scrutiny of acts and regulations committee · are private carriers.23 for example, furniture...

SCRUTINY OF ACTS AND REGULATIONS COMMITTEE

REVIEW OF REDUNDANT AND UNCLEAR LEGISLATION REPORT

Review of the Carriers and Innkeepers Act 1958

Ordered to be Printed By Authority. Government Printer for the State of Victoria May 1998 N° 17 Session 1998

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C H A P T E R 1 O V E R V I E W

INTRODUCTION

1.1 The Minister for Fair Trading, the Honourable Jan Wade MP, wrote to the Committee on 20 July 1994:

The Carriers and Innkeepers Act 1958 is archaic and I would be pleased for you to consider it for repeal and the making of recommendations as to whether any of its provisions should be retained.1

1.2 The Law Institute of Victoria also identified the Carriers and Innkeepers Act 1958 (Cwlth) (“the Act”) as one which should either be repealed, or which required modification to remove archaic language.2

BACKGROUND TO LAW RELATING TO CARRIERS AND INNKEEPERS

1.3 Common carriers and innkeepers are both subject to unlimited liability at common law for loss of and damage3 to the property that they are given to carry, or brought by guests to their inns. This strict liability was imposed as a matter of policy:

And this is a politick establishment, contrived by the policy of the law, for the safety of all persons, the necessity of whose affairs oblige them to trust these sorts of persons, that they may be safe in their ways of dealing; for else these carriers [and innkeepers] might have an opportunity of undoing all persons that had any dealings with them, by combining with thieves etc, and yet doing it in such a clandestine manner, as would not be possible to be discovered. And that is the reason that the law is founded upon that point.4

1.4 It was recognised, however, that strict liability could place an unfair burden on the innkeeper or carrier, especially in relation to valuable goods, where the value is unknown to the carrier or innkeeper.5 Consequently, legislation was first introduced in Victoria in 1859

1 Minister for Fair Trading, letter to Scrutiny of Acts and Regulations Committee (“SARC”), 20.7.94. 2 Law Institute of Victoria, letter to SARC, 7.10.94. 3 There is some doubt whether liability extends to damage as well as loss. This matter is discussed in Chapter 5. 4 Coggs v Barnard (1704) 2 Ld Raym 909, per Holt CJ. 5 See, for example, the speech of Mr Wood, Parliament of Victoria, Parliamentary Debates (Hansard),

Legislative Assembly, Session III, Vol. 4, 1858-59, 21.10.1858, p. 107.


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to impose a monetary cap on liability, subject to certain acts being done by the carrier or innkeeper (the display of notices indicating the limitation of liability, for example).6

1.5 Despite the passage of well over 100 years, the provisions in the current Act relating to carriers remain very similar to the 1859 Act. While the part of the current Act dealing with innkeepers was introduced as recently as 1970, the provisions still rely on many outdated or uncertain common law principles that are irrelevant or inappropriate for modern dealings.

1.6 Carriers today, most of whom are private carriers and therefore not subject to the Act, believe the provisions relating to carriers are outdated and should be repealed. However, innkeepers maintain that the part of the Act governing their liability is very relevant and wish to retain it. The context in which that part of the Act operates is important.

SIGNIFICANCE OF LAW RELATING TO INNKEEPERS

1.7 The possible impact of any repeal or amendment of the provisions of the Act relating to innkeepers on the tourism industry in Victoria is of particular concern to the Victorian Government. The Government is committed to maximising the long-term benefits of tourism by developing and marketing the State as a competitive tourist destination.7

1.8 Tourism plays a significant role in the Victorian economy. Victoria attracted a record 969,000 overseas visitors during 1995, a 26% share of all international arrivals into Australia. The international visitor market was worth $1.2 billion in direct expenditure to Victoria for 1995.8 During the 1996/1997 financial year, domestic travel to Victoria grew by 4%, reaching 14.8 million trips for that year. This represented a 24% share of the interstate market.9 In Victoria, as at March 1997, there were 1,012 hotels, motels and guesthouses providing 29,869 guest rooms.10 Of course, additional accommodation is provided by hostels, hobby farms, boats, houseboats and on-site caravans.

6 An Act to amend the Law relating to Innkeepers Carriers and others 1859 (Vic.) 7 Department of Arts, Sport and Tourism, Annual Report 1994-95, p.49. 8 Tourism Victoria, International Travel to Victoria: Summary Results 1995, issued January 1997. These remain

the most recent figures for international travel to Victoria as at May 1998. 9 Tourism Victoria, Domestic Travel to Victoria: Summary Results 1996/1997, April 1998. 10 Australian Bureau of Statistics (Victoria), figures provided over the telephone on 10.10.97.

Chapter 1 - Introduction

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DISCUSSION PAPER

1.9 Following the request of the Minister for Fair Trading to review the Act, the Committee prepared a Discussion Paper which was distributed in May 1995. The following issues were raised in the Discussion Paper:

• the relevance of the Act for modern commercial dealings between carriers and their customers;

• the relevance of the Act for modern dealings between innkeepers and their guests;

• whether insurance coverage is a necessary requirement in the conduct of modern dealings;

• the effect of a recent High Court decision11 on the Victorian Act;

• whether any part of the existing Act needs to be retained.

1.10 The Discussion Paper also asked whether it was appropriate to adopt an international code of practice for application in Victoria.

SUBMISSIONS

1.11 The committee distributed copies of the Discussion Paper to over ninety organisations and individuals, and received written submissions from the following:

• Australian Hotels Association, dated 11 May 1995, 30 June 1995 and 28 February 1996;

• Blue Circle Taxi Trucks, dated 20 December 1994;

• DHL Worldwide Express, dated 27 July 1995;

• Insurance Council of Australia, dated 6 December 1995;

• The Law Institute of Victoria, dated 24 July 1995;

• Mayne Nickless Ltd, dated 24 May 1995;

• Minister for Fair Trading, the Hon. Jan Wade, MP, dated 19 July 1995;

• Minister for Industry and Employment, then the Hon. Phil Gude, MP, dated 17 May 1995;

• Minister for Small Business, Minister for Tourism, the Hon. Louise Asher, MP, dated 8 July 1997;

• Minister for Small Business, then the Hon. Vin Heffernan, MP, dated 5 June 1995;

• Office of the Parliamentary Counsel Victoria, dated 4 August 1995;

• Property Owners Association of Victoria, dated 30 June 1995;

11 Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 68 ALJR 395.


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• Royal Automobile Club of Australia Ltd, dated 24 May 1995;

• Victorian Employers’ Chamber of Commerce and Industry, dated 23 January 1995, 7 July 1995, 14 August 1995 and 24 October 1995; and

• The Victorian Bar, dated 17 June 1995.

1.12 A further sixty letters were received from innkeepers. However, the majority of these letters were in response to an article published in the Herald-Sun on 5 May 1995. The letters raised a number of concerns in relation to the possible repeal of the Act.

1.13 A discussion paper was sent to the Australian Consumers’ Association which replied that it would not be making a submission to the Committee on this matter.12

PUBLIC HEARING

1.14 The Committee also conducted a public hearing on 19 July 1995, at which it received evidence from the following people:

• Ms Julie Abramson, Legal Policy Worker with Victorian Employers’ Chamber of Commerce and Industry;

• Mr Tony Sheer, President of the Victorian Accommodation Association;

• Mr Anthony Hulett, General Counsel with Mayne Nickless Ltd;

• Mr Tony Mackintosh, Regional Manager of the Insurance Council of Australia;

• Mr Alan Giles, Chief Executive Officer, Ms Margaret Kearney, President, Mr Peter Gromotka, President Residential Division and Mr Nigel Roberts of the Australian Hotels Association.

12 Australian Consumers’ Association, letter to SARC, 31.1.95.

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C H A P T E R 2 A P P L I C A B L E L A W

OVERVIEW

2.1 This Chapter outlines who may be considered a carrier, and discusses the important distinction between private and common carriers. The obligations and rights of carriers at common law are discussed. The provisions of the Victorian Act relevant to carriers are then considered, and compared to the common law.

CLASSES OF CARRIERS

Who is a carrier?

2.2 A carrier is:

one who gratuitously or for reward carries passengers, their goods and other people’s goods.13

2.3 A carrier may be a private or common carrier.14 This distinction is important as the Carriers and Innkeepers Act 1958 (Vic.) (“the Act”) applies only to “common carriers”.

Common carriers

2.4 A common carrier:

… exercises the public profession of carrying passengers … or the goods of all persons wishing to use its services. To be a common carrier of goods, the carrier must hold itself out, either expressly or by course of conduct, as willing to carry for reward and as a business the goods of all people who send them to be carried, without discrimination, and so long as the carrier has room, at a reasonable price.15

In other words, a common carrier may not refuse to carry goods without a lawful excuse (see below for examples of lawful excuses).

13 Halsbury’s Laws of Australia , Butterworths, Sydney, 1996, para. 70-1. 14 id. 15 ibid., para. 70-10.


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2.5 The concept of “holding oneself out” involves the communication to others of the fact that the carrier is willing to carry goods for reward. The “holding out” may be active or passive.16

2.6 Whether or not a carrier is a common carrier is a question of fact, which will not be determined by the carrier’s description of its own business.17 All carriers who are not common carriers are private carriers.18

2.7 Examples of people found not to be common carriers (and who are therefore private carriers) include warehousemen, stevedores and furniture removalists.19 The Public Transport Corporation in Victoria is expressly precluded from being a common carrier by its incorporating Act.20

Private carriers

2.8 A private carrier is one who, either on a casual basis or in the course of a business, undertakes the carriage of passengers, their goods and other people’s goods. A private carrier:

does not hold itself out as exercising the public employment of a common carrier.21

In practice, this merely means that a private carrier is one which reserves the right of accepting or rejecting offers for carriage.22

2.9 It is clear from submissions to the Committee that, in fact, almost all carriers today are private carriers.23 For example, furniture removalists are private carriers.

COMMON LAW OBLIGATIONS AND LIABILITIES OF CARRIERS

Common carriers

2.10 The obligation of a common carrier to carry is imposed by the common law, which imposes further obligations and duties.24

16 Id., n. 2. 17 ibid., para. 70-15. 18 ibid., para. 70-5, n. 1. 19 ibid., para. 70-20. 20 Transport Act 1983, section 49. 21 Halsbury’s Laws of Australia, op. cit., para. 70-5. 22 id. 23 See further Chapter 3.

Chapter 2 - Applicable Law

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2.11 The duties and liabilities of a common carrier commence when it has accepted the goods for carriage, and end when there has been actual or constructive delivery of the goods.25

Obligations

2.12 A common carrier is bound to accept goods offered to it for carriage unless the carriage sought is outside the profession of the carrier, or there is a lawful ground for refusal.26 Carriage may lawfully be refused where, for example, the goods are intended for a destination to which the carrier does not carry, or if the carrier has no room in its vehicle.27 Further, the price demanded by the carrier as payment for the carriage must be reasonable.28

Liability

2.13 A common carrier is absolutely responsible for the safety of the goods entrusted to it for carriage. A common carrier is even liable for loss caused wholly by the fault of other persons over whom it has no control, including theft of the goods carried, whether by its own servants or strangers.29

2.14 A common carrier will not be liable, however, where the loss or damage results from:

• an act of God or of the Sovereign’s enemies;

• the fault or fraud of the consignor; or

• an inherent vice in the goods carried.30

2.15 Loss due to an act of God arises where the loss is caused directly and exclusively by a direct, violent, sudden and irresistible act of nature which could not with any amount of ability be foreseen or, if it could be foreseen, could not by any amount of care and skill have been resisted so as to prevent its effect (for example, an earthquake).31 An obvious example of an act of the Sovereign’s enemies would be a war.

24 Halsbury’s Laws of Australia, op. cit., para. 70-155, n. 1. 25 ibid., paras 70-220 and 70-235. 26 ibid., para. 70-205. 27 ibid., para. 70-215. 28 ibid., para. 70-210. 29 ibid., para. 70-260. 30 id. 31 ibid., para. 70-265.


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2.16 A common carrier is not liable for any loss or damage caused by the act or omission of the consignor (except where the carrier is negligent).32 Nor is a common carrier liable for harm to goods carried which is due to anything inherent in their own nature, over which the carrier has no control and against which it cannot guard (for example, perishable fruit).33

Exclusion of liability

2.17 A common carrier’s liability may be limited by special contract. At common law, such a contract may contain an absolute disclaimer of liability, by providing, for example, that carriage is at the “owner’s risk”, in which case the carrier will not be liable for even gross negligence.34 It seems, however, that liability for wilful damage on the part of the carrier may not be excluded. Such a limitation must be in express, plain and unambiguous terms.35

2.18 A common carrier’s liability at common law may also be limited by the display of a public notice. Such a notice must be given to the consignor at or prior to delivery for carriage. The notice may protect the carrier from liability for everything except his or her own wilful acts.36

Comments on common law liability

2.19 While the liability imposed on common carriers at common law in respect to loss of or damage to goods in carriage may seem onerous, it must be remembered that common carriers may escape liability in one of two ways - by including exclusion clauses in contracts with customers, and by the display of public notices.37 As these courses are open to them, the burden imposed by the common law does not seem unduly onerous.

Private carriers

2.20 A private carrier’s obligation to carry particular goods arises from a contract entered into with another person, rather than from the common law.38 In other words, the 32 ibid., para. 70-270. 33 ibid., para. 70-285. 34 Note, however, that a clause purporting to exclude liability for negligent acts may be inconsistent with the

provisions of State and Federal fair trading legislation. See further Chapter 3. 35 Halsbury’s Laws of Australia , op. cit., para. 70-300. 36 ibid., para. 70-295. 37 This is in direct contrast to the position of innkeepers, who may not contract out of their common law

liability and who are, therefore, in greater need of statutory protection. See further Chapter 5. 38 Halsbury’s Laws of Australia , op. cit., para. 70-155.


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relationship between a private carrier and his or her customer arises from the entering into of a contract, and is determined by the terms of the contract.

2.21 A private carrier may therefore exclude its liability for loss, damage or delay in the terms of the contract of carriage.39 Normal rules in respect of the incorporation of terms into contracts govern such an exclusion clause.

2.22 However, common law principles of negligence apply to private carriers, and impose an obligation on the private carrier to take reasonable care in the carriage of passengers and goods. A private carrier is therefore liable for damage, loss or delay resulting from his or her negligence. While a private carrier may attempt to exclude liability for his or her negligent acts in the contract, such an exclusion clause may be rendered invalid due to the operation of State and/or Federal fair trading laws. 40 Under general principles of liability, a private carrier will also be liable for damage and loss due to his or her intentional acts inconsistent with the consignor’s rights in the goods carried (for example, deliberately damaging the goods or selling them to another person).41

LEGISLATION SPECIFIC TO COMMON CARRIERS

Purpose of legislation

2.23 Legislation was introduced in most of the Australian States and Territories, including Victoria, to provide common carriers with a means of limiting their absolute liability for loss or damage to goods. The purpose of the legislation is to enable common carriers to protect themselves against large losses from risks of which they are ignorant, and for which their charges are relatively low.42

History of Victorian legislation

2.24 An Act to amend the Law relating to Innkeepers Carriers and others was passed by the Victorian Parliament in 1859. The Act was modelled on the English Carriers Act 1830 (UK). The preamble to the Act indicates that it was considered “expedient to diminish the responsibility of innkeepers, mail contractors, stage-coach proprietors and common carriers in

39 ibid., para. 70-60. 40 See further Chapter 3. 41 Halsbury’s Laws of Australia, op. cit., para. 70-60. 42 ibid., para. 70-320.


