Seven Mile Beach, Broken Head
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Tricky business of farm injury liabilities
Catchwords: Contract law, negligence, exclusion clause, disclaimer, guests, risk, warn, contract out, assumption of risk, Darlington Futures, Civil Liability Act NSW
Can farmers escape liability from claims by injured guests? Is it possible, through the use of a contract and an “exclusion clause” or a “disclaimer”, to re-allocate the risk of injury to the guest.
Being on a farm is a risky business. There are all manner of potential risks to a less than savvy guest for which the farmer could be legally liable as occupier, controller and person responsible for the farm.
With certain types of guests (eg, voluntary farm workers and non-paying boarders to name a few) farmers may not be able to rely on the farm insurance policy for indemnity.
The black letter terms of the policy may exclude the particular type of guest or their activities on the farm. It’s the farmer who is sued, not the insurer.
The guest might not be insured as they promise. The farmer may also feel that to insure against specific risk of injury is uneconomical and not take out that insurance.
Insurance companies, can go broke, even if they don’t disclaim. It can take only one claim to ruin the farmer!
The concept of the effective exclusion clause is that the guest contractually assumes the legal risk of injury and takes it away from the farmer. Related to this concept is voluntary assumption of risk of injury. It is theoretically possible for the farmer to contract out of a potential negligence claim by an injured guest.
I say theoretically possible because exclusion clauses have been narrowly construed by the Courts in favour of the injured party.
However, established precedent requires the Court should not reject an exclusion clause, however unreasonable it is, if the words are clear and susceptible of one meaning only.
There have been several cases in the NSW Supreme Court which have followed the reasoning in the High Court decision of Darlington Futures v. Delco (1986) that exclusion clauses must be determined by construing the clause according to its “natural and ordinary meaning”, read in the light of the contract as a whole, and where there is ambiguity, against the person relying on it.
The elements of an effective exclusion clause, which might stand up in Court include:
1. Clear words capable of one meaning that the liability is excluded; if it’s negligence for personal injury and property damage, use clear words of whatever negligence is excluded.
2. Adequate notice of the exclusion clause before the contract is signed or entered into; this includes being in an understandable language (to the guest) and signing a document is generally better proof, in the absence of fraud, bad faith or dishonesty.
3. A free choice to the guest to decide whether to assume the risk; no element of compulsion or restraint in the guest making the decision and full knowledge of the circumstances.
The Civil Liability Act 2002 (“CLA” ) does not excuse landowners from liability for harm for failing to take precautions if there was a known risk of harm or it ought to have been known to the landowner; and it was significant; and a reasonable person would have taken precautions (S5B CLA).
The problem with farms is that there are a lot of known risks of harm right down to a brown snake under the tin in the wood pile.
An injured person is presumed to be aware of obvious risks (S5G CLA) and assumes the risks and the landowner is under no duty to warn of them.
But this does not save the landowner if the person was not aware of the obvious risks. What is obvious to an Australian landowner may not be at all obvious to a backpacker from Europe.
So the CLA is by no means blanket protection for a landowner. The CLA allows for contracting out of claims by use of exclusion clauses (S3A). And farmers can still be legally responsible for injuries to guests where they least expect it.
If you are expecting guests who could be at risk of any injury on the farm, check your policy. Call your local solicitor for some advice about preparing a tailored contract for guests to contract out of claims with an “exclusion clause” that disclaims liability and acknowledges the assumption of risk.
Jonathan de Vere Tyndall
Article updated 30 March 2015, originally published The Land on 1 November 2001
Editors note: The articles published contain comment only and not legal advice, for which you should retain a solicitor. No responsibility is accepted for the accuracy of the contents.