement in the
second limb of s 601AG was not met and the Plaintiffs’
claim was dismissed.
The decision makes it clear that the terms of the
insurance policy under consideration for the purposes of
s 601AG, including the insuring clause and any exclu-
sions and limitations on cover, are relevant to a deter-
mination of the insurer’s liability under s 601AG.
The decision is also interesting for the judge’s appli-
cation of the principles in Selig which illustrates, in a
different statutory context, the limits of the Common-
wealth and state proportionate liability schemes.
Justine Siavelis
Principal
Gilchrist Connell
jsiavelis@gclegal.com.au
www.gclegal.com.au
Ryan Tozer
Solicitor
Gilchrist Connell
rtozer@gclegal.com.au
www.gclegal.com.au
Footnotes
1. Smart v AAI Ltd; JRK Realty Pty Ltd v AAI Ltd [2015] NSWSC
392; BC201504204.
2. Selig v Wealthsure Pty Ltd (2015) 89 ALJR 572; 105 ACSR
552; [2015] HCA 18; BC201503711.
3. Almario v Allianz Australia Workers Compensation (NSW)
Insurance Ltd (2005) 62 NSWLR 148; 53 ACSR 422; [2005]
NSWCA 19; BC200500528.
4. Law Reform (Miscellaneous Provisions) Act 1965 (NSW). The
proportionate liability provisions of the CLA did not permit a
reduction for contributory negligence absent some other law
enabling a reduction of the claim for contributory negligence.
5. Perpetual Trustee Co Ltd v Milanex Pty Ltd (in liq) [2011]
NSWCA 367; BC2011090097.
6. Sciacca v Langshaw Valuations Pty Ltd [2013] NSWSC 1285;
BC201312755.
7. His Honour referred to the principles in Hollis v Vabu Pty Ltd
[2001] HCA 44; 207 CLR 21; BC200104558 and Stevens
v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 1986 160
CLR 16; BC8601402.
australian civil liability July 2015 103
8. Consumer law claims for adverse medical
outcomes — questions arising from Perisher
Blue Pty Ltd v Nair-Smith1
Bill Madden and Victoria Upton SLATER AND GORDON LAWYERS
Injury compensation claims (including claims arising
from adverse medical outcomes) were once not uncom-
monly pleaded so as to include reference to the now
repealed Trade Practices Act 1974 (Cth). Such claims
pleaded breach of contract and in particular breach of the
s 742
implied contractual warranty that services be
provided with due care and skill.
Pleadings of that type appear to have become less
common following the Review of the Law of Negligence
20023
and the amendments which followed it. A recent
decision of the NSW Court of Appeal in relation to a
“public liability” injury claim arguably highlights the
potential for the continuing relevance of such pleadings,
now by reference to the Competition and Consumer
Act 2010 (Cth).
Background
In 2003 Dr Nair-Smith suffered injury when boarding
a chairlift at a ski field operated by Perisher Blue. She
succeeded in her claim at first instance,4
leading to the
subject appeal by Perisher Blue. Although various issues
arose on appeal, this discussion is limited to one key
issue with potential broader application, flowing from
the claim pleaded under the then s 74(1) of the Trade
Practices Act 1974 (Cth):
In every contract for the supply by a corporation in the
course of a business of services to a consumer there is an
implied warranty that the services will be rendered with due
care and skill …
The court in a single judgment (per Barrett, Gleeson
JJA and Tobias AJA) held that the limitations on
damages imposed by Pt 2 of the Civil Liability Act 2002
(NSW) were relevantly invalid according to s 109 of the
Constitution because they were directly inconsistent
with the right to “full contractual liability” conferred by
s 74(1) of the Trade Practices Act 1974 (Cth) in its
unamended form, which was the applicable legislation at
the time.5
“Full contractual liability” refers to an entitlement to
recover the full amount of damages recoverable at
common law undiminished by any state’s or territory’s
legislation and free from any intrusion by such legisla-
tion, for any breach of s 74.6
Section 74 was later
amended (though not retrospectively) by the insertion of
subs (2A):
If:
(a) there is a breach of an implied warranty that
exists because of this section in a contract
made after the commencement of this subsec-
tion; and
(b) the law of a State or Territory is the proper
law of the contract;
the law of the State or Territory applies to limit or
preclude liability for the breach, and recovery of that
liability (if any), in the same way as it applies to
limit or preclude liability, and recovery of a liability,
for breach of another term of the contract.