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respect of the safe custody or carriage of parcels and packages containing articles of great value in small compass”.43

2.25 The Act removed the common carrier’s absolute liability in respect of valuable goods (jewellery, gold, bank notes etc. as specified in the Act), where the value of the goods in the package to be carried exceeded the value of £10.44 In other words, a common carrier was liable only where the value of the goods carried did not exceed £10. The exclusion of liability did not apply, however, where notice of the value of the goods was given to the carrier by the consignor at the time of the delivery of the goods to the carrier.45 In that instance, the carrier could charge an increased rate for the carriage of the package provided that it displayed, in the office where packages were received, a notice stating the increased rates applicable.46

2.26 Where the value of the goods was so declared, and a higher rate charged, the carrier was obliged to provide a signed receipt on request. Where the receipt was not provided, the carrier could not claim the limitation of liability conferred by the Act, and the common law applied.47 Further, except as outlined above, no notice displayed by the carrier was effective to limit its liability in respect of damage and loss to goods carried.48 This provision therefore overrode the common law position that common carriers could limit their liability by the display of public notices.

2.27 However, nothing in the Act affected special contracts entered into by the parties, provided the contract was executed by the parties to it.49 It was therefore open to a common carrier to limit its liability to a greater extent than permitted by the Act, through the use of contracts. This replicated the position at common law, as discussed above.

2.28 The Act did not protect the loss or injury to goods caused by a “felonious” act of any servant of the carrier.50 However, once again, it was open to a carrier to overcome this provision through the use of a special contract.

43 An Act to amend the Law relating to Innkeepers Carriers and others 1859 (“1859 Act”), Preamble (emphasis

added). 44 Section I, 1859 Act. 45 Section I, 1859 Act. 46 Section II, 1859 Act. 47 Section III, 1859 Act. 48 Section IV, 1859 Act. 49 Section VI, 1859 Act. 50 Section VIII, 1859 Act.


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2.29 A new Act was introduced as a result of the updating and consolidation of legislation that took place in Victoria in the 1950’s. The new Act was entitled the Carriers and Innkeepers Act 1958. On introducing the relevant Bill in Parliament, the then Minister for Transport stated:

The Bill represents an attempt to make every carrier responsible for goods he carries up to a certain value, and if a person consigns goods over that value he must declare the goods to enable the person carrying them to insist on the consignor insuring them or to insure them himself and charge a fee for so doing. The carrier will then know his liability and the public will know the responsibilities of carriers, and both parties will be able to safeguard their interests.51

2.30 Despite the passage of almost 100 years, the 1958 Act was substantially the same as the 1859 Act.52 And despite further amending Acts since 1958, the current Act remains largely unchanged in relation to the liability of common carriers. Even the reference to a “stage-coach proprietor” remains.

Current Victorian Act

2.31 Section 3 of the 1958 Act (as currently in force) provides that a carrier will not be liable for the loss of valuable goods worth over $20.53 Again, this is subject to the proviso that the consignor of the goods may declare their value to the carrier, in which case the carrier may increase the charge for carriage.54 As in the original Act, the carrier may charge the increased rate only where the necessary notice of rates is displayed.55

2.32 As in the 1859 Act, the carrier must provide a receipt upon request or forfeit the protection of the Act.56 Notices other than the one referred to in section 4 are ineffective to limit liability.57 Again, a special contract entered into by the parties overrides the provisions of the Act.58 Damage and loss to goods caused by the criminal acts of the carrier or the

51 Parliament of Victoria, Parliamentary Debates (Hansard), Vol. 255, 1958-1959, p. 477. 52 The 1859 Act did, however, require that carriers be licensed, and included a number of provisions relevant

to this requirement. 53 It seems that the amount of 10 pounds in the 1859 Act was merely doubled to arrive at the same figure in

Australian dollars in the 1958 Act, without consideration of the effect of 100 years of inflation. 54 Section 3, current Act. 55 Section 4, current Act. 56 Section 5, current Act. 57 Section 6, current Act. 58 Section 8, current Act.


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neglect or misconduct of his or her servants are precluded from the protection offered by the Act.59

2.33 In short, there are no substantial differences between the original Act and the current Act, despite the passage of well over 100 years.

Comments on current Victorian Act

2.34 The Act was introduced to protect common carriers and others from the seemingly unlimited liability at common law. However, common carriers are in fact able to limit their common law liability through both special contracts and public notices. As noted above, the common law does not, therefore, impose an unreasonable burden, as common carriers may restrict their liability in this manner.

2.35 The legislation does not affect the ability of common carriers to contract out of their liability. However, carriers can no longer limit their liability by the display of public notices, except as provided by the legislation. The legislation provides for an across the board limit on the liability of common carriers in respect to specified valuables worth over $20, provided certain requirements are met, but permits carriers to limit their liability even further through the use of contracts.

2.36 It may be argued that, as common carriers may contract out of their common law liability, the legislation is irrelevant and unnecessary. Submissions to the Committee in fact support this view.60

Legislation in other States and Territories

2.37 The States of New South Wales, South Australia, Tasmania and Western Australia also have legislation regulating the carriage of goods: the Common Carriers Act 1902 (NSW); the Carriers Act 1891 (SA); the Common Carriers Act 1874 (Tas.); and the Carriers Act 1920 (WA). The New South Wales Act applies in the Australian Capital Territory with certain amendments.61 The South Australian Act applies in the Northern Territory.

2.38 These Acts are written in the same outdated style, and are to similar effect, as the Victorian Act. This is not surprising, as all Acts have their origin in the Carriers Act 1830 (UK).

59 Section 10, current Act. 60 See discussion of submissions from carriers in Chapter 4. 61 The New South Wales Acts Application Act 1984 adopts and amends the Common Carriers Act 1902 (NSW).


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2.39 Queensland had similar legislation which was, however, repealed following the decision of the High Court in Wallis v Downard-Pickford (North Queensland) Pty Ltd.62

62 (1994) 68 ALJR 395. See Chapter 3 for a discussion of this case.

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C H A P T E R 3 F A I R T R A D I N G L E G I S L A T I O N

OVERVIEW

3.1 This Chapter considers the State and Federal fair trading legislation that may have an impact on the provisions of the Act dealing with carriers. The relevance of a recent High Court decision in relation to the Queensland carriers legislation is then discussed.

FAIR TRADING LEGISLATION

3.2 Despite the existence of legislation limiting their liability, common carriers may be liable to a customer under fair trading legislation in respect of loss or damage to goods occurring in the course of carriage. The Trade Practices Act 1976 (Cwlth) (“TPA”) and the Goods Act 1958 (Vic.) (“GA”) imply warranties and conditions into certain contracts. The TPA applies where the carrier is a “corporation”63, and the GA applies where the carrier is not a corporation. The distinction between private and common carriers has no bearing on the application of the fair trading legislation.

TRADE PRACTICES ACT 1976 (CWLTH)

3.3 Section 74(1) of the TPA implies, into contracts for the supply of services by a corporation to a consumer, a warranty that the services will be rendered with due care and skill. Section 74(2) provides that, where a corporation supplies services64 to a consumer in the course of the business, and the consumer expressly or impliedly makes known the particular purpose for which the services are required, there is an implied warranty that the service supplied will be reasonably fit for that purpose. The latter warranty will not, however, be implied where the circumstances show that the consumer did not rely on, or it was unreasonable for him or her to rely on, the corporation’s skill or judgment.

63 As defined in section 4(1), TPA. 64 Other than services of a professional nature by a qualified architect or engineer.


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3.4 The TPA definition of “services” includes any rights provided in trade or commerce, including a contract for or in relation to the performance of work.65 “Supply” in relation to the supply of services, includes “provide, grant or confer”.66 The provision of carriage services for goods therefore amounts to a supply of services within the meaning of the TPA. Finally, a “corporation” includes a trading corporation formed in Australia.67

3.5 Importantly, the above warranties do not apply in relation to services provided for a contract for the transportation of goods for the purposes of a business, trade, profession or occupation carried on by the consignor of the goods.68 The warranties are intended to protect consumers, not businesses, and do not therefore apply to commercial transport services, as the carrier Mayne Nickless Ltd recognised in its submission to the Committee.69

3.6 In short, the implied warranties in the TPA apply where the carrier is a corporation and the customer is a consumer within the meaning of the TPA. A consumer is a person who acquires services for less than $40,000 or, if more than $40,000, where the services are for personal or domestic purposes, as defined by the TPA.70

GOODS ACT 1958 (Vic.)

3.7 Section 91 of the GA implies two conditions in a sale of services. The first is an implied condition that the services will be rendered with due care and skill. The other is an implied condition, in the case of a sale of services by a person who sells services in the course of a business, that the services will be fit for the purpose for which services of that kind are commonly bought, having regard to the price, the terms of sale and other relevant factors. Section 91 GA, with some minor differences, mirrors section 74 of the TPA.

3.8 The definition of “services” in the GA is more limited than that in the TPA, and means services by way of (amongst other things):

(c) the transportation of goods otherwise than for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported.71

65 Section 4(1), TPA. 66 Section 4(1), TPA. 67 Section 4(1), TPA. 68 Section 74(3), TPA. 69 Submission from Mayne Nickless Ltd, 24.5.95, p. 2. 70 Section 4B, TPA. 71 Section 84(1), GA.

Chapter 3 - Fair Trading Legislation

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As with the TPA, therefore, the warranties in the GA do not apply to the transportation of goods for commercial purposes.

3.9 The implied conditions in the GA apply only where the buyer acquires services from a person for less than $15,000 or, if more than $15,000, where the services are for personal or domestic purposes.72 This is similar to the position under the TPA, except that the threshold (in dollar terms) is lower under the GA. Again, the application of the Act is thereby restricted to people who may be regarded as consumers. As indicated above, these provisions of the TPA and GA are designed to protect individual consumers, rather than business interests. Contracts entered into for a commercial purpose are therefore governed by conditions and terms negotiated between the parties.

3.10 The existence of these fair trading provisions may complement the obligations of carriers imposed by State legislation. The real problem arises when there is a suggestion that the fair trading provisions conflict with the provisions of State legislation limiting the liability of carriers.

HIGH COURT DECISION IN WALLIS V DOWNARD-PICKFORD

Overview

3.11 In Wallis v Downard-Pickford (North Queensland) Pty Ltd73 the High Court considered the impact of sections 68 and 74 of the TPA on the Queensland carriers legislation. The Court held that section 6(1) of the Carriage of Goods by Land (Carriers Liability) Act 1967 (Qld) (“Queensland Act”), which limited the liability of the carrier for damage to goods entrusted under a contract of carriage, was inconsistent with the TPA and was therefore invalid by reason of s. 109 of the Constitution.74

Facts

3.12 Wallis was a member of the Queensland Police Force, and was transferred to another town in the course of his employment. The Commissioner of Police entered into a contract with Downard-Pickford (North Queensland) Pty Ltd (“Downard-Pickford”) for the carriage of Wallis’ goods to the town where Wallis was to be stationed.75 Wallis’ goods were

72 Section 85(1), GA. 73 (1994) 68 ALJR 395. 74 Section 109 of the Constitution of the Commonwealth of Australia provides: When a law of a State is

inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

75 The carrier also argued that the contract was within section 74(3) TPA, being a contract where the goods were carried for the purpose of a “business, trade, profession or occupation”, and therefore not subject to


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damaged in transit as a result of the company’s failure to use due care and skill. The damage was quantified at $1,663.47.

3.13 Downard-Pickford argued that its liability was limited to $200 as provided in the Queensland Act, as no notice of value had been delivered and accepted by it as required to increase liability. The Supreme Court of Queensland was asked to determine whether Wallis could rely on sections 68 and 74 of the TPA to avoid the limitation of liability in the Queensland Act. The decision of Cooper J, that there was a conflict between the Queensland Act and the TPA, was overturned on appeal to the Queensland Court of Appeal. The matter then came before the High Court of Australia.

Queensland Act

3.14 Section 6(1) of the Queensland Act purported to limit the liability of a carrier in respect of loss of or injury to goods entrusted to it under a contract of carriage to the amount of $20 in the case of an individual item or $200 per consignment, unless:

at or before the time such goods are delivered to the carrier, the consignor has given to him a statement in writing declaring the nature and value of such goods and has received from the carrier his acceptance of the consignment76

3.15 Section 9(1) of that Act deemed the provisions of section 6(1) to be incorporated in every contract of carriage. Section 9(2) purported to invalidate any contract that sought to exclude, modify, alter or avoid any provision of the Queensland Act. Section 5 of the Queensland Act further provided that the liability of a carrier would be determined under the Act, and not otherwise.

Relevant provisions of Trade Practices Act

3.16 As outlined above, section 74(1) of the TPA implies into contracts for the supply of services a warranty that the services will be provided with due care and skill. Section 68(1) of the TPA renders void any term of a contract that purports to exclude, restrict or modify the application of any of the provisions of Part V Division 2. Both sections 68 and 74 appear in that Division of the TPA.

the implied warranty in section 74(1). Their Honours, for varying reasons, held that section 74(3) did not apply.

76 Carriage of Goods by Land (Carriers Liability) Act 1967 (Qld), section 6(1).


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Judgment

3.17 Justices Toohey and Gaudron delivered the joint leading judgment on behalf of the High Court. Their Honours summarised the submission made on behalf of Wallis (the appellant):

The essence of the submission was that the statutory creation of a contractual obligation is inherently accompanied by a full contract ual remedy. Section 74, it was submitted, implies into relevant contracts a term which contains the primary obligation to take due care and skill and a secondary obligation to provide compensation for breach.

In support of this submission, the appellant pointed to s. 68(1)(c) which renders void any term of a contract that purports to modify a warranty imposed by, among other provisions, s. 74. This provision was said to demonstrate the Trade Practices Act’s concern with liability as well as the creation of rights.77

3.18 On this point, their Honours concluded:

It follows that the warranty created by s. 74 carries with it full contractual liability for breach. Section 6(1) of the Queensland Act purports to limit that liability. The consequence is that there is a conflict between the two statutes, a conflict which amounts to a direct inconsistency in the sense that the Queensland Act detracts from the full operation of a right granted by the Trade Practices Act. The limitation is therefore, to that extent, invalid by reason of s. 109 of the Constitution.

3.19 The effect of the TPA on sections 5 and 9 of the Queensland Act was also considered. As section 9 incorporated 6(1) into each relevant contract so as to constitute a term of that contract within the meaning of “any term of the contract” in section 68 TPA, the limit of liability therefore attached to each contract of carriage. Their Honours outlined what followed from this:

Because s. 6 is a term of relevant contracts of carriage, that term is rendered void in each case by the operation of s. 68(1)(c). Further, s. 9 itself is impugned in that it purports to imply into contracts exactly those terms that s. 68 forbids. It can therefore be seen as inconsistent with s. 68 for the purposes of s. 109 of the Constitution. It is also the case that s. 5 of the Queensland Act, which provides that the liability of a carrier is on “the bases prescribed by this Act and not otherwise”, is invalid under s. 109 of the Constitution to the extent that it purports to exclude the operation of ss. 68 and 74 of the Trade Practices Act.

