The health and fitness industry is an important contributor to the national economy through direct and indirect savings in health care costs associated with the promotion of physical activity and exercise. Despite its important and significant role in the health and wellbeing of the general population, the standardisation of the health and fitness industry in Australia has been self-regulatory with the exception of fair trading and contracts. In several states and a territory, there are mandatory codes of practice specific for health and fitness service suppliers to protect consumer rights. These are:
• Australian Capital Territory – Fair Trading (Fitness Industry) Code of Practice 2009 (ACT)
• Queensland – Fair Trading (Code of Practice – Fitness Industry) Regulation 2003 (Qld)
• Western Australia – Fair Trading (Fitness Industry Code of Practice) Regulations 2020 (WA)
• South Australia – Fair Trading (Health and Fitness Industry Code of Practice) Regulations 2007 (SA)
Consumer Affairs Victoria has been working with health and fitness centres to remove or modify unfair consumer contract terms, such as automatic renewals and variation to services without a notice, penalties for member cancellation, and penalties for breaches of contract.
Nevertheless, health and fitness service suppliers are advised that it would be up to a court or tribunal to decide if such terms are considered unfair.
Withstanding this advice, Consumer Affairs Victoria has also advised that recreational businesses, including health and fitness centres, can limit their liability under consumer law for death or personal injury as long as they notify consumers of any limitation before they agree to buy the services.
From 27 June 2022, recreational businesses in Victoria wishing to do so for the first time must use the exact wording found in Schedule 2 of the Australian Consumer Law and Fair Trading Regulations 2022 (Vic) when they notify consumers:
“WARNING UNDER THE AUSTRALIAN CONSUMER LAW AND FAIR TRADING ACT 2012
If you sign this form, you will be agreeing that your rights to sue the supplier under the Australian Consumer Law and Fair Trading Act 2012 are excluded, restricted or modified in the way set out in this form, if you are killed or injured because the services provided were not in accordance with the statutory guarantees outlined below.
Under the Australian Consumer Law (Victoria), several statutory guarantees apply to the supply of certain goods and services. These guarantees mean that the supplier named on this form is required to ensure that the recreational services it supplies to you-
• are rendered with due care and skill; and
• are reasonably fit for any purpose which you, either expressly or by implication, make known to the supplier; and
• might reasonably be expected to achieve any result you have made known to the supplier.
Under section 22 of the Australian Consumer Law and Fair Trading Act 2012, the exclusion of these statutory guarantees is brought to your attention by this form.
NOTE: The change to your rights, as set out in this form, does not apply if your death or injury is due to gross negligence on the supplier’s part. Gross negligence, in relation to an act or omission, means doing the act or omitting to do an act with reckless disregard, with or without consciousness, for the consequences of the act or omission. See regulation 5 of the Australian Consumer Law and Fair Trading Regulations 2012 and section 22(3)(b) of the Australian Consumer Law and Fair Trading Act 2012.”
In our opinion, this statement and requirement by Consumer Affairs Victoria relating to the acceptable limitations of liability can give a false sense of security to the health and fitness facilities in Victoria. The statement can equally give the illusion to the consumers that by signing on such a contract they have completely relinquished their rights to file a legal claim against the service supplier for negligence.
The enforceability or effectiveness of waivers in Australia is complicated and court decisions are likely to be lenient towards the injured in the absence of evidence of reasonable due care by the health and fitness service providers to protect the safety and health of the participants.
As case law and research demonstrated, the validity and enforceability of exclusion clauses or waivers used by health and fitness businesses aimed at limiting or avoiding liability claims has been tested many times and decided to be void by the courts. Therefore, we advise all health and fitness service suppliers to get expert legal advice when drafting and including exclusion clauses in their contracts.
Here is an excerpt from an online article we published on the enforceability of waivers or exclusion clauses in the health and fitness industry on 17 August 2020:
Effectiveness of waivers in the Australian fitness industry
Under Australian law, health and fitness service providers can incorporate exclusion clauses or waivers into their service agreements or contracts. Such waivers are purported to preclude the signers from holding the facility and their employees responsible for injuries that occur during an ensuing activity. Appropriately worded waivers may also act as risk warnings about the type of activities to be engaged in by a participant to preclude liability claims for personal injuries.