The direct effect of Nair-Smith
It must be conceded that the direct effect of the recent
Court of Appeal decision may be quite limited. Not only
as the court was required to consider the effect of the
now replaced Trade Practices Act, but also as the
decision focused on an older version of s 74 of that Act,
before its amendment.
Rather than dwell on the repealed statute, even after
its amendment, it may be more useful to turn to the
current law and its potential application.
The current law as to due care and skill
Section 74 of the Trade Practices Act 1974 (Cth) has
been replaced by s 60 of the Australian Consumer Law,
which is found in Sch 2 of the Competition and
Consumer Act 2010 (Cth). Section 60 applies to the
supply of services, which should include most forms of
medical advice and treatment. It creates a “guarantee”
rather than an implied warranty, which is arguably more
akin to creating a claim based on a breach of statutory
duty. The section reads:
60 Guarantee as to due care and skill
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.
There must be a supply of services to a consumer.
Services is defined in s 2(1) of Sch 2 as follows:
australian civil liability July 2015104
9. “services” includes any rights (including rights in relation
to, and interests in, real or personal property), benefits,
privileges or facilities that are, or are to be, provided,
granted or conferred in trade or commerce, and includes,
but is not limited to, the rights, benefits, privileges or
facilities that are, or are to be, provided, granted or
conferred under:
(a) a contract for or in relation to:
(i) the performance of work (including work of a
professional nature), whether with or without
the supply of goods; or
(ii) the provision of, or the use or enjoyment of
facilities for, amusement, entertainment, rec-
reation or instruction; or
(iii) the conferring of rights, benefits or privileges
for which remuneration is payable in the form
of a royalty, tribute, levy or similar exaction;
or
(b) a contract of insurance; or
(c) a contract between a banker and a customer of the
banker entered into in the course of the carrying on
by the banker of the business of banking; or
(d) any contract for or in relation to the lending of
moneys;
but does not include rights or benefits being the supply of
goods or the performance of work under a contract of
service.
The supply must be a supply in trade or commerce.
Supply in trade or commerce may not be an issue in
private medical treatment scenarios, but debate may
arise in some settings.7
Although a contract will usually exist where there is
a supply of services to a consumer, the section does not
on its face limit itself to circumstances where a contract
exists.
Private right of action for breach of s 60
Section 267 makes clear that a consumer has a right
to recovery of “damages” for a breach of s 60, Sch 2.
Section 267(4) provides:
The consumer may, by action against the supplier, recover
damages for any loss or damage suffered by the consumer
because of the failure to comply with the guarantee if it was
reasonably foreseeable that the consumer would suffer such
loss or damage as a result of such a failure.
The right to recovery of damages under s 267(4) may
not be excluded by contract, by virtue of s 276, which
provides:
(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 modify-
ing:
(a) the application of all or any of the provisions
of this [Part]; or
(b) the exercise of a right a conferred by such a
provision; or
(c) any liability of a person [in relation to] a
failure to comply with a guarantee that applies
under [Division 1 of Part 3-2] 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 appli-
cation of a provision of this [Part] unless the term
does so expressly or is inconsistent with the provi-
sion.
(3) This section does not apply to a term of a contract
[that is a term referred to in section 276A(4)].
On what basis will damages be assessed,
under s 267(4)?