Effect of decision on Victorian legislation

3.20 At first sight, the decision of the High Court suggests that any legislation placing caps on the liability of carriers (or, by analogy, innkeepers) will be void as being inconsistent with the TPA. The Office of the Parliamentary Counsel of Victoria (“OPC”) submitted to the Committee that:

77 (1994) 68 ALJR 395, at 398.


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In view of the decision in Wallis , it appears that ss. 3-5 of the C&I Act conflict with the provisions in section 74 of the TPA and may, therefore, be invalid to the extent that those sections purport to limit the liability of carriers in respect of goods listed in s. 3.78

3.21 The OPC also identified a similar situation of conflict between the Victorian carriers legislation and the GA:

[Sections] 3-5 of the C&I Act and the provisions in Part IV of the Goods Act cannot stand together …. A term in a contract of sale of services to which the Goods Act applies and which limits or purports to limit the liability of the carrier pursuant to ss. 3-5 of the C&I Act would be void under s. 95 or s. 97 of the Goods Act .79

3.22 The Law Institute of Victoria (“LIV”) took a similar view of the effect of Wallis on the Victorian Act:

The Law Institute considers that the High Court decision [in Wallis] is likely to have a direct effect on section 3 of the [Act]…. A court would be likely to find that section 3 is inconsistent with section 74(1) of the TPA where the contract for the carriage of goods was not of a kind referred to in section 74(3)(a) of the TPA. To that extent section 3 of the [Act] would likely be held invalid by section 109 of the Commonwealth Constitution. The High Court decision has the effect that the States and Territories are unable to place effective statut ory caps on liability arising from breach of section 74 of the TPA.80

3.23 There is, however, an argument that there was no inconsistency between the Queensland Act and section 74 of the TPA. Wallis was brought before the Supreme Court of Queensland by way of originating summons, which was asked to determine as a question of law whether the plaintiff could rely on sections 68 and 74 of the TPA to avoid the limitation of liability contained in section 6(1) of the Queensland Act. The leading judgment by Toohey and Gaudron JJ noted:

Because the proceedings took this form it is not possible to say whether the appellant [the plaintiff in the original action] intended to sue the respondent in negligence, for breach of an implied term in the contract of carriage, for breach of the warranty implied by the [TPA], or to rely upon all these causes of action. The reason for the preliminary proceedings no doubt lies in s. 5 of the Queensland Act which limits the liability of a carrier to “the bases prescribed by this Act and not otherwise”.81

3.24 Despite this comment by the judges, it is not entirely clear why the plaintiff first brought an action based on inconsistency with the TPA. Even with the existence of the provision in section 5 of the Queensland Act mentioned above, there appears to have been another way in which the plaintiff could have proceeded. 78 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 2. 79 ibid., p.4. 80 Submission from the Law Institute of Victoria, 24.7.95, p. 1. 81 (1994) 68 ALJR 395, at 397.


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3.25 Toohey and Gaudron JJ stated that the appellant’s goods had been damaged as a result of the respondent’s “failure to use due care and skill” (the term used in section 74 of the TPA). This appears to be merely another way of indicating that the respondent had been negligent.

3.26 The second paragraph of section 5 of the Queensland Act provides:

A carrier to whom goods have been so entrusted shall be liable for loss of or injury to such goods occasioned by the unlawful act or the negligence of the carrier or any of his agents. [Emphasis added].

3.27 This part of section 5 suggests that, despite the limitation of liability in section 6 of the Queensland Act, the carrier remains liable for damage to or loss of goods caused by his or her negligent acts. If this is so, it is difficult to understand why the case came before the Court, as the plaintiff would have been entitled to compensation despite section 6 of the Queensland Act. And if the Queensland Act did not purport to limit liability for negligent acts, it is difficult to see how it was directly inconsistent with section 74 of the TPA.

3.28 Alternatively, the second paragraph of section 5 may itself have been subject to the limitation of liability in section 6. In this case, section 6 of the Act would indeed limit liability for a corporation’s negligent acts, and would be directly inconsistent with sections 68 and 74 of the TPA. The first issue, therefore, was whether section 5 of the Queensland Act was subject to section 6 or vice versa.

3.29 The Queensland Act may be contrasted with the Victorian legislation. Section 10 of the Victorian Act makes it clear that the limit on liability imposed by section 3 of the Victorian Act does not apply in the cases referred to in section 10. The application of section 10 appears to have two distinct results:

(a) it makes a carrier fully liable (that is, the liability is not subject to the limit in section 3) for his or her criminal acts, and those of his or her servants; and

(b) it makes the employees of a carrier fully liable for their “personal neglect or misconduct”.

3.30 The provision does not, therefore, impose full liability directly on the carrier for his or her own negligent acts, or for the negligent acts of its employees. However, a carrier may be fully liable indirectly for the negligence of its employees. If a carrier’s employee was found liable under section 10 for his or her “personal neglect”, the carrier could perhaps then be found vicariously liable for these acts, in which case the end result may be that the carrier is found liable in negligence.


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3.31 However, the better view may be that section 10 implicitly negates the possibility of carriers being held fully liable in negligence, for their own acts and those of their servants. That is, the limit of liability in section 3 will apply in these situations. In which case, section 3 of the Victorian Act would almost certainly be directly inconsistent with section 74 of the TPA. The same analysis applies in relation to inconsistency between the Carriers and Innkeepers Act 1958 and the Goods Act 1958.

3.32 Given the doubt surrounding the matter82, the Committee sought the advice of counsel. In relation to the issue of the Queensland Act, Peter Hanks, barrister-at-law, advised the Committee that while section 5 rendered a carrier liable for failure to take reasonable care of goods entrusted to the carrier, the extent of that liability was limited by section 6(1) of the Queensland Act. In other words, the limitation of liability in section 6 prevailed over the liability for negligent acts in section 5.83

3.33 In relation to any inconsistency between the Victorian Act and the TPA, counsel advised that there is:

a direct inconsistency [between the Victorian Act and the TPA] in the sense that the Victorian Act detracts from the full operation of a right granted by the [TPA]. To the extent that s. 3 purports to limit the liability of carriers, it is invalid by reason of s. 109 of the Constitution.84

In short, section 3 of the Victorian Act is invalid due to inconsistency with the TPA. Of course, the TPA applies only to carriers who are corporations. Section 3 therefore continues to apply to carriers that are not incorporated. It is worth noting that the application of the reasoning in Wallis to the provisions in the Act dealing with innkeepers achieves a rather different result.85

3.34 A further argument may be made that section 74(1) of the TPA is not inconsistent with section 3 of the Victorian Act, on the basis that section 68(1) of the TPA renders void any term of a contract that purports to exclude, restrict or modify any of the provisions of Part V, Division 2. While section 3 of the Victorian Act places a statutory cap on liability, the Act does not include another provision which deems section 3 to be a term of every contract of carriage, as was provided by section 9(1) of the Queensland legislation. However, in Wallis, Toohey and Gaudron JJ considered that the inconsistency existed by means of section

82 The position with respect to the provisions dealing with innkeepers was even less certain: see discussion in

Chapter 12. 83 Peter Hanks, Memorandum of Advice, 22.2.98, p. 2. 84 ibid., p. 6. 85 See Chapter 12.


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74 which carried with it full contractual liability for breach. Therefore, the inconsistency existed without direct reliance on the operation of section 68(1).86

86 Submission from the Law Institute of Victoria, 24.7.95, p. 1.

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C H A P T E R 4 R E T E N T I O N O F P R O V I S I O N S R E L A T I N G T O C A R R I E R S

OVERVIEW

4.1 As indicated in Chapter 1 of this Report, the Committee sought submissions from carriers and other interested parties in relation to the review of the Act. The submissions were overwhelmingly in support of the repeal of the provisions of the Act governing carriers.

SUBMISSIONS FROM CARRIERS

4.2 On the subject of the relevance of the Act to the industry today, Mayne Nickless Ltd informed the Committee that common carriers were “an extinct legal species” and that:

The provisions of the Act dealing with common carriers have no real relevance today and could quite readily be repealed.87

4.3 Current industry practice is to include terms and conditions in the contract of carriage excluding liability:

For many years we have used standard form conditions, which state that we are not a common carrier and which exclude or limit our liability for loss of or damage to the goods we carry …. Today, all carriers exclude liability as a common carrier in standard consignment note conditions and those conditions will either apply or specific contractual arrangements will be entered into.88

4.4 Mayne Nickless Ltd considered that it was not necessary to retain any part of the Act dealing with carriers:

We do not believe it would be beneficial for any Victorian legislation to govern the relationship between carriers and their customers as section 74 of the TPA adequately covers the field. Commercial transactions need no specific legislative governance.89

87 Submission from Mayne Nickless, 24.5.95, pp. 2-3. 88 ibid., p. 2. 89 ibid., p. 4.


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4.5 Mayne Nickless also reminded the Committee that the Act applied only to carriage by land. Other State and Commonwealth legislation applies in relation to the carriage of goods by air, sea or rail. Further, international transactions are covered by international conventions.90

4.6 In relation to the High Court’s decision in Wallis v Downard-Pickford (North Queensland) Pty Ltd91, Mayne Nickless Ltd correctly pointed out that section 74 TPA does not cover commercial transactions, and noted:

As a provider of predominantly commercial transport services, section 74 does not generally apply to us in practice. However, our standard conditions state that all conditions or warranties imposed by the TPA (or equivalent State legislation) prevail over our conditions.92

4.7 Another carrier, DHL International (Aust) Pty Ltd, confirmed that the Act has little relevance for its dealings:

[T]he relevance of the Act for dealings between DHL and its customers is minimal for the following reasons: (1) DHL is not a common carrier and does not hold itself out to be a common carrier; (2) customers enter into a contract of carriage with DHL which limits DHL’s liability; and (3) DHL’s liability for international shipments may be covered under the Warsaw Convention.93

SUBMISSIONS FROM THE LEGAL PROFESSION

4.8 In relation to modern contracts of carriage the Law Institute of Victoria (“LIV”) informed the Committee:

In reality, virtually all carriage of goods is today covered by an individual agreement or standard form contract and there seems little relevance in retention of special provisions of this nature to protect common carriers.94

4.9 The LIV concluded that:

The repeal of the Victorian legislation would have few, if any, practical ramifications given that almost all carriers limit their potential liability (to the extent possible) by means of contractual terms and ensure appropriate insurance arrangements are in place where particularly valuable goods are to be carried.95

90 ibid., p. 2. 91 (1994) 68 ALJR 395. 92 Submission from Mayne Nickless, 24.5.95, p. 2. 93 Submission from DHL International (Aust) Pty Ltd, 27.6.95, p. 1. 94 Submission from the Law Institute of Victoria, 1.2.95, p. 2. 95 Submission from the Law Institute of Victoria, 24.7.95, p. 2.

Chapter 4 – Retention of Legislation

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4.10 However the LIV then, inconsistent with the above assertion, added:

Nevertheless circumstances will inevitably arise from time to time whereby for whatever reason a common carrier will fail to limit its potential liability by contractual means and incur substantial liability for the damage to or loss of goods despite the absence of negligence or breach of warranty implied by section 74. In these circumstances it is appropriate for legislative protection to operate to ameliorate the effects of the common law.96

4.11 The Victorian Bar Council advised the Committee in its submission that the provisions of the Act dealing with carriers no longer provided a useful purpose.97

4.12 The Office of Parliamentary Counsel Victoria (“OPC”) submitted that:

[I]t is our view that the provisions of the C&I Act dealing with the liability of carriers may be repealed without affecting modern dealings between carriers and their customers.98

4.13 The OPC considered that the Act, in practice, affected few (if any) contracts:

Since most contracts of carriage are with private carriers, the provisions in ss. 3-12 of the C&I Act have no application to such commercial dealings between carriers and the persons who engage them. There appears to be adequate protection for contracts for carriage between consumers and private carriers under the Goods Act (Part IV), the TPA (ss. 68 and 74) and the Fair Trading Act 1985 ….99

4.14 The OPC further indicated that:

Contracts for which no statutory protection is afforded (and to which the C&I Act would therefore apply) appear to be commercial contracts for carriage and the limitation provisions in the Act appear to be irrelevant to those contracts. Parties[‘] rights under these contracts are governed by standard conditions or negotiated terms.100

COMMITTEE’S CONCLUSIONS AND RECOMMENDATION

4.15 In light of the above submissions, the Committee concludes that the provisions in the Act dealing with carriers are outdated and irrelevant to modern commercial dealings for carriers and their customers for the following reasons:

(a) common carriers are almost (if not entirely) non-existent in Victoria today;

(b) modern contracts of carriage are governed by terms and conditions agreed upon by the parties; and

96 ibid., p. 3. 97 Submission from the Victorian Bar, dated 17.6.95, p. 1. 98 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 1. 99 ibid., p. 3. 100 ibid., p. 4.


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(c) contracts between carriers and consumers are adequately covered by the TPA and other applicable fair trading legislation.

4.16 The Committee therefore concludes that no part of the Act in relation to carriers need be retained.

RECOMMENDATION 1

The Committee recommends that sections 3 - 12 of the Carriers and Innkeepers Act 1958, pertaining to carriers, be repealed.

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C H A P T E R 5 C O M M O N L A W

OVERVIEW

5.1 This Chapter outlines the complicated case law that applies to the relationship between innkeeper and guest. At common law, innkeepers are strictly liable for the theft or disappearance of, and possibly for injury to, their guests’ property. While legislation was enacted in most States of Australia to give innkeepers a measure of protection from their common law liability, the legislation relies on many common law concepts, including those of “inn” and “guest”. These common law definitions are uncertain in their application to modern dealings. Further, the extent of liability at common law is uncertain, and there are contradictory views on the ability of an innkeeper to contract out of common law liability.

5.2 It is important to understand the situation at common law, not only as an aid to interpreting the legislation, but to understand what the position would be if the legislation were repealed and not replaced. As the Office of Parliamentary Council Victoria (“OPC”) advised the Committee, if the Act were repealed, innkeeper’s liability would be determined according to common law principles.101 In fact, the common law applies to innkeepers in Queensland and South Australia, where legislation introduced to protect innkeepers has been repealed without replacement.102

5.3 The first step is to understand to whom the law applies. In other words, it is necessary to determine who may be considered an innkeeper and who is a guest at common law.

“INNKEEPER”

5.4 At common law, an “inn” is:

[A] house where the traveller is furnished wit h everything which he or she has occasion for whilst upon his or her way and common inns are instituted for passengers or wayfarers,

101 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 5. 102 The relevant legislation in Queensland was repealed by the Liquor Act 1992 (Qld), and that in South

Australia was repealed by the Liquor Licensing Act 1985 (SA).


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though it is not necessary, in order that a person may be a guest, that the person must have come for more than temporary refreshment.103

5.5 The above definition was approved by the Supreme Court of Victoria in the 1917 case of Webster v Opitz.104 However, the definition may be traced back to much earlier English cases.105

5.6 The cases demonstrate that the following are considered not to be “inns”:

• a refreshment bar, structurally severed, though part of licensed premises; 106

• a fully licensed alehouse;107

• an ordinary coffee house;108

• a restaurant;109

• a boarding-house.110

5.7 An innkeeper is, of course, the keeper of an “inn”. However, if accommodation is provided under some special contract, for example to a lodger (rather than to a “guest”), and the host is not prepared to provide accommodation to any and all reasonable comers, the host is not an innkeeper.111 The distinction between “guest” and “lodger” is discussed below.

