Gone too Far

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Dr Betul Sekendiz questions limitations of liability

The health and fitness industry is an important contributor to the national economy through direct and indirect savings in health care costs and productivity associated with the promotion and benefits of regular exercise.

Despite its important and significant role in the health and wellbeing of the general population, the standardisation of the 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 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 (Fitness Industry Code of

Practice) Regulations 2007 (SA)

Consumer Affairs Victoria (CAV) has also published guidelines for the fitness industry based on case law and has been actively working with fitness service suppliers to remove or modify potentially unfair consumer contract terms by businesses. These include automatic renewals and variation to services without a notice, penalties for member cancellation, and penalties for breaches of contract.

Another area of contract terms regulated under the consumer protection laws is the limitation of liabilities. Under Australian consumer laws, fitness service suppliers can incorporate exclusion clauses or waivers into their contracts to prevent the signers from holding the facility and their employees responsible for injuries that occur during an activity. The laws and the use of waivers In Australia, under the Australian Consumer Law (2010) (Section 60 in Schedule 2 of the Competition and Consumer Act 2010 (Cth)[CCA] formerly known as the Trade Practices Act [TPA] 1974) all consumer contracts have a warranty that the supply of services will be rendered with due care and skill. Section 64 of the Australian Consumer Law makes any term of a contract invalid that aims to exclude, restrict or modify the application of this consumer warranty.

As a result of the Tort Reforms in Australian law two decades ago (which focused on reducing general damages payments for minor claims and eliminating trivial claims), 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 supplied with due care and skill, fit for purpose, and within a reasonable time (when no time is set).

Relevant provisions can be found in the CCA section 139A, some state and territory fair trading laws, and similarly in the Civil Liability Acts (CLA) of Western Australia and NSW. The legislation describes a recreational service as a sporting activity or a similar leisure-time pursuit, or any other activity that involves a significant degree of physical exertion or physical risk and is undertaken for recreation, enjoyment and leisure purposes.

These reforms were purported to be necessary by the government to preserve the ‘Australian way of life’ as a result of the perceived crisis in public liability insurance and the emerging ‘litigation culture’, which was later criticised for having no empirical foundation.

There were also concerns that limitation of liabilities granted

Fitness lunge via pexels Credit: Anastasia Shuraeva.

to recreational service suppliers reduced consumer protection in considerably more situations than actually was intended. This was due to the extremely wide definition of the ‘recreational services’ that goes beyond including activities which are inherently dangerous, such as skydiving or bungee-jumping to include activities which are not, such as a boot-camp session at the park.

Enforceability of waivers Overall, an enforceable waiver would need to be: (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 a written law.

In Australia, recreational service suppliers may use a waiver to only limit their liability for death or personal injury, including illness (mental or physical), but not for property loss or damage. In addition, reckless misconduct by the recreational service supplier must not have caused the injury or death, where the supplier was aware or should reasonably have been aware of a significant risk that could result in the harm, and engaged in the conduct despite the risk and without adequate justification.

In Victoria, under Regulation 6 of the Australian Consumer Law and Fair Trading Act 2012, recreational service suppliers must also notify the consumer in writing by using the exact wording in the contract form prescribed in Schedule 2 of the Australian Consumer Law and Fair Trading Regulations 2022.

Almost all fitness facilities in Australia use ‘waivers’ that are perceived to be the most important risk management practice after ‘insurance’ (Sekendiz, 2014; Sekendiz et al. 2016). However, in the last two decades case law in Australia has demonstrated how waivers used by fitness service suppliers can be ineffective against claims of negligence.

In Belna Pty. Ltd. v. Irwin (2009) the plaintiff Ms 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 due to the history of a knee injury that was identified during the pre-exercise screening.

The judge also contended that the activities undertaken by Ms Irwin were not ‘recreational’ as she undertook them to lose weight and get fit and therefore the assumption of risk defence under the CLA could not apply. 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 utilised 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).

However, the appellate judge found that the activities were recreational. On the pre-exercise questionnaire Ms Irwin wrote her short-term goal in undertaking the activities was to ‘enjoy life’ and her long-term goal was to ‘lose weight and become fit’ that did not distract from the meaning of recreational activity.

Here, the 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 judge 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 judge concluded the exclusion clause used by the defendant (Belna Pty.Ltd) was ‘so vague as to be meaningless’ and did not protect them from liability.

Fitness Equipment via pexels Credit: Ruslan Khmelevsky.

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, 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 to be 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 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 2020 (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 … Health Club may involve strenuous activity and special risk (special or otherwise) associated with such use and participation and I release … Health 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 … Health Club or its staff or any other person using the premises (Powell v. JFIT Holdings Pty Ltd t/as New Dimensions 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 stated 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 Fitness Centre, 2020, para 142).

As a result, the waiver was not a valid defence and the defendant was found liable for breach of duty of care for the safety of the Plaintiff due to failing to ensure a reasonably safe training environment free from obvious hazards of injury.

Earlier and emerging case law demonstrates that while fitness service suppliers can incorporate waivers into their contracts to prevent liability claims, the enforceability of waivers is complicated and court decisions are likely to be lenient towards the injured in the absence of evidence of reasonable due care and skill by the supplier to protect the safety and health of the participant.

It is also evident from case law that fitness services may not always fall under the definition of a ‘recreational service’ for a waiver to be a valid defence against a negligence claim.

In an increasingly health-conscious society with more individuals using fitness services primarily for health reasons or referrals by their health practitioners, it is crucial that fitness service suppliers ensure to have a comprehensive risk management program that is regularly reviewed and revised to reasonably meet their duty of care requirements, in the first place. Dr Betul Sekendiz, PhD is a risk management expert and fitness industry thought leader. A founder and Managing Director of Fitness Industry Risk Management Consulting (FIRMC®), which provides evidence-based risk management consultancy services to fitness businesses, Dr Sekendiz has been an expert witness on high profile legal liability cases and is the Chair of the Australian Fitness Industry Standards Council.