What does the law say?
In Australia, the provisions of the Australian Consumer Law (2010) Section 60 under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (formerly known as the Trade Practice Act 1974) implies that all consumer contracts include a warranty that the supply of services will be rendered with due care and skill. Section 64 of the Australian Consumer Law voids any provision of a contract that purports to exclude, restrict or modify the application of this consumer warranty.
As a result of the Tort Reforms in Australian law almost two decades ago, the Trade Practices Amendment (Liability for Recreational Services) Act 2002 section 68B was incorporated in the TPA, that allowed certain recreational services to use exclusion clauses or waivers to limit or exclude liability for negligence and/or breach of an express or implied warranty that the services would be rendered with due care and skill. Relevant provisions can be found in the Competition and Consumer Act (CCA) 2010 section 139A, and similarly in the Civil Liability Acts of Western Australia (WA) and New South Wales (NSW).
Enforceability of waivers
The CCA voids a waiver if it is not limited to death, or physical or mental harm/injury to an individual. In addition, reckless misconduct by the recreational service provider must not have caused the personal injury. Section 139A (5) of the CCA describes reckless misconduct as when the service provider: (a) was aware or should reasonably have been aware of a significant risk that could result in injury to another person, and (b) engages in the conduct despite the risk and without adequate justification. Some of the other factors the courts consider when deciding the enforceability of an exclusion clause are whether the clause was: (a) part of the contract, (b) appropriately worded to cover the breach that occurred, (c) reasonably brought to the attention of the other party before the contract was made, and (d) not prohibited by statute (Sekendiz et al., 2016).
A number of case law in the Australian fitness industry has demonstrated how certain waivers can be ineffective against negligence claims against health and fitness service providers. In Belna Pty. Ltd. v. Irwin (2009) the plaintiff Irwin and the defendant entered into a contractual agreement when Irwin became a member of the fitness facility. After the contract was signed, one of the fitness instructors employed by the defendant developed an exercise program for Irwin. While performing leg lunges, as prescribed by the fitness instructor’s program, Irwin suffered a knee injury. As a result, Irwin sued the facility management for breach of duty and breach of contract. At trial, the judge deemed the prescribed exercise regime, particularly the lunges, unsuitable and beyond the plaintiff`s capacity to safely perform. Accordingly, the judge ruled in favour of the plaintiff finding breach of duty of care. When the defendant appealed to trial court`s decision, they argued that the exclusion clause in the contract excluded them from liability under section 5N of the Civil Liability Act 2002 (NSW) which states:
(1) 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.
The exclusion clause utilized by the defendant stated:
It is my expressed interest in signing this agreement, to release the … Fitness Centre, its Directors, Franchises, Officers, Owners, Heirs and Assigns from any and all claims for professional or general liability, which may arise as a result of my participation, whether fault may be attributed to myself or its employees. I understand that I am totally responsible for my own personal belongings whilst at the Centre. I also understand that each member or guest shall be liable for any property damage and/or personal injury while at the Centre (Belna Pty. Ltd. v. Irwin, 2009, para. 38).
The appellate judge identified several problems with the wording of the exclusion clause including use of phrases that are vague and difficult to understand (e.g. “expressed interest”, “professional or general liability”, “fault … attributed to myself or its employees”, Belna Pty. Ltd. v. Irwin, 2009, para. 39). The court also gave consideration to the semantics of the word “release” stating that a release acts to terminate any legal liability only after it occurred and that therefore the clause was not an exclusion of liability. As a result, the appellate court concluded the exclusion clause used by the defendant was ‘so vague as to be meaningless’ and did not protect them from liability.