5.8 It is clear that the definitions discussed above were developed over the course of several centuries. The language of the case law - references to alehouses and coffee houses - seems outdated and inappropriate for modern dealings between guests and the owners of hotels, guesthouses and other forms of contemporary accommodation.

5.9 Further, while the common law definition suggests that an “inn” must be a place that offers both sleeping accommodation and refreshments, it appears from the definition

103 Halsbury’s Laws of Australia , op. cit., para. 40-585. 104 [1917] VLR 107. 105 See for example: Thompson v Lacy [1820] 3 B & Ald 283; Calye’s Case [1584] 8 Coke 32 1 SLC (12th ed.) 131;

Bennett v Mellor [1793] 5 T R 273. 106 R v Rymer, 2 Q.B.D. 136; Strauss v County Hotel Co ., QBD 27. 107 Sealey v Tandy [1902] 1 KB 296; Howell v Jackson 6 C & P 723. 108 Doe v Laming 4 Camp 77. However, a coffee house which provided beds as well as provisions was

considered to be an “inn”: Thompson v Lacy 3 B.& Ald 283. 109 Ultzen v Nicols [1894] 1 QB 92. 110 Dansey v Richardson 23 LJQB 217. 111 Halsbury’s Laws of Australia , op. cit., para. 40-585.

Chapter 5 – Common Law

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approved in Webster v Opitz that the guest need not engage sleeping accommodation for the common law liability to apply.112 This aspect is discussed further below.

112 See for example Williams v Linnitt [1951] 1 KB 565, where a farmer who visited a local inn to drink with

friends was considered a “guest”.


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“GUEST”

5.10 At common law, a “guest” is:

[A] traveller, passenger, wayfarer, or such like person, who, by himself, or his beast, has been, however temporarily, accepted to, and remains under, hospitality within an “inn” or its curtilage.113

5.11 Traditionally therefore, in order to be a guest at common law, a person was required to be a “traveller”. A person was not a traveller, according to the authorities, where he or she was a local resident and/or used the facilities for mere temporary refreshment:

And therefore if a neighbour, who is no traveller, as a friend, at the request of the innkeeper lodges there, and his goods be stolen , etc, he shall not have an action ….114

5.12 However, by the end of the 18th century it was recognised that it was not necessary for the guest to stay the night in order for the innkeeper to be liable, but that a passing visit for refreshment was sufficient. It was also irrelevant that a person came from nearby. This was confirmed by the leading case of Orchard v Bush & Co.115 The plaintiff in that case, a local resident, had his coat stolen while he was eating dinner at an inn. The innkeeper argued that merely taking temporary refreshment was not enough to make the plaintiff a traveller. The Court held that a person need not engage sleeping accommodation to be considered a “guest”:

[A] guest is a person who uses the inn, either for a temporary or a more permanent stay, in order to take what the inn can give. He need not stay the night. I confess I do not understand why he should not be a guest if he uses the inn as an inn for the purpose merely of getting a meal there.116

5.13 Orchard v Bush was applied in the more modern case of Williams v Linnitt117, where an innkeeper argued that a local resident who came to drink at the inn with friends was not a traveller. The Court held that any person who came to an inn for the purpose of receiving such accommodation as the innkeeper could give him, which he was ready to pay for, and who was so received by the innkeeper, was a traveller and entitled to the protection given by the common law to a guest. This was so even though the person was a local resident and came for no more than temporary refreshment and did not intend to stay the night at the inn.

113 Stroud’s Judicial Dictionary of Words and Phrases, Sweet & Maxwell Ltd, London, 4th edn, 1971, vol. 3, p. 1199. 114 Calye’s Case [1584] 8 Coke 32 1 SLC (12th ed.) 131. 115 [1898] 2 QB 284. 116 Orchard v Bush & Co [1898] 2 QB 284 at 287, per Wills J. 117 [1951] 1 KB 565.


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5.14 The Court added, however, that:

[T]he term “traveller”, even on this broad construction, is very far from embracing all comers: it excludes, for instance: (a) the innkeeper’s family living in the inn, (b) the innkeeper’s servants, (c) the innkeeper’s private guests, (d) lodgers at the inn, and (e) persons resorting to the inn for purposes unconnected with the enjoyment of the facilities which it provides as an inn, for example, to repair the drains or sell the innkeeper a sewing machine.118

5.15 The common law distinction between a guest and a lodger, referred to above, is particularly significant.119 This distinction also has a long history, and may be summarised as follows:

[F]rom the earliest times a “guest” of an inn was a person who, without prior or special contract, arrived at the premises and demanded food or sleeping accommodation, and was received on reasonable terms. A “lodger”, on the contrary, was one who arrived at the inn and was received on the terms of his contract.120

5.16 In Daniel v Hotel Pacific Pty Ltd121, a majority of the Full Court of the Supreme Court of Victoria considered the meaning of “guest” at common law in the context of a provision of the Licensing Act 1928. The majority held that a person who books accommodation in advance at a hotel for a definite period and who subsequently arrives at the hotel to occupy the accommodation reserved on the terms agreed, is not a guest but a lodger.

5.17 Today, it is generally the custom to book hotel accommodation in advance and for a stated minimum time.122 If the decision in Daniel is correct, those who book accommodation in advance and then take up the accommodation on the agreed terms would be “lodgers” not “guests”, and so not able to rely on an innkeeper’s common law liability.

5.18 Lowe J, of the majority in Daniel , recognised the difficulty of applying archaic legal concepts to modern situations:

I have been much puzzled as to what is the discrimen which enables one to decide how in cases which are superficially alike one gives rise to the relationship of innkeeper and guest and the other does not. The root of the trouble is that we are applying to present-day complex conditions a concept that originated in, and applied to, a much simpler state of society.123

5.19 Nevertheless, His Honour held that, in all of the circumstances, the plaintiffs were lodgers rather than guests:

118 [1951] 1 KB 565, at 579, per Asquith LJ. 119 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 5. 120 Ex parte Coulson (1947) 48 SR (NSW) 178, at 184, per Davidson J. 121 [1953] VLR 447. 122 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 5. 123 [1953] VLR 447, at 453.


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It is the combination of these circumstances and not merely the fact that the plaintiffs had booked for a definite period which leads me to my conclusion of fact. I do not say, and I should hesitate long before saying, that an arrangement to stay for a short but definite period in itself prevents the person so arranging being received as a guest.124

5.20 Sholl J, who dissented, explained the seventeenth century context in which the definition was developed:

[T]he customary fashion of using hotels was for the traveller to arrive unannounced, and thereupon to demand and receive accommodation at a reasonable tariff, and that an antecedent contract for accommodation, and a fortiori such a contract for a stated period, was so unusual that it was considered inconsistent with the ordinary user of inns and was to be regarded as a “special agreement” for board which removed the boarder from the category of guests.125

5.21 Sholl J indicated why he considered the majority’s decision inappropriate for application to modern dealings:

The use in modern times of the telephone, the telegraph, and the post is so universal, and accommodation in hotels is often so much in demand, that it would seem mere anachronistic eccentricity for the law to impose on an hotelkeeper a greater duty towards the smaller class of mere casual arrivals, who come [to a hotel] without any notice at all, and one fortunate enough to obtain accommodation, than to the many who have the common sense and the courtesy to send a prior communication; or to impose towards a person who refuses to state the length of his stay a greater duty than towards one who is prepared to book for a definite time.126

5.22 His Honour proposed the following test to distinguish between “guest” and “lodger”:

[W]hether there has been initially or subsequently - ie before on, or at some time after the visitor’s reception - and either expressly or by implication, an arrangement (a) which contemplates or involves an intended “permanence” of stay, ie a stay for a long time ... especially (b) if accompanied by the absence of any other permanent home …or (c) which in some other way makes the visitor a member of the innkeeper’s household in a character differing from that of an ordinary hotel guest ….127

5.23 Sholl J concluded that, in all the circumstances, the plaintiffs were ordinary hotel guests. His Honour observed that:

the subject is one of which clarification and simplification by legislation is very desirable.128

124 [1953] VLR 447, at 455, per Lowe J. 125 [1953] VLR 447, at 461. 126 [1953] VLR 447, at 463. 127 [1953] VLR 447, at 467. 128 [1953] VLR 447, at 468.


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5.24 In Turner v Queensland Motels Pty Ltd129, a husband and wife travelled from Adelaide to Brisbane where they stayed in a motel for an indefinite period, the accommodation having being booked for them in advance by a travel agent. No deposit had been paid. A thief entered their room and stole some of their property. The Queensland Court of Appeal held that the travellers were “guests” of the motel, and that their status could only be changed by special contract. The mere circumstance of booking accommodation in advance through an agent did not cause them to lose their status as “guests” and become “lodgers”. A “special contract” in this context meant:

[S]ome contract whereby a person is received on terms other than those on which an owner of an inn holds out that he will receive all travellers who are willing to pay a price adequate to the sort of accommodation provided, and who come in a situation in which they are fit to be received.130

5.25 In a recent Supreme Court of Victoria decision, Oakford Executive Apartments Ltd v Van der Top131, O’Bryan J considered the decisions in Daniel and Turner. The guests in Oakford, whose property was stolen from their apartment, had also booked their accommodation in advance. His Honour referred to the judgment of Sholl J in Daniel as “very persuasive”, and held that the parties in Oakford had not entered into a special contract which differentiated the travellers from ordinary guests of an innkeeper. O’Bryan J further held that the circumstance that such accommodation was pre-booked did not change the essential character of their status from “guests” to lodgers.

5.26 The debate has not, however, been determined by the decision in Oakford Apartments. O’Bryan J, as a single judge of the Supreme Court of Victoria, was bound by the decision of the Full Court in Daniel, while the decision of the Queensland Court of Appeal in Turner could merely be persuasive. Yet his conclusion is arguably contrary to the decision of the Full Court in Daniel, despite the comments of Lowe J in that case. While the correct result appears to have been reached, a decision of the Full Supreme Court, or of the High Court, is necessary to put the matter beyond doubt in Victoria. It is at least arguable, therefore, that an innkeeper is not liable to a person who books accommodation in advance and then takes up the accommodation on the agreed terms.

5.27 The determination of who may be considered a guest at common law is clearly a difficult task. The case law discussed above was developed over the course of several

129 [1967] Qd R 189. 130 Quoted by O’Bryan J in Oakford Executive Apartments Ltd v Van der Top, unreported, Supreme Court of

Victoria, O’Bryan J, 31.1.92, 10458/1991, at 13. 131 Unreported, Supreme Court of Victoria, O’Bryan J, 31.1.92, 10458/1991.


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centuries and, due to outdated terms and concepts, seems hardly appropriate for application to modern dealings between owners of accommodation establishments and their guests.

5.28 The Committee considers that the concept of “traveller” is irrelevant to a modern definition of guest and, further, that the decision in Daniel produces an inappropriate and undesirable distinction between guests and lodgers.

LIABILITY OF INNKEEPERS

5.29 At common law, innkeepers have been held strictly liable for the property of their guests since the earliest recorded laws and cases.132 Liability is “strict” as it arises without proof of negligence and does not depend on the law of bailment or contract law. In effect, innkeepers are insurers of the goods of their guests, subject to any available defence.133

5.30 The innkeeper is strictly liable in respect of goods located within the “hospitium”, or bounds, of the inn. It is not necessary that the goods be specially deposited with the innkeeper, or in the special keeping of the innkeeper. The obligation extends to goods in the room occupied by the guest, even though the innkeeper has no knowledge of the goods.134 The OPC considered that, for this reason, it was perhaps necessary to limit liability of innkeepers, except where the loss or damage was due to some default, neglect or wilful act of the innkeeper or an employee (as is currently the situation under the Act).135

5.31 Further, the innkeeper may be liable even though the goods are not exclusively in the possession of the innkeeper because the person who brings the goods to the inn may deal with them. The innkeeper is also liable for goods specifically placed in his care.136 It is not difficult to imagine the potential for fraudulent claims against an innkeeper given this extensive liability.

5.32 The Committee considers that the exposure of innkeepers to liability under the common law places an unfair burden on the innkeeper who should, in some circumstances, be protected from this unlimited liability, as is the case under the current Act.

132 Trevor Atherton, Innkeepers’ Liability for Guests’ Property: Contracting Out is Against the Law, Australian

Business Law Review, Vol. 24, Dec. 1996, p. 448. 133 ibid., p.449. 134 id. 135 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 5. 136 Atherton, op. cit., p. 449.


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Extent of liability

5.33 Another problem with the common law is that there is some uncertainty as to the extent of an innkeeper’s liability. In some cases it has been held that liability extends only to the loss of a guest’s goods and not damage, unless the damage was caused by the innkeeper’s negligence. In other cases, the innkeeper has been found strictly liable for damage or injury as well as loss.137

5.34 In Winkworth v Raven138, a guest’s car was damaged by the water in the engine freezing, while in the garage of an inn.139 The Court held that an innkeeper was not liable for damage to a guest’s property, in the absence of negligence:

[T]he innkeeper is not an insurer of the person of the guest nor of the latter’s goods generally … he is only responsible in case of injury to the guest or his goods if negligence on the part of the innkeeper is proved. I can find no case in which an innkeeper has been held liable for injury to goods as opposed to loss of the goods unless default on the part of the innkeeper has been proved.140

5.35 Winkworth v Raven was applied in Williams v Owen141, where the guest’s car was extensively damaged by a fire in the inn’s garage. The Court held that the innkeeper was under no absolute responsibility as to render him responsible for the injury to the car, in the absence of negligence, because his responsibility as an innkeeper did not extend to responsibility for injury to a guest’s goods as distinct from their loss or theft.

5.36 However, the Court in Williams acknowledged, and distinguished, an earlier case in which an innkeeper had been held liable for injury to a guest’s goods. In Day v Bather142 a horse was brought to an inn by a guest. The horse was injured while being exercised by one of the innkeeper’s staff. The innkeeper was held liable for the injury. And in a New South Wales case early this century, an innkeeper was held liable for injury to a guest’s goods caused by a fire on the inn’s premises.143

5.37 The position, then, in respect of liability for injury to a guest’s goods, is far from clear. As the OPC advised the Committee:

137 Halsbury’s Laws of Australia , op. cit., para. 40-590, n. 2. 138 [1931] 1 KB 652. 139 Note that at this time the relevant English Act did not exclude innkeeper’s liability for motor vehicles. 140 [1931] 1 KB 652, at 657, per Swift J (emphasis added). 141 [1956] 1 All ER 104. 142 (1863) 2 H & C 14. 143 Nott v Maclurken (1903) 20 WN (NSW) 135.


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An innkeeper would be strictly liable at least for any loss of a guest’s property. It is unclear whether liability at common law extends to damage other than damage caused by the neglect or misconduct of the innkeeper or its employees ….144

5.38 The Committee notes that the extent of an innkeeper’s liability at common law is uncertain, and believes that the position should be made clear in relevant legislation (as is currently the case145). The Committee is inclined to the view that innkeepers should be liable for both loss of and damage to a guest’s property, subject to such protections as afforded in relevant legislation.