Although the Competition and Consumer Act 2010
(Cth) includes restrictions on personal injury damages
awards in Pt VIB of that Act, those restrictions appear
not to apply to claims under s 60 of Sch 2. That is
because Pt VIB by s 87E(1)(a) relevantly applies only to
proceedings that relate to Pt 2-2, 3-3, 3-4 or 3-5, or Div 2
of Pt 5-4 of the Australian Consumer Law, by virtue of
s 87(1). Section 60 of Sch 2 is in Pt 3-2; it is not within
the Parts listed in s 87(1).
Absent the application of Pt 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 at [192]. The civil liability legis-
lation of the states and territories would not immediately
apply, given the primacy of Commonwealth legislation
under s 109 of the Australian Constitution.
However a defendant to a claim based on s 60 may
seek to call into aid the restrictions found in the civil
liability legislation of the various states, despite s 109.
Such an argument may be made by reference to s 275,
which reads:
275 Limitation of liability etc.
If:
(a) there is a failure to comply with a guarantee
that applies to a supply of services under
Subdivision B of Division 1 of Part 3-2; and
(b) the law of a State or a Territory is the proper
law of the contract;
that law applies to limit or preclude liability for the
failure, and recovery of that liability (if any), in the
same way as it applies to limit or preclude liability,
and recovery of any liability, for a breach of a term
of the contract for the supply of the services.
Effect of s 275: more questions than answers
Some challenging questions then arise on considering
the potential interpretation of s 275,8
such as:
• What is meant by law that applies to limit or
preclude liability for the failure?
• What is meant by law that applies to limit or
preclude recovery of liability for the failure?
australian civil liability July 2015 105
10. • What if there is no contract (bearing in mind the
phrasing of s 60, referred to above)?
• What if there is a contract, but no state or territory
law is the proper law of the contract?
By way of example, the Civil Liability Act 2002
(NSW) at s 5D(3)(b), in failure to warn cases, provides
that any statement made by the person after suffering the
harm about what he or she would have done is inadmis-
sible except to the extent (if any) that the statement is
against his or her interest. That arguably is a provision
regarding evidence, not a law that limits or precludes
liability. Arguably it may not be available to a defendant
in an “advice” services claim based on s 60.
Perhaps the most interesting unanswered question
arises from s 275’s use of the word “liability”, with no
express reference to quantification of damages. The
courts may take that phrase to permit application of
sections like s 26L of the Civil Liability Act 2002
(NSW) which requires certain defendants to pay dam-
ages awarded to an “offender to the NSW Trustee and
Guardian”, to be held in trust for the offender and paid
out only as authorised.
If recovery of liability is taken to encompass dam-
ages, then provisions such as those limiting personal
injury damages in Pt 2 of the Civil Liability Act 2002
(NSW) may apply to s 60 claims. That seems to have
been assumed, though not carefully analysed or deter-
mined, in Perisher Blue Pty Ltd v Nair-Smith at [187].
However if the language, absent express reference to
damages, is not sufficiently clear then “full contractual
liability” damages may be available to a claimant.
No doubt these questions will arise for judicial
consideration in due course.
Bill Madden
National Practice Group Leader,
Medical Law
Slater and Gordon Lawyers
Victoria Upton
Student, UNSW Law
Slater and Gordon Lawyers
Footnotes
1. Perisher Blue Pty Ltd v Nair-Smith [2015] NSWCA 90;
BC201504428.
2. Section 74(1) provided: “In every contract for the supply by a
corporation in the course of a business of services to a
consumer there is an implied warranty that the services will be
rendered with due care and skill …”
3. Department of Communications, Information Technology (Cth)
Review of the Law of Negligence 2002. Available online at
www.amatas.com.au.
4. Nair-Smith v Perisher Blue Pty Ltd [2013] NSWSC 727;
BC201303023.
5. The relevant injury was suffered on 18 July 2003.
6. See, above, n 1 at [194]–[195].
7. Re E v Australian Red Cross Society [1991] FCA 781.
8. Similar language appeared in s 74(2A) of the Trade Practices
Act 1974 (Cth), the insertion of which is discussed in Perisher,
above, n 1 at [177].
australian civil liability July 2015106