In Kovacevic v. Holland Park Holdings Pty. Ltd. (2010) the defendant gym operator relied on a waiver as part of a gym membership contract that stated the plaintiff: (a) used the gym at her own risk, (b) would not hold the operator responsible for personal injury she suffered, and (c) waived any legal claims for any injury, loss or damage she suffered (para. 25). In their defence they argued that gym activities fell under the definition of ‘recreational services’ in section 68B of the TPA and therefore the waiver in their contract was appropriate to effectively bar the legal action brought by the plaintiff. Section 68B (2) of the TPA, defines “recreational services” as:
(a) a sporting activity or a 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 purposes of recreation, enjoyment or leisure.
However, the judge did not find the exercise classes the plaintiff undertook were similar to a sporting activity or similar leisure time pursuit, even though the exercises may have had elements of a certain degree of physical exertion and risk. Furthermore, section 68B (1) (d) of the TPA required the exclusion, restriction or modification to be limited to liability for death or personal injury. The waiver the plaintiff signed in the contract “… extended expressly to all claims for articles lost, stolen or broken at the centre, or for loss or damage to any other property including automobiles and contents” (Kovacevic v. Holland Park Holdings Pty Ltd, 2010, para. 37). Therefore, the waiver was found void and the defendant could not avoid liability for breach of duty of care for the safety of the plaintiff.
More recently, in Powell v. JFIT Holdings Pty Ltd t/as New Dimensions Health and Fitness Centre (2020), the plaintiff sustained serious injuries to her lower back while attempting to clear the gym floor of heavy weights left by previous users before she could safely start her exercise routine. In an attempt to bar the plaintiff`s injury claim, the defendant sought to use a waiver defence based on section 5N of the Civil Liability Act 2002 (NSW). The waiver signed by the plaintiff stated:
I am aware that my use of premises and its facilities and my participation in the classes and programs conducted by the … Club may involve strenuous activity and special risk (special or otherwise) associated with such use and participation and I release … Club and its directors, employees, contractors, and agents (the ‘staff’) from all liability and responsibility whatsoever, for personal injury, property damage or death however caused but not limited to the negligence (whether passive or active) of … Club or its staff or any other person using the premises (Powell v. JFIT Holdings Pty Ltd t/as New Dimensions Health and Fitness Centre, 2020, para 126).
In considering the validity of the waiver, the judge conducted a factual test with reference to Goode v. Angland (2017) to determine whether the activity of clearing up the gym floor at the time of the plaintiff`s injury could be described as a recreational activity under the Act. The judge contended that “Whilst the plaintiff was intending to pursue physical fitness exercises, which can be a recreational activity, that activity had not yet actually commenced at the time she was injured, as she was engaged in the preliminary activity of clearing a space to enable that activity to proceed” (Powell v. JFIT Holdings Pty Ltd t/as New Dimensions Health and Fitness Centre, 2020, para 142). As a result, the waiver was not a valid statutory defence and ineffective in protecting the defendant from liability for breach of duty of care for the safety of the Plaintiff due to a failure to ensure a training environment reasonably free from obvious hazards of injury.
Earlier and emerging case law demonstrates that while fitness service providers can make use of waivers as a defence against injury claims, the enforceability or effectiveness of waivers in Australia is complicated and court decisions are likely to be lenient towards the injured in the absence of evidence of reasonable due care by the fitness service providers to protect the safety and health of the participants.
If you would like to get expert risk management advice to improve the safety and quality of your services, don`t wait until it is too late and contact FIRMC® with your enquiries today.
References
Belna Pty. Ltd. v. Irwin (NSWCA 46, 2009).
Goode v. Angland (NSWCA 311, 2017).
Kovacevic v. Holland Park Holdings Pty Ltd (QDC 279, 2010).
Powell v. JFIT Holdings Pty Ltd t/as New Dimensions Health and Fitness Centre (NSWDC 264, 2020).
Sekendiz, B. (2014). Implementation and perception of risk management practices in health/fitness facilities. International Journal of Business Continuity and Risk Management, 5(3), 165–83.
Sekendiz, B., Ammon, R., & Connaughton, D.P. (2016). An examination of waiver usage and injury-related liability claims in health/fitness facilities in Australia. Journal of Legal Aspects of Sport, 26(2), 144–61.