Defences

5.39 At common law, the unlimited liability of innkeepers is subject to certain defences, which an innkeeper may raise in order to avoid liability. The defences which may be available to the innkeeper are:

(a) the negligence of the guest;146

(b) that the guest retained the goods in his or her exclusive possession;

(c) that the goods were not infra hospitium (within the bounds of the inn);

(d) an act of God; and (e) acts of enemies of the Sovereign.147

5.40 In order for an innkeeper to escape liability on the first ground, the guest’s negligence must have caused the loss. Negligence in this context is constituted by the guest failing to exercise the ordinary care that a prudent person could reasonably have been expected to exercise in the circumstances. What constitutes negligence is a question of fact in each individual case.148 The Australian Hotels Association (“AHA”) noted, in its submission to the Committee, that at common law the onus is on the hotelier to disprove negligence, rather than on the guest to prove negligence, as is the case under the State legislation.149 Ms Margaret Kearney, President of the AHA, submitted that, if the proposed repeal of the Act occurred, hotels would have to spend time and money in proving their case in the courts.150

144 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 5. 145 See further Chapter 6. 146 There is doubt as to whether this ground provides an absolute defence, or whether the apportionment

legislation would apply: Atherton, op. cit., p. 450. 147 Halsbury’s Laws of Australia , op. cit. at para. 40-595. 148 ibid., para. 40-600. 149 Submission from AHA, 30.6.95, p. 2. 150 SARC, Minutes of Evidence, public hearing 19.7.95, p.32.


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5.41 It is very difficult for an innkeeper to prove that a guest has assumed exclusive responsibility for the goods so as to relieve the innkeeper of liability.151 Such a defence may succeed in a situation where, for example, a guest’s wallet is stolen from his or her pocket while at the inn. However, a court found that there was no exclusive possession where property was stolen from a locked suitcase at an inn.152 Where there is doubt, the courts usually resolve the matter in favour of the guest.153

5.42 As indicated above, an innkeeper is only strictly liable for loss or damage to goods that are within the bounds of the inn. This includes goods that are not within the building itself, but have been left in a place in which it was clearly intended that they should be kept (for example, a separate storage building).154

5.43 The Committee considers that there is still a role for most of these defences as a means of protecting innkeepers from unlimited liability. However, the Committee holds the view that the defences refer to certain archaic concepts that are inappropriate for modern dealings, such as “acts of the enemies of the Sovereign”. These concepts should be encapsulated in a more modern form of defence covering situations where the loss of or damage to a guest’s property was due to circumstances completely beyond the control of the innkeeper.155

Contracting out of common law liability

5.44 As will be discussed in Chapters 6 and 7 of this Report, most States in Australia, including Victoria, have enacted legislation that restricts the application of unlimited common law liability to innkeepers. However, in South Australia and Queensland that legislation has been repealed, and the common law applies. Innkeepers in Queensland have attempted to protect themselves by including terms in contracts with guests, or displaying notices, which include exclusion or limitation of liability clauses.156 Even in States with protective legislation, some innkeepers have sought further protection from unlimited liability for property in safe custody by contractual limitation or exclusion clauses.157

151 Atherton, op. cit., p. 450, n. 15. 152 Carpenter v Haymarket Hotel Ltd [1931] 1 KB 364. 153 Halsbury’s Laws of Australia , op. cit. at para. 40-605. 154 ibid., para. 40-610. 155 See further discussion in Chapter 6. 156 Atherton, op. cit., p. 448. 157 ibid., p. 450. Note that this is not necessary in Victoria where the current Act limits liability for goods in

safekeeping: see Chapter 6.


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5.45 The OPC advised the Committee that the application of the common law to modern dealings between innkeeper and guest may be excluded if the relationship between the parties was governed by an agreement.158 However, it appears that an innkeeper cannot contract out of the common law strict liability by special agreement. First, because the liability is independent of the law of contract or bailment, and secondly as (it has been stated) the common law has never permitted innkeepers to contract out of it.159

5.46 There are not many cases on this issue, and those that exist appear to contradict one another. One case cited in favour of innkeepers being permitted to contract out of their common law liability is Huntley v Bedford Hotel .160 The case involved a claim for compensation by Lady Huntley for £1,300 worth of jewellery stolen from her hotel room at the Bedford Hotel in Brighton (England) where she was staying on holiday. Under the Innkeepers Act 1863 (UK), the hotel’s liability was limited to £30 unless there was negligence on the part of the hotel. As required by the Act, there was a statutory notice of limitation posted in the hall of the hotel, and another notice in the guest room which stated that “articles of value, if not kept under lock, should be deposited with the manager, who will give a responsible receipt for the same”. The jewellery was kept in a locked jewellery box in a locked trunk in Lady Huntley’s dressing room.

5.47 Lady Huntley argued successfully at the trial that the notice in the room constituted a special contract by which the hotel had agreed to accept full liability if the jewellery was kept under lock. This was overturned by the Court of Appeal. Lord Esher MR held that the notice in the bedroom was the only evidence of a special contract, and that that notice had to be considered in conjunction with the fact that an ordinary notice under the Act was displayed in the hall. That being so, he concluded, there was no evidence that the innkeeper intended to contract out of the Act. Lord Esher also rejected the findings made at the trial of negligence on the part of the hotel and contributory negligence by Lady Huntley.

5.48 It is important to note that the special contract that Lady Huntley sought unsuccessfully to establish involved a greater liability than the limitations in the Act. The question of contracting out of the liability of an innkeeper at common law did not arise. Therefore the case does not appear to support the proposition that an innkeeper may contract out of that liability.161

158 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6. This advice was limited to non-

corporate innkeepers, due to the application of the Trade Practices Act 1974 (Cwlth): see further chapter 12. 159 Atherton, op. cit., p. 451. 160 (1892) 56 JP 53. 161 Atherton, op. cit., p. 452.


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5.49 In Carpenter v Haymarket Hotel Ltd162 a guest, in her hotel room, changed her diamond ring for a pearl ring. She left the diamond ring in her jewellery case in her locked room and went out. The next morning she discovered the diamond ring was missing. The usual statutory notice was displayed in reception, and a further notice in the guest room declared that the hotel would not be responsible for any lost property and directed guests to deposit all articles of value at the office.

5.50 The trial judge found that the guest had not been negligent, but that the innkeeper was absolved from liability because the guest had ignored the notice in her room. The trial judge came to this conclusion on the basis of an earlier decision in which the court found that a guest’s failure to heed a warning notice to deposit cash for safekeeping was negligent.163 However, the decision of the trial judge in Carpenter was overturned on appeal, and it was held that the earlier case merely decided that failure to heed the notice was, in the circumstances of that case, evidence of negligence by the guest. The court held (as did the trial judge) that the plaintiff in Carpenter had not been negligent. The notice could not, therefore, relieve the innkeeper from liability.

5.51 The leading English case on the subject is Williams v Linnitt.164 A farmer frequented the local inn to drink with his friends. On the night in question, he left his car in the carpark in front of the inn, from where it was stolen. The carpark had a sign on it which stated that the proprietor of the inn would not be liable for loss of or damage to any vehicle or to anything in, on or about the vehicle. The farmer sued for the full value of the car as, under the Innkeeper’s Liability Act of 1863, there was no exclusion of or limit on an innkeeper’s liability for motor vehicles.

5.52 The majority of the Court of Appeal held the innkeeper liable. Lord Denning dissented on the ground that the carpark was not within the bounds of the inn. However, it was unanimously held that innkeepers cannot contract out of their liability for guest’s property. In fact, the defendant conceded to the Court of Appeal that, if the carpark was within the bounds of the inn, he could not contract out of his liability.

5.53 Asquith LJ stated:

Goods placed within those limits by the traveller are “infra hospitium” and, except by notice under the Innkeepers’ Acts and to the extent that such a notice operates, the innkeeper cannot

162 [1930] 47 TLR 11. 163 Jones v Jackson (1873) 29 LT 399. 164 [1951] 1 KB 565.


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limit his absolute liability for them. He cannot by a special agreement contract out of his strict liability.165

5.54 Lord Denning agreed and noted that the very existence of the Act impliedly affirmed that innkeepers were unable to contract out of their common law liability for, if innkeepers were able to contract out of their liability, the protection offered by the Act would not have been necessary.166

5.55 The English Law Reform Committee, which conducted a review of the law in this area, stated in its second report:

As the liability is based on the custom of the realm and not on contract, the innkeeper cannot escape liability by warning his guests to take special precautions, nor can he by any express contract restrict his liability.167

5.56 The issue was considered recently by the Victorian Supreme Court in Oakford Executive Apartments v Van der Top168, where guests signed a pro forma Reservations Agreement that contained the following provision:

Oakford Executive Apartments shall not be liable for or liable to compensate Guests for loss, theft or damage of personal property on, or brought into the unit or in the immediate vicinity of any of the units.

5.57 The guests’ apartment was robbed and they sought to recover the full value of their loss. The Magistrates’ Court held that an innkeeper could not rely on an exclusion clause in a special contract with guests.

5.58 On appeal, O’Bryan J upheld the findings at trial that the apartments constituted an “inn” and that the plaintiffs were “guests”. The judge reviewed the authorities and concluded:

In my opinion, the decision in Williams [v Linnitt] should be followed in Vict oria in the absence of any binding authority to the contrary. In the absence of a special contract which changes the nature of the relationship between the parties an innkeeper may not contract out of his common law liability to his guest.169

5.59 It is clear from the reasoning in the case that His Honour’s reference to a “special contract” means a contract which changes the character of a customer from a “guest” to a

165 [1951] 1 KB 565 at 580. 166 [1951] 1 KB 565 at 585. 167 Law Reform Committee (England), Innkeepers’ Liability for Property of Travellers, Guests a nd Residents, Second

Report, 1954. 168 Unreported, Supreme Court of Victoria, O’Bryan J, 10458,9/91, 31.1.92. 169 ibid., p.17.


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lodger (as discussed above in this Chapter). This has always been recognised at common law as an exception to an innkeeper’s liability.170

5.60 The cases therefore demonstrate that innkeepers cannot by contract limit or exclude the strict liability imposed upon them at common law for the safety of the property of their guests.171 Further, and possibly the most persuasive factor against innkeepers now being able to contract out of their common law liability, is the fact that under the 1859 Act, innkeepers in Victoria could contract out of their common law liability. This situation was changed by the amending Act of 1948.172

5.61 It is worth noting, however, that where an innkeeper displays a notice such as that in Carpenter, while the notice will not of itself exclude liability, non-compliance by the guest may constitute evidence of negligence on the part of the guest which, if proven, would exempt the innkeeper from liability.173

5.62 Even if it were possible for an innkeeper to contract out of common law liability, there would be a number of practical difficulties with putting this into practice. First, the exclusion or limitation of liability clause would need to be incorporated as a term of the contract. To that end, the innkeeper would need to ensure that the guest had reasonable notice of any term purporting to limit liability in order for the term to be incorporated.174 A notice in a hotel carpark and at reception may not be sufficient notice.175

5.63 Secondly, notice must be given at or before the time of entering into the contract. If the exclusion or exemption clause was included in a notice displayed on the door of a guest’s room, this term would not be incorporated as the contract would have been formed before the guest arrived in the room.176 In fact, there is some doubt as to when a contract does come into existence between an innkeeper and a guest - when the reservation is made, when a deposit is paid, or when a guest checks in at reception.177 Further, the effect of the involvement of a travel agent on the principles of privity of contract is not clear.178

170 Atherton, op. cit., p. 456. See discussion of “guest” above. 171 id. 172 See discussion of Victorian Act in Chapter 6 below. 173 Jones v Jackson (1873) 29 LT 399; Atherton, op. cit., p. 452. But see note 53 above, which queries the impact

of the apportionment legislation in this context. 174 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6. 175 Atherton, op. cit., p. 458. 176 Olley v Marlborough Court [1949] 1 KB 532. 177 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6. 178 As it is fairly clear that innkeepers may not contract out of their common law liability, these issues will not

be explore d further in this Report.


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5.64 Another obstacle is that exemption and limitation clauses are strictly construed against the person seeking to rely upon them. Consideration would also have to given to translating notices, where appropriate, into other relevant languages such as Japanese, in order for the contract to bind non-English speaking guests.179

5.65 Finally, where innkeepers do display notices or use contracts wrongfully purporting to exclude or limit liability, these may offend the consumer protection legislation.180

5.66 Ms Margaret Kearney, President of the AHA, pointed out the problems in those jurisdictions where the common law applied, Queensland and South Australia. She believed that there was a conflict between cases decided in the two States as to whether it was possible for an innkeeper to contract out of his or her common law liability.181 This issue is discussed at length above.

5.67 The Committee concludes that an innkeeper may not contract out of his or her common law liability. The Committee notes therefore that an innkeeper is subject to almost unlimited liability (subject to any relevant defences) at common law. The Committee considers that innkeepers should be protected to some extent from this unlimited liability.182

INNKEEPER’S LIEN

5.68 At common law, an innkeeper has a general lien, for payment of the bill, over all goods which are received as part of the guest’s luggage and have come into the innkeeper’s possession as a direct result of the relationship of innkeeper and guest. The lien acts as a balance for the innkeeper’s unlimited common law liability.183 The innkeeper’s exercise of the lien is confined to his or her remuneration owed for services rendered as an innkeeper.184

SUMMARY OF PROBLEMS WITH COMMON LAW

5.69 In summary, the problems with the application of the common law to the relationship between innkeeper and guest are as follows.

179 Atherton, op. cit., p. 458. 180 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6. See discussion in Chapter 12. 181 SARC, Minutes of Evidence, public hearing 19.7.95, p. 31. 182 See further Chapter 6 in relation to the contents of new legislation. 183 Williams v Linnitt [1951] 1 KB 565, at 577-8, per Asquith LJ. 184 Halsbury’s Laws of Australia , op. cit., para. 40-615. See further Chapter 6 for the effect of the current

Victorian Act on the innkeeper’s lien.


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1. The definitions of inn and innkeeper are outdated, and uncertain in their application to modern forms of accommodation and accommodation providers.

2. The definition of guest is uncertain due to:

(a) the conflict between the line of authority that requires a guest to be a “traveller”, and recent cases which have found that a local resident who visits an inn for temporary refreshment may be a guest; and

(b) the distinction drawn by the courts between a guest and a lodger, which precludes most travellers today, who book their accommodation in advance and then take up the accommodation on those terms, from being considered guests;

3. Common law liability is strict and unlimited (except where a defence applies).

4. It is uncertain whether there is liability at common law for loss to property only, or for both damage to and loss of property.

5. Some of the common law defences are outdated, for example the defence of acts of the sovereign’s enemies.

6. Innkeepers are unable to contract out of their common law liability.

5.70 The OCP stated in its submission to the Committee that:

These [common law] principles are uncertain and their applicability to modern dealings inappropriate ….

5.71 The AHA acknowledged, in its submission to the Committee, that some protection may be available to innkeepers at common law, but submitted that there were “grey areas” which required legal interpretation and clarification.

5.72 The Committee notes the existence of these considerable prob lems in relation to the application of the common law. The Committee agrees that the common law is uncertain and that the rights and obligations of innkeepers and their guests should not be left to the common law for determination.

RECOMMENDATION 2

The Committee recommends that the liability of innkeepers not be left to the common law for determination.

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C H A P T E R 6 C A R R I E R S A N D I N N K E E P E R S A C T 1 9 5 8

OVERVIEW

6.1 In Victoria, as in most Australian States and Territories, legislation exists which limits the strict liability of an innkeeper at common law to a nominal sum, subject to the innkeeper displaying the statutory notice as required.185 However, innkeepers remain fully liable for the default, neglect or wilful acts of themselves and their servants.

