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Thursday, 12 December 2002
Page: 7986


Senator COONAN (Minister for Revenue and Assistant Treasurer) (8:48 PM) —Before I go to the specific amendment, I want to make some general comments in response to the Labor and Democrat amendments. It is significant to put on the record, as I did in my second reading speech, that the bill implements a commitment made by the Commonwealth at the ministerial meeting on public liability insurance on 30 May this year. At that meeting, the Commonwealth agreed to legislate to allow self-assumption of risk for people who choose to participate in inherently risky activities, such as adventure tourism and sports. The decision was taken by the federal government because of direct representations by state Labor governments on this issue.

The amendments proposed by the opposition and the Democrats would make the Trade Practices Act less restrictive than complementary legislation in New South Wales, South Australia and the Northern Territory. This would provide plaintiff lawyers with a very real incentive to frame their cases as a breach of contract rather than having their case heard under the law of negligence, as amended by state law reform. Only two days ago, the Premier of New South Wales, Mr Carr, sent a letter to the Prime Minister in which he asks for the scope of the bill to be widened. The letter reads:

Under the New South Wales reforms, liability waivers will be permitted in contracts of recreational services. These waivers will only be effective, however, if amendments are also made to the Trade Practices Act. I am pleased with the speed at which the Commonwealth government moved to introduce such amendments earlier this year. I am advised, however, that the bill may be narrower in scope than the final New South Wales reforms in two significant ways. First, I understand that some non-sporting recreational activities such as attending theatrical performances or photography courses may not be caught by the bill's definition of a recreational service. I also understand that the bill does not permit the exclusion of liability for property damage. Without amendment to the bill, the Trade Practices Act will limit the effectiveness of the New South Wales reforms, albeit at the margins only.

While I appreciate that the bill does cover most cases in which waivers are likely to be used, I would be grateful if you would consider amending the bill to follow the broader New South Wales approach. This would ensure consistency with the New South Wales reforms as well as reduce the potential for unnecessary arguments about whether a waiver is effective for a particular kind of recreational activity. I believe that such changes would also be consistent with the aim of allowing participants in recreational activities to assume greater personal responsibility. I note, however, that the current bill makes a significant contribution to reducing the extent to which the Trade Practices Act might undermine the New South Wales reforms, and I would not wish consideration of further amendments to delay passage.

That is the general background in which we are considering the amendment before us. Proposed subsection (1A) of Labor's amendment, as described by Senator Ludwig, mandates a requirement that regulations be passed requiring waivers to be in a particular form and that they be signed by the consumer who is participating in the recreational activity. I can understand how Senator Ludwig would advocate that, and I acknowledge the line of authority that he referred to. However, the requirement that a consumer sign a waiver for it to be valid is impractical in many instances. Often contractual terms are established by prominently displayed signage—I am sure we are all familiar with that—and where a recreational service is supplied to a very large number of consumers, as in the case of ski lift tickets or a roller-coaster et cetera, the obligation imposed on business to keep records would be unduly onerous.

The government's view is that proposed subsection (1B) is unnecessary. Any exclusion, restriction or modification relating to section 74 would contravene other provisions of the Trade Practices Act, such as section 53, which prohibits misleading and deceptive conduct, or section 53G, which prohibits any false or misleading representation concerning the existence, exclusion or effect of any condition, warranty right or remedy. Any breach of these sections gives rise to a statutory course of action independent of any contractual rights.

Proposed subsection (1C) is likely to increase the uncertainty attaching to waivers. In deciding whether or not to enforce a waiver, the court will need to determine whether the service provider acted `recklessly'. Suppliers of recreational services will find it more difficult to determine whether they can rely on waivers. Reckless conduct by service providers is a different concept to gross negligence, which some people have argued should be an explicit exception where waivers ought not be capable of being relied upon. I was initially attracted to that, but I no longer am. The courts have proved to be reluctant to uphold the validity of waivers where a supplier is grossly negligent and have an important role to play in protecting the rights of injured litigants.

I turn briefly to the Democrat amendment. My view is that this amendment could increase the uncertainty attaching to waivers. It will be up to a court to determine whether the service provider acted recklessly. It is not known what the term `reckless' might mean in this regard. Is a reckless action any different from a failure to act with due care and skill? Is it some higher standard or benchmark? It is difficult to know that. Whatever meaning is intended for the term `reckless', it is clear that the amendment is intended to restrict the operation of the bill.

This brings me back to my original point: the context for the government's position on this bill. This restriction will undermine the Commonwealth's commitment to amend the Trade Practices Act so as not to impede the effectiveness of state law reform, which has marched ahead. It also ignores the fact that the courts have an important role to play in protecting the rights of injured litigants. When suppliers have acted in a manner which we might describe as grossly negligent, the courts have indeed proved reluctant to uphold the validity of waivers under the common law of contract. For these reasons, the government does not support this amendment. But I do stress that taking this position is very much predicated on the agreement that was struck between the Commonwealth and the states in the context of the broader need to rein in some of the difficulties in contract law and to make the Trade Practices Act complementary to common law and state laws.