6.2 This Chapter commences with an outline of the development of the Victorian Act, followed by a detailed examination of the current legislation, and identification of the perceived problems with the Act. The Chapter then considers whether the legislation need be retained and, if so, whether as a separate piece of legislation or whether the provisions may be inserted in another Act.

6.3 There are a number of problems with the Victorian legislation. The language and style of the current Act, even though substantially rewritten as recently as 1970, are outdated. The Act relies heavily on common law definitions and concepts that, as discussed in the preceding Chapter, are uncertain and inappropriate for application to modern dealings. Further, the caps on liability were set in 1970, and have been outstripped by inflation. These problems are discussed in detail below.

6.4 Hotel owners have made it clear, in submissions and evidence put to the Committee, that they support the retention of the Act in its current form.186 They argue that any change to the Act that may expose them to greater liability would impose further costs on the industry, which would ultimately place Victorian hotels at a competitive disadvantage.

185 Atherton, op. cit., p. 450. 186 These submissions are discussed towards the end of this Chapter.


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DEVELOPMENT OF VICTORIAN LEGISLATION

6.5 In 1859, An Act to Amend the Law relating to Innkeepers Carriers and Others was introduced. The provisions of that Act relating to liability for damage to or loss of property applied to both innkeepers and carriers without distinction. In summary187, the Act provided that:

• an innkeeper was not liable for loss of or injury to valuable goods (as described in the Act) worth over £10 in value unless, at the time of the bringing of the goods into the inn, the value and nature of the goods were declared;188

• in that case, the innkeeper could demand an increased rate of charge, provided he or she displayed in a conspicuous place a notice indicating the increased rates applicable - if the notice was not so displayed, the innkeeper lost the protection of the Act;189

• the innkeeper was obliged, if required, to sign a receipt for the goods - if the innkeeper did not, he or she lost the protection of the Act;190

• innkeepers were liable at common law where the protection of the Act did not apply, and no public notices or declarations were effective to limit that liability;191 and

• the protection of the Act did not apply to negligent or felonious acts by employees of the innkeeper.192

6.6 Under the 1859 Act, an innkeeper was able to contract out of his or her common law liability, as the Act did not affect any “special contracts” between innkeeper and customer (unlike the prohibition on public notices and declarations), provided the latter signed the agreement.193

6.7 The 1859 Act did not include any definitions of “inn” and “innkeeper”, as it relied wholly on the common law definitions. The term “guest” was not used in the 1859 Act.

187 The provisions of the 1859 Act are discussed at length in Chapter 2 above. 188 Section I, 1859 Act. 189 Sections II and III, 1859 Act. 190 Section III, 1859 Act. 191 Section IV, 1859 Act. 192 Section VIII, 1859 Act. 193 Section VI, 1859 Act.

Chapter 6 – Carriers and Innkeepers Act 1958

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6.8 The regime introduced by the 1859 Act applied in substantially the same form until 1948, despite the re-enactment of the legislation as the Carriers and Innkeepers Acts of 1915 and 1928. The Carriers and Innkeepers Act of 1948, for the first time, drew a distinction between those provisions relating to carriers and those in respect of innkeepers. The sections that had previously applied to both carriers and innkeepers now applied to carriers only, and a new section was introduced to apply to innkeepers alone. Section 3 of the 1948 Act provided:

No innkeeper shall be responsible for the safe custody of any goods or chattels the property of any lodger or guest above the value of Ten pounds unless such goods and chattels have been given into the care or charge of such innkeeper his servant or agent.

6.9 In 1958 the Carriers and Innkeepers Act was enacted to consolidate the law applying to carriers and innkeepers, being the 1928 and 1948 Acts. As a result, sections 3 to 25 of the 1958 Act (prior to any amendment) dealt exclusively with carriers. The sole provision in relation to innkeepers was section 26, derived from section 3 of the 1948 Act.

6.10 In 1970, the Carriers and Innkeepers (Amendment) Act was passed. The 1970 Act substituted sections 26 to 31 of the current Act, for section 26 of the 1958 Act. In other words, the provisions in the current Act dealing with innkeepers were introduced by the 1970 Act. The provisions of the current Act are discussed in detail below.

“INNKEEPER”

6.11 Under the Victorian Act, an “inn” is:

any hotel or motel and includes any establishment held out by the proprietor as offering food, drink and, if so required, sleeping accommodation, without special contract, to any traveller presenting himself who appears able and willing to pay a reasonable sum for the services and facilities provided and who is in a fit state to be received.194

6.12 An “innkeeper” means “the keeper of an “inn”.195

6.13 The statutory definitions of “inn” and “innkeeper” are therefore substantially the same as the common law definitions.196 It may be that these definitions are not broad enough to cover some modern forms of accommodation:

Certain anomalies exist in the present definition of an inn, particularly in view of the advent of motels in the community. Quite a number of motels in Victoria do not provide a meal service; they simply provide an accommodation service. From my interpretation of the definition

194 Section 26(1), current Act. 195 Section 26(1), current Act. 196 Parliament of Victoria, Parliamentary Debates (Hansard), Legislative Assembly, vol. 298, 23.3.70, p. 4125, per

Mr Sutton. The common law definitions are discussed in Chapter 5.


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which follows the British Act – I stand to be corrected if I am wrong – an inn means a common inn and an innkeeper means the keeper of an inn and a person who provides not only accommodation but also meals. What is the position then of motels which offer excellent accommodation but no meals? …. I do not think the Act embraces this type of accommodation which abounds throughout Australia.197

6.14 A preliminary review of the equivalent legislation in New South Wales, the Innkeepers Act, found:

Since the legislation was framed at the beginning of the century, a wide range of accommodation establishments has developed to cater for travellers, along with a tourism industry which has a major economic and social significance. The accommodation industry now includes establishments such as hotels, motels, motor inns, international standard resorts, guesthouses, private hotels, holiday apartments, timeshare apartments, ski lodges, “working farms”, health farms, backpackers motels and so on. The Innkeepers Act is totally inadequate because it ignores the existence of this range of establishments, and therefore does not address the extent to which the operators of these other establishments should be liable for the personal property of their guests.198

6.15 It should be noted that the New South Wales legislation does not include a definition of “inn” and so relies entirely on the common law definition, while the Victorian legislation includes the definition outlined above. In practice, this makes little or no difference. Yet, contrary to what was said in relation to the New South Wales Act, the Victorian definition seems broad enough to at least include most accommodation establishments that provide meals. However, it would be very useful for the operators and guests of establishments such as guesthouses and backpacker lodges to be certain of their inclusion in, or exclusion from, the Act. Certain forms of accommodation such as caravans, which are covered under other legislation, would be excluded from the operation of the Act and this should perhaps be made clear in the Act.

6.16 Section 26(1) also refers to a “traveller”, a term which is not defined in the Act, and which therefore derives its meaning from the common law. As noted in Chapter 5, there are significant problems associated with the common law concept of traveller. One line of authority held that a person who happened to be a local resident or who visited an inn for mere temporary refreshment was not considered a traveller, and so was not protected by innkeeper’s liability. However, more recent cases have indicated that this restriction no longer applies.

6.17 In line with these recent cases, the statutory definition of “inn”, by using the words “… and, if so required, sleeping accommodation”, suggests that it is not necessary for the traveller to engage sleeping accommodation in order for the Act to apply. In that case, 197 ibid., p. 3156, per the Hon. D G Elliot. 198 Chief Secretary’s Department, New South Wales, Review of the Innkeepers Act 1968: Discussion Paper, p. 8.


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people visiting a hotel for a meal would be covered by the Act. However, this broad reading of the definition of “inn” is restricted by the definition of “guest”, discussed at length below, and it seems it may be the intention of the Act to apply only to those persons who “set off on a journey of some substantial distance”.199

6.18 Clearly, there are a number of problems with the definitions used in the current Act. Further, the terms “inn” and “innkeeper” are archaic, and may mislead operators who are covered by the Act into believing that the Act is irrelevant to their establishments. The Office of Parliamentary Counsel Victoria (“OPC”) indicated, in its submission to the Committee, that if statutory regulation were considered necessary, the provisions in the Act should not be retained in their current form as the words “inn” and “innkeeper” were outdated and inappropriate to describe the many forms of accommodation available today. The OPC favoured the use of the expressions “accommodation” and “accommodation provider”. 200

6.19 The hotel industry accepts that these expressions are archaic. The Victorian Employers’ Chamber of Commerce and Industry (“VECCI”) recognised that:

the term “innkeeper” is inappropriate and does not reflect the contemporary commercial accommodation provider and should be changed.201

6.20 The Victorian Accommodation Association (“VAA”) agreed:

The executive of the [VAA] does, however, endorse the need to adjust the name “innkeeper” to something more attune[d] to today’s language and attitudes ….202

6.21 The Committee agrees with these views, and therefore considers that new terms should be substituted for “inn” and “innkeeper” which reflect the diverse nature of the modern accommodation industry and which do not import any of the common law uncertainty. Further, it should be made clear which establishments are covered by the Act, and which are not.

199 Parliament of Victoria, Parliamentary Debates (Hansard), op. cit., p. 4125, per Mr Sutton. 200 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6. 201 VECCI, letter to Minister for Small Business and Minister for Tourism, 24.1.97, p. 1. 202 VAA, letter to Minister for Small Business and Minister for Tourism, 28.5.97, p. 1.


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RECOMMENDATION 3

The Committee recommends that new terms be substituted for “inn” and “innkeeper” which do not import any of the common law uncertainty, and which reflect the modern and diverse nature of the industry today. The Committee considers the expressions “accommodation” and “accommodation provider” to be appropriate. The Committee recommends that the definition of “accommodation” be as broad as possible, and outline which types of accommodation, if specified, are not covered by the legislation (eg caravans).

6.22 The Committee proposes to use the terms referred to above in its recommendations throughout the Report.

“GUEST”

6.23 The provisions of the Act which impose liability on innkeepers for the loss of or damage to property may only be accessed by a “guest”, as defined by the Act. Under the Act:

a traveller shall be deemed to be a “guest” at an inn only on days during which he [or she] is entitled to use a room at the inn that has been engaged by or for him [or her] for sleeping.203

6.24 Once again, the section refers to a “traveller”, a concept not defined in the Act and so determined by common law. As noted above, there has been some uncertainty at common law in relation to the definition of “traveller”.

6.25 However, the section is otherwise a significant departure from the common law. As outlined in Chapter 5, recent cases have found that it is not necessary for a person to engage sleeping accommodation in order to be considered a guest. The Act, by contrast, clearly indicates that innkeeper’s liability will apply only in cases where the property lost or damaged belongs to a person who has engaged sleeping accommodation. Therefore, a person taking a meal or having a drink at an inn cannot access the innkeeper’s liability provisions under the Act.

6.26 The common law also draws a distinction between a guest and a lodger. This distinction is discussed at length in Chapter 5. In short, at common law, an innkeeper is liable only to a “guest”, and not to a “lodger”. In the Full Supreme Court of Victoria decision of Daniel , the majority held that a person who books accommodation in advance and then

203 Section 27(2), current Act.


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takes up the accommodation on the agreed terms is a lodger rather than a guest. The absurd result is that most modern travellers would not be protected at common law. As the Act does not indicate when a traveller will be considered a lodger, rather than a guest, the common law distinction applies.

6.27 The statutory definition of guest also determines the period during which the innkeeper may be liable to a guest for loss of or damage to the guest’s property. This period is not, however, entirely clear. It is necessary to consider the application of the definition to the actual situation of a guest who checks in the afternoon or evening of one day, then checks out in the morning or early afternoon of another day.

6.28 On one view, the person is a “guest” even after checking out of the hotel at, say, 10am in the morning, as the person was, for the earlier part of that day, entitled to use a room at that inn which was engaged for sleeping. On the other hand, it may be argued that the intention of the legislation is to cover people only for the period during which they are actually entitled to use the room.

6.29 The better view is that the first interpretation is correct. The first interpretation is also preferable from a policy point of view, given the number of travellers who leave their property in the care of innkeepers even after checking out. The point is, the definition is open to differing interpretations that may leave tourists and innkeepers uncertain of their rights and obligations.

6.30 The OPC recommended to the Committee that:

Reference to a “traveller” should be excluded from any definition substituting “inn” or in any definition of “guest”; the status of a person as a traveller is irrelevant in today’s social customs …. A definition of “guest” that does not import any of the common law ambiguity or uncertainty is necessary.204

6.31 The Committee considers that, given the doubts surrounding certain aspects of the definition of “guest”, and the unsatisfactory state of the common law in relation to the distinction between “guest” and “lodger”, a new definition of “guest” is required. The new definition must address these uncertainties and accord with the needs of modern travellers.

RECOMMENDATION 4

The Committee recommends that a new definition of “guest” be introduced, which does not import any of the common law uncertainty. The Committee suggests the expression “accommodation user”. The terms “traveller” and “lodger” should not be used.

204 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 6.


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6.32 The Committee proposes to use the expression “accommodation user” in its recommendations throughout this Report.

LIABILITY OF INNKEEPER UNDER ACT

6.33 It is clear that hotel owners in Victoria are concerned with any amendment to the Act that may increase their liability for loss of or damage to guests’ property. Hotel owners oppose any change to the legislation in this respect. Their submissions are canvassed at length below. However, once again, the Committee considers that it must achieve a fair balance between the interests of the hotel owners, and those of their guests.

Preservation of common law liability

6.34 The Act expressly preserves common law liability principles.205 Therefore, in those situations where the Act does not apply, for example because the Fourth Schedule notice is not displayed as required, liability will be determined according to common law principles.

6.35 The common law position was discussed at length in the preceding Chapter. It is apparent that there are many problems with the application of the common law to the relationship between innkeepers and their guests. As a result, the Committee considers that it is not appropriate for the liability of innkeepers to be determined, to any extent, by the common law.

RECOMMENDATION 5

The Committee recommends that the Victorian legislation governing the liability of accommodation providers expressly exclude the operation of the common law.

Extent of liability

6.36 At common law, it is not certain whether an innkeeper is liable for damage to a guest’s property, or for loss of the property only.206 One of the reasons behind the introduction of the 1970 amendments (in effect, the introduction of the current provisions governing innkeepers, as discussed above) was to:

205 Sections 27(1), current Act. 206 See discussion of extent of common law liability in Chapter 5.


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make it clear that when a traveller is a guest at an inn the innkeeper shall be liable for damage to the traveller’s property to the same extent as he is liable for the loss of a traveller’s property.207

6.37 Therefore, the current Act expressly provides that an innkeeper is under the same liability to make good damage to property as is imposed in relation to the loss of goods.208

6.38 The Committee considers that this clarification of the common law is very useful and should be preserved in any amendment to the current legislation or new Act.

RECOMMENDATION 6

The Committee recommends that the Victorian legislation governing the liability of accommodation providers preserve the provision which makes it clear that accommodation providers are liable for damage to, as well as loss of, an accommodation user’s property in the appropriate circumstances.

Limitation of liability for goods not in safe keeping

6.39 At common law, an innkeeper is strictly liable for loss of and (less certainly) damage to a guest’s property. No distinction is made between property deposited for safekeeping, and property not so deposited.

6.40 By contrast, the Act draws a distinction between goods deposited in safe custody, and goods not so deposited. The extent of an innkeeper’s liability for damage to or loss of a guest’s property not deposited for safekeeping, may be limited to the amount of $100, subject to compliance with the Act’s requirements.209

6.41 The submissions received by the Committee from hotel owners strongly oppose any change to the liability provisions of the Act. The AHA expressed a concern that, if hotels had unlimited liability, this may invite “unreasonable” claims against the hotel.210 However, the AHA accepted that a measure of care was desirable, and so supported the retention of the existing limits.211

207 Parliament of Victoria, Parliamentary Debates (Hansard), Legislative Council, Vol. 297, 1969-70, 17.2.70, p.

2657, per the Hon R J Hamer.

208 Section 28, current Act. 209 Section 30(1)(b). 210 Submission from AHA, 11.5.95, p. 1. 211 ibid., p. 2.


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6.42 The RACV submitted that the limitation of liability in the Act should be retained, although the Act should be redrafted in a more modern and understandable form.212

6.43 In a letter to the Minister for Small Business and Tourism, VECCI stated:

With regard to the cap of[sic] liability of $100 and $2000 for goods in safe custody, the industry believes that these levels [should] be maintained as a[sic] arbitrary figure, not as a level of current values.213

6.44 The Law Institute of Victoria (“LIV”) agreed that a case could be made out for limiting the innkeeper’s liability for loss or damage to property which was not deposited for safekeeping, and where the loss or damage is not due to the negligence of the innkeeper and his or her employees. However, the LIV submitted that the limits on liability should be reviewed having regard to the costs and availability of insurance and having regard to internationally accepted norms.214

6.45 The Committee understands the concerns of hotel owners in relation to increased liability in this respect. The Committee agrees that liability for property not deposited for safekeeping should not be unlimited. However, the Committee notes that the cap on liability in respect of goods not in safekeeping was imposed in 1970. The figure of $100, then, ignores almost three decades of inflation. The Committee considers that this figure is outdated and, at the very least, should be replaced by a figure that represents current values.

6.46 However, the Committee recognises that any replacement figure will again soon be outstripped by inflation. The Committee therefore prefers a method of calculation of liability based on the daily tariff of the accommodation establishment. This calculation is discussed at length in Chapter 10. The Committee considers that this method will achieve a result that is fairer than imposing a blanket figure on all hotel owners, regardless of their standing. The Committee is of the view that a motel in Bendigo should not be subject to the same liability as a five star hotel in Melbourne.

RECOMMENDATION 7

The Committee recommends that the Victorian legislation maintain a cap on the liability of accommodation providers for property not deposited for safekeeping. The Committee recommends that the method of calculating liability set out in Chapter 10 of this Report be adopted.

212 Submission from RACV, 24.5.95. 213 VECCI, letter to Minister for Small Business and Minister for Tourism, 24.1.97, p. 1. 214 Submission from Law Institute of Victoria, 24.7.98, pp. 1-2.


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Limitation of liability for goods in safe keeping

6.47 Under the Victorian Act, a cap is also placed on the liability of an innkeeper for property placed in safekeeping. The Act provides that, where a guest’s property is lost or damaged:

(i) while it is being held for safe custody after being deposited by or on behalf of the traveller with the innkeeper or a servant authorised or appearing to be authorised for the purpose; or

(ii) after the traveller or some person on his behalf was unable to deposit it as provided by paragraph (i) because the innkeeper or such servant failed or refused without reasonable excuse to receive it -

liability is limited to the amount of $2,000.215

6.48 An innkeeper or his or her servant may require a person wishing to deposit goods in safe custody to place them in a container and fasten or seal the container.216 Further, as indicated above, the innkeeper will not be liable if he or she refuses to accept property for safekeeping with “reasonable excuse” – where, for example, the property is dangerous, or overly cumbersome.217 In other words, an innkeeper may refuse to accept property for safekeeping where such refusal is reasonable.

6.49 Again, innkeepers strongly oppose any moves to change their liability in this respect. The AHA, for example, argued that the offer of security or custodial arrangements for the property of guests was not one of the “primary purposes” of the business of a hotel. Therefore, the AHA maintained, hoteliers should not be subject to unlimited liability for loss of or damage to a guest’s personal property in the same way that they would be liable for breach of the warranties implied by the Trade Practices Act 1974 (Clwth) (“TPA”) in respect of the “primary services” of the hotel, being the provision of accommodation, food and entertainment services.218

6.50 However, the LIV submitted to the Committee:

215 Section 30(1)(a). 216 Section 30(2). 217 Section 30(1)(a)(ii). 218 Submission from AHA, 11.5.95 p. 1. Section 74 of the TPA does not distinguish between services provided

as part of the “primary purpose” of a business and those not so provided. Therefore, if the TPA otherwise applies, and if the provision of custodial or security arrangements for guests’ property is within the definition of “services” in the TPA, the warranties in section 74 of that Act will be implied, irrespective of whether or not hoteliers consider the services to be part of the “primary purpose” of the business of a hotel. See further Chapter 11.


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It would seem appropriate that the innkeeper be fully liable for the loss or damage of goods which have been deposited for safe custody. Innkeepers should be responsible for taking all necessary security precautions and arranging insurance cover having regard to all of the circumstances. Liability should only be capped by legislation if members of the accommodation industry can demonstrate that it is not possible to obtain insurance on a reasonable basis.219

6.51 It is also worth noting that Victorian hotel owners have expressed a general desire that innkeeper’s liability in Victoria be in line with other States and Territories, in order that they not suffer any competitive disadvantage. In all other States and Territories, innkeepers are subject to unlimited liability for goods in safekeeping (whether under the common law or the relevant statute).220

6.52 The Committee understands the concerns of hotelkeepers in relation to increased liability. However, the Committee notes that the cap on liability in respect of property deposited for safekeeping was also imposed in 1970, and considers the sum of $2000 to be outdated.

6.53 Further, the Committee largely agrees with the views of the LIV, and considers that it may be preferable to impose unlimited liability on innkeepers where property is deposited for safekeeping. There are strong policy considerations in support of this conclusion. First, where innkeepers hold themselves out as offering this service, they should do everything reasonable to make sure that the property is secure. Also, once the guest has delivered the property to the innkeeper he or she is no longer in a position to safeguard the property, while the innkeeper is clearly in a position to secure the property - by employing properly trained staff, providing safety deposit boxes, and other security arrangements. Finally, the Committee considers it desirable to bring Victoria into line with the other States and Territories of Australia.

6.54 Despite the above, the Committee is of the view that there should be no obligation on innkeepers to provide a safe custody service for guests’ property. It is up to individual hotelkeepers whether they wish to provide such a service. However, where an innkeeper does choose to provide the service, the Committee believes that his or her liability for property deposited in safe custody should be unlimited. The analysis and recommendations below, therefore, apply only where innkeepers do choose to provide a safekeeping service.

6.55 The Committee also considers it appropriate that innkeepers providing a safekeeping service continue to be liable where: first, property is offered for safekeeping by the guest, and the innkeeper (or his or her servant) refuses without a reasonable excuse to accept the goods; 219 Submission from the Law Institute of Victoria, 24.7.95, p. 3. 220 See Chapter 7 for a comparison of the legislation of other jurisdictions.


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and further, where the guest is unable to deposit the goods due to some default of the innkeeper (or his or her servant). This is the position under the current Act. The Committee notes that if liability in these circumstances did not exist, there would be no incentive for an innkeeper to accept any property for safekeeping, even where he or she provided the service. It is not clear from the current Act whether section 30(1)(a)(ii) imposes an obligation on an innkeeper to provide a safekeeping service. As noted above, the Committee considers that it should be a matter for the individual innkeeper to decide whether or not to provide a safe custody service. Therefore, the new Victorian legislation should make it clear that no such obligation is to be imposed on innkeepers.

6.56 Recognising the potential for increased claims against innkeepers due to the introduction of unlimited liability221, the Committee is of the view that certain protections should be introduced or maintained to protect hotelkeepers from false or fraudulent claims. The Committee considers that guests depositing property for safe keeping should be obliged to reveal to the innkeeper the nature of the property and/or the approximate value of the goods being deposited. This information should ideally be recorded by the innkeeper on an invoice or receipt, a copy of which should be provided to the guest. Further, the innkeeper should be permitted to inspect the property, to determine whether it meets the description provided by the guest. The right of the hotel keeper to refuse property for safekeeping where reasonable, outlined above, should be maintained.

RECOMMENDATION 8

The Committee recommends that the $2000 cap on liability for property deposited for safekeeping by an accommodation user be abolished, and replaced by unlimited liability. However, the Committee recommends that the new legislation make it clear that accommodation providers are under no obligation to provide a safekeeping service.

The Committee recommends that the accommodation provider be entitled to inspect the property deposited for safekeeping. The Committee further recommends that the accommodation user be obliged to disclose the nature of the property and/or the approximate value of the goods being deposited for safekeeping. The accommodation provider should note the information on a receipt, a copy of which should be provided to the accommodation user.

The Committee further recommends that the Victorian legislation preserve the provision making an accommodation provider liable where property is refused safekeeping without

221 See discussion of incidence of claims and submissions of innkeepers in rela tion to increased claims due to

unlimited liability in Chapter 11.


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reasonable excuse, and where an accommodation user is unable to deposit property for safekeeping due to the default of the accommodation provider. This provision would apply only where the accommodation provider offers a safekeeping service to guests.

Statutory notice required

6.57 The limitation of liability under the Victorian Act to the amounts outlined above is subject to the conspicuous display at reception and in the guest’s room, of the notice set out in Schedule 4 of the Act, which reads as follows:222

FOURTH SCHEDULE

NOTICE

Loss of or Damage to Guests’ Property

Under the Carriers and Innkeepers Act 1958, an innkeeper may in certain

circumstances be liable to make good any loss of or damage to a guest’s property

even though it was not due to any fault of the innkeeper or any servant in his

employ.

This liability however—

(a) extends only to the property of guests who have engaged a room for

sleeping;

(b) is limited to $100 to any one guest except in the case of property which has

been deposited, or offered for deposit, for safe custody in which case it is

limited to $2,000;

(c) does not cover motor vehicles or other vehicles of any kind or any

property left in them, or horses or other live animals.

6.58 Submissions from hotel owners opposed the amendment or repeal of the Act, on the ground that any change to the legislation would require the reprinting of these notices, which would be a great expense to the innkeepers. The AHA indicated:

To incorporate provisions in any other Act [or introduce new legislation] would involve significant compliance costs in terms of the prescribed notice that must be displayed in every room, and which refers specifically to the [Act].223

222 Section 30(4). 223 Submission from AHA, 11.5.95, p. 2.


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6.59 VECCI agreed:

At present innkeepers display Fourth Schedule Notices based on the present Act. If the provisions are moved into a different Act unnecessary compliance costs may arise as innkeepers may have to arrange for the printing and display of new Notices.

If such an action is ultimately deemed necessary, then savings and transitional provisions which ensure the validity of existing [N]otices are essential.224

6.60 Mr Alan Giles, Chief Executive Officer of the AHA, stated in his evidence to the Committee that, if the Act were amended or repealed, the signage would need to be replaced in approximately 30,000 rooms, and that this would be an expensive process. The hotel industry would like any change to retain the use of the existing signage rather than create a new version of it.225

6.61 Mr Giles, also indicated that the signs required by the Act had been around for many years, not only in Australia but overseas. He continued:

Today, most people would expect to see them and would probably notice them not being there. The average traveller who consistently uses hotels would expect to see them as part of a normal hotel room.226

6.62 The RACV confirmed that the community was accustomed to notices on the reverse of doors in hotel rooms which limit a hotelkeeper’s liability for loss of or damage to a guest’s property.227

6.63 Mr Peter Gromotka, General Manager of the Hilton International Hotel in Melbourne, believed that the current notices created discipline in guests by highlighting the risk of leaving valuable goods lying around.228

6.64 The Committee is of the opinion that a notice is a useful tool for informing guests of hotels of their rights and obligations under the legislation, and that the limitation of liability in any new or amended legislation should be subject to the display of a notice annexed as a Schedule to that Act.

6.65 The Committee notes the concerns of hotel owners in relation to compliance costs as a result of changes to the Act. However, the Committee considers that, even if there were only minor amendments to the Act, such as the updating of the language of the Act which the

224 Submission from VECCI, July 1995, p. 4. 225 SARC, Minutes of Evidence, public hearing 19.7.95, pp. 34 and 35. 226 ibid., p. 33. 227 Submission from RACV, 24.5.95, p. 1. 228 SARC, Minutes of Evidence, public hearing 19.7.95, p.33.


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hotel industry agrees is necessary, then the notice would require similar amendment. The notice, after all, reflects the outdated and uncertain language of the Act itself.

6.66 Further, the Committee notes that these notices have been in use since 1970 and does not consider it unreasonable that they be updated almost 30 years later. The Committee considers that the cost of replacing the notices will reflect the standing of the various establishments; a three room guesthouse will not, of course, be subject to the same costs of compliance as a 200 room, five-star hotel. Therefore, the Committee is of the view that the compliance costs will not impose an unreasonable burden on any operators.

RECOMMENDATION 9

The Committee recommends that the limit on an accommodation provider’s liability for property not deposited for safekeeping remain subject to the conspicuous display of a notice prescribed by the legislation.

No limitation of liability where innkeeper negligent

6.67 The liability of an innkeeper is not limited by the Act where the goods are lost or damaged through the default, neglect or wilful act of the innkeeper (or his or her servants).229

6.68 The AHA accepted that, where loss or damage to guests’ property was caused by the negligence of hoteliers and staff, that liability should be unlimited.230 The submissions of other hotelkeepers did not address this issue.

6.69 Further, if the Act were amended to exclude liability for negligent acts, this may be inconsistent with State and Federal fair trading legislation, and any provision to that effect invalid.231

6.70 The Committee considers it appropriate that innkeepers and their servants remain liable for loss of or damage to a guest’s property, where the loss or damage was due to their negligent or intentional act or omission.

RECOMMENDATION 10

229 Sections 26(2), 29 and 30(5). 230 Submission from AHA, 11.5.95, p. 1. 231 See Chapter 12 for a discussion of this situation.


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The Committee recommends that accommodation providers remain subject to unlimited liability for damage or loss to accommodation users’ property caused by the accommodation provider’s intentional or negligent acts, or those of their servants.

Exclusion of liability where traveller not a “guest”

6.71 The Act expressly provides that the innkeeper will not be liable for loss or damage to a guest’s property where the traveller is not a guest at the inn within the meaning of the Act.232

6.72 The Committee holds the view that it is appropriate that the innkeeper only be liable to guests at the hotel, and not to anybody who just happens to drop in at the hotel. However, as noted above, there are significant problems with the definition of “guest” which require attention.

No liability for vehicles

6.73 An innkeeper is not liable under the Act for loss of or damage to a vehicle or anything therein.233

6.74 The Committee recognises that this is a well-established exception to innkeeper’s liability, and considers it appropriate that an innkeeper escape liability for loss of or damage to a vehicle, except where caused by his or her negligent or intentional act.

RECOMMENDATION 11

The Committee recommends that the Victorian legislation preserve the provision that accommodation providers not be liable for damage to or loss of vehicles, or property on or in vehicles.

ABOLITION OF INNKEEPER’S LIEN

6.75 The Act abolishes the innkeeper’s lien over a guest’s property.234

232 Section 29(b). 233 Section 29(a). 234 Section 31.


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6.76 The Committee holds the view that the rights of guests and innkeepers should be clearly determined by legislation, rather than left to ancient common law concepts. The Committee believes that the exercise by an innkeeper of his or her lien over a guest’s property could lead to confrontations between guest and innkeeper, and aggravate any dispute. Therefore, the Committee supports the abolition of the innkeeper’s lien by statute.


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RECOMMENDATION 12

The Committee recommends that the Victorian legislation preserve the abolition of the common law lien.

RETENTION OF LEGISLATION

Need for legislation

6.77 As discussed in the preceding Chapter, the Committee holds the view that the common law is uncertain and inappropriate for application to modern dealings between innkeepers and their guests. Assuming, therefore, that some form of legislation is required, the Committee considered three options:

(a) retaining the current Act but with updated language and drafting;

(b) inserting the provisions in another piece of legislation, such as the Liquor Control Act 1987; or

(c) drafting an entirely new and separate Act.

RETENTION OF CURRENT ACT

Submissions in support of retention of legislation

6.78 As outlined in Chapter 1 of this Report, the Committee received submissions and evidence from a number of industry groups representing hotel owners, and from individual hotel owners. The submissions and evidence from hotel owners, without exception, supported the retention of the Act. In summary, hoteliers believed that:

1. The introduction of unlimited liability (if the Act were repealed) would increase insurance premiums.235

2. The cost of compliance (new notices, security etc) due to amendment or repeal of the Act would be high.

3. As the increased cost of insurance and compliance would be passed on to consumers, the Victorian tourism industry would be detrimentally affected and less competitive with other States.

4. There would be an explosion of false and/or mistaken claims by guests, and an increase in litigation.236

235 The insurance issue is discussed in Chapter 11. 236 The incidence of claims is discussed in Chapter 11.


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5. The loss of or damage to a guest’s property would or should be covered by the guest’s personal or travel insurance.237

6. They should not be liable for a guest’s carelessness, and that it is the responsibility of the guest to look after his or her own property.

6.78 The current Minister for Small Business and Tourism, the Hon Louise Asher MP, consulted the tourism industry, particularly the accommodation sector, in relation to the proposed repeal or amendment of the Act. The Minister summarised the views of the industry:

All three industry submissions to me supported the retention of the Act (or at least its innkeeper provisions in a new or amended piece of legislation);

The Act is well understood by consumers, is regularly utilised and is accepted as appropriate by bot h innkeepers and their guests. The current legislation appears to be working effectively with a small number of claims. The low limit on liability … acts as a deterrent against potentially fraudulent claims;

The experience of innkeepers is that guests appear to accept that, except in situations of theft due to non-secure premises or unscrupulous activity, they should take responsibility for the care of their own goods. There is no evidence that the question of liability is an issue for guests, and the Act, in fact, provides a level of certainty in relations between innkeeper and guest. Reliance on the common law in such dealings would not provide the same level of certainty. It is worth noting that the primary purpose of a residential hotel is to provide accommodation, not custodial/security arrangements;

Any change to the limited liability provisions would result in increased costs for innkeepers (and thus consumers) in terms of insurance premiums, security and compliance. Any changes to the legislation would need to incorporate a savings provision to uphold the validity of the existing Fourth Schedule notices (the AHA estimates there may be 30,000 in existence). If such notices had to be replaced, this would place an unnecessary burden and cost on the accommodation sector which would be passed on to consumers; and

In summary, the industry is united in support of the current system and is of the view that a compelling case for change has not been made.238

6.79 In its submission to the Committee, the Australian Hotels Association (“AHA”) recommended that the provisions of the Act dealing with innkeepers be retained. The AHA stated that the provisions were invoked on “a regular basis”.239 However, the AHA agreed that the language of the Act should be updated where required.240

237 The role of private insurance is discussed in Chapter 11. 238 Submission from Minister for Small Business and Minister for Touris m, 8.7.97, pp. 1-2. 239 Submission from AHA, 11.5.95, p. 1. 240 ibid., p.2.


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6.80 The Committee received over 60 letters from hoteliers concerned by the proposed repeal or amendment of the Act. Without exception, the hoteliers opposed the repeal of, or significant amendment to, the Act.

6.81 The Victorian Employers Chamber of Commerce and Industry (“VECCI”) also supported the retention of the Act, while recognising that it should be redrafted to clarify any ambiguities and rewritten in “plain English”. VECCI believed that the Act was both relevant and widely used. Also, VECCI submitted, the Committee’s discussion paper did not advance any compelling reasons for changing the liability of innkeepers. Commercial practices had developed on the basis of the Act.241

6.82 The greatest concern expressed by those organisations representing the hotel industry, has been the potential effect of repeal or amendment of the Act on small business. It has been argued that:

The financial impact of the repeal of the Act on the industry will, in some cases, be excessive, particularly for small businesses who are in the majority, as they seek alternative protection through insurance or additional security and methods for the safe custody of goods.242

6.83 The Property Owners Association of Victoria (“POAV”) submitted that the Act was useful and should be retained. The POAV stated that the Act was necessary to:

“prevent false and vexatious claims especially by mentally disadvantaged people and con-men etc.”243

6.84 The Law Institute of Victoria (“LIV”) considered that the legislation had diminished in importance over the years, as fewer valuables were carried by travellers and security arrangements became more sophisticated. However, the LIV acknowledged that innkeepers appeared to rely on the provisions to limit their liability “from time to time”. The LIV considered that the language of the provisions required updating into plain English. Further, the LIV could not see any point in retaining dual purpose legislation, and considered that the provisions protecting innkeepers should be retained in their own Act.

6.85 The Committee also conducted a public hearing on 19 July 1995, at which a number of representatives from the hotel industry and other relevant organisations gave evidence. Ms Julie Abramson, Legal Research Officer with VECCI, gave evidence before the Committee which reinforced the written submission made by VECCI to the Committee.

241 Submission from VECCI, July 1995, p. 3. 242 VECCI, letter to Minister for Small Business and Tourism, 24.1.97, p. 1. 243 Submission from POAV, 18.6.95, p. 1.


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6.86 Ms Abramson stated that the Act provided certainty to innkeepers in their dealings with the travelling public. If the Act were repealed, she argued, there would be an increase in the costs of compliance which would be passed on to the public. Such a change would place Victoria at a competitive disadvantage compared with other States. Dr Coghill asked Ms Abramson whether there was any evidence of a competitive disadvantage suffered by Victoria as compared with Queensland or South Australia, due to the legislation being in place in Victoria. Ms Abramson was unable to point to any such evidence.244

6.87 In most cases, Ms Abramson believed, a guest’s property would be covered by personal insurance.245 Further, if the Act were repealed, or the provisions transferred to another Act, there may be the need to print and display new notices, the cost of which would also be passed on to the travelling public. VECCI did not support the transfer of the provisions to another Act or, if this was done, submitted that saving provisions would be necessary to ensure the validity of existing notices.246

6.88 Mr Anthony Sheer, President of the Victorian Accommodation Association (“VAA”), told the Committee that the VAA opposed the repeal of the Act.

6.89 Mr Alan Giles, Chief Executive Officer of the AHA, indicated that, generally speaking, the industry was concerned with any change that would create an insurance “impost” on hotels which would make them less competitive with other States, or which required expensive changes in respect of compliance.

6.90 Mr Nigel Roberts, General Manager of the Sheraton Towers Southgate, told the Committee that he believed the Act provided a guideline to guests, and the fact that the limitation of liability was supported by legislation endorsed it as a serious issue. Finally, Mr Roberts informed the Committee that the style and the general direction of the law for innkeepers in Singapore and Hong Kong was very similar to that in Australia.247

Submissions against retention of legislation

6.91 In contrast, the Minister for Small Business at the outset of the Committee’s inquiry, the Hon Vin Heffernan MP, doubted the need to retain the Act:

More fundamentally, it appears unnecessary to regulate the liability of “innkeepers”. In the absence of legislative provisions there exist incentives for proprietors or operators of

244 SARC, Minutes of Evidence, public hearing 19.7.95, p. 2-11. 245 ibid., pp. 2-4. 246 Submission from VECCI, July 1995, pp. 4-5. 247 SARC, Minutes of Evidence, public hearing 19.7.95, p. 34.


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accommodation places to insure themselves against claims made by guests for lost or damaged property. “Innkeepers” might also seek to provide sufficient security provisions in and around the place of accommodation to minimise the risk of theft or loss of property and, hence, avoid increasing insurance premiums. Finally, practices such as these do not prevent the relevant parties from entering into mutually acceptable private contractual arrangements.248

6.92 In his evidence to the Committee, Mr Anthony Mackintosh, Regional Manager of the Insurance Council of Australia (“ICA”), told the Committee that he considered the Act had little relevance as there were so many areas of insurance to cover the situation.249

Committee’s comments on submissions

6.93 The Committee notes the concerns expressed by hotel owners, and certainly does not wish to place the Victorian industry at a competitive disadvantage. However, the Committee is seeking to achieve a fair balance of the interests of the hotel owners and the interests of the public who constitute the hotels’ guests.

6.94 The Committee considers it appropriate to address the various concerns of the industry in turn. The insurance and claim issues are discussed at length in Chapter 11 of this Report. In summary, the Committee concludes that there is not sufficient evidence that the introduction of new legislation in line with the proposals of the Committee would cause significant increases in insurance premiums or the number of claims.

6.95 It is important to remember that the Committee is not advocating the repeal of the legislation without replacement, which would expose hotel owners to unlimited liability at common law. Rather, the Committee favours the retention of a reasonable limit on liability for property not deposited for safekeeping, and the introduction of unlimited liability for property deposited for safekeeping. The latter provision would bring Victoria in line with every other State and Territory (whether imposed by common law or statute).250

6.96 The Committee recognises that, if the method it favours for calculation of liability for property not in safekeeping were introduced, some establishments may be subject to liability greater than is currently the limit in other States. However, the Committee considers this method, which is discussed in Chapter 9, to be fair to both guests and hotel owners. As the cap will be determined by multiplying the daily tariff of the establishment, the liability will reflect the standing of the establishment, rather than imposing a set figure which may be too low in the case of five-star hotels, yet impose an unfair burden on small country motels. 248 Submission from Minister for Small Business, 5.6.95, p. 1. 249 SARC, Minutes of Evidence, public hearing 19.7.95, p.24. 250 The position in other States and Territories is discussed in Chapter 7.


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6.97 Further, the Committee notes that the New South Wales government will be reviewing its legislation in the near future, and considers it likely that New South Wales will introduce changes along the lines proposed in this Report. It is also possible that other States will review their legislation in the next few years, given the increasing importance of tourism nationally. It would be to the State’s advantage if Victoria could update its legislation governing innkeepers in anticipation of moves in other States to do likewise, indeed the new Victorian legislation may provide a model for other States.

Insertion of provisions in another Act

6.98 In its discussion paper on the Act, the Committee raised the possibility of incorporating the provisions dealing with innkeepers in the Liquor Control Act 1987, as has been done in several other Australian jurisdictions.

6.99 In its submission to the Committee, the AHA indicated that it did not support the incorporation of the relevant provisions into another Act, as to do so would involve significant compliance costs in respect of the amendment of the notice which the Act required to be displayed. In relation to the suggestion that the provisions be incorporated into the Liquor Control Act, the AHA pointed out that this would not pick up non-licensed premises and, further, that the cost of compliance would remain an issue.251

6.100 The former Minister for Small Business, the Hon Vin Heffernan, advised the Committee that to include the provisions limiting innkeeper’s liability in the Liquor Control Act 1987 would not be a desirable or appropriate outcome.252

6.101 The OPC also advised the Committee that the inclusion of the relevant provisions in the Liquor Control Act 1987 would not be appropriate.253

6.102 The Committee considers the relationship between innkeepers and guests to be sufficiently important to warrant its own piece of legislation, and can see no advantages in incorporating relevant provisions in the Liquor Control Act, the primary purpose of which is to control premises licensed to serve alcohol.

251 Submission from AHA, 11.5.95, p.2. 252 Minister for Small Business, letter to SARC, 5.6.95, p. 1. 253 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 7.


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New legislation

6.103 The OPC cited the increasing importance of the tourism industry in Victoria as a reason for enacting new legislation setting out the rights of guests and the liabilities of accommodation providers, rather than incorporating them in any existing Act.254

6.104 The Victorian Bar supported the views put in the research paper prepared by the Attorney-General’s Department of the Australian Capital Territory.255 That research paper, as the Bar acknowledged, supported the introduction of the Unidroit Draft Convention, subject to the availability of insurance. The introduction of a Unidroit type of scheme would necessitate the enactment of new legislation.256

6.105 The Committee agrees with the OPC that tourism is very important to the State, and believes that the rights and obligations of innkeepers and their guests would best be dealt with in an entirely new and separate piece of legislation. The Committee is of the view that there is great merit in the government updating legislation which impacts on a very significant area of the State and national economies, namely tourism. The Committee considers that any new legislation in Victoria must therefore be forward-thinking, so that it is many years before it again requires review.

RECOMMENDATION 13

The Committee recommends that sections 26 to 31 of the Carriers and Innkeepers Act 1958 be repealed, and that a new piece of legislation be enacted to govern the liability of accommodation providers in accordance with the recommendations set out in this Report.

254 id. 255 See Chapter 6 above. 256 Submission from the Victorian Bar, 17.6.95, pp. 1 and 2. See Chapter 10 for a discussion of the Unidroit

scheme.

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C H A P T E R 7 C O M P A R I S O N W I T H O T H E R S T A T E S

OVERVIEW

7.1 The majority of the Australian States and Territories have legislation similar to the Victorian Act. The relevant Acts are:

• Australian Capital Territory - Innkeepers’ Liability Act 1902 (NSW) (“ACT Act”);

• Northern Territory - Hotel-Keepers Act 1981 (“NT Act”);

• New South Wales - Innkeepers Act 1968 (“NSW Act”);

• Tasmania - Liquor and Accommodation Act 1990 (“Tasmanian Act”);

• Western Australia - Liquor Licensing Act 1988 (“WA Act”).

7.2 The first three Acts deal exclusively with the relationship between innkeepers and their guests. The Tasmanian Act and the WA Act primarily govern licensed premises, and deal only incidentally with liability for the property of guests. However, the WA Act is more restricted than the Tasmanian Act, as it deals only with property which is lost or damaged on licensed premises, while the Tasmanian Act is not so limited.

7.3 In South Australia, legislation governing innkeepers’ liability was repealed by the Liquor Licensing Act 1985 (SA), and has not been replaced. Queensland’s legislation was repealed by the Liquor Act 1992 (Qld), and also has not been replaced.

7.4 This Chapter outlines the relevant provisions in the Acts listed above, and compares those Acts to the Victorian Carriers and Innkeepers Act 1958 (“Victorian Act”).

“INN” AND “INNKEEPER”

7.5 In the ACT, an “inn” is “any hotel, inn, tavern, public-house or other place of refreshment”, and the word “innkeeper” means the “keeper of any such place”.257 The ACT definition does not oblige an innkeeper to provide sleeping accommodation where so required, as does the Victorian Act. The ACT definition is therefore very broad, arguably

257 Section 3, ACT Act.


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even broader than the common law definition. On the basis of this definition alone, the ACT Act appears to apply even to restaurants. However, the broad definition of inn is restricted by the definition of “guest”, discussed below.

7.6 The NT Act uses the expression “hotel” rather than “inn”. A “hotel” is defined as including “a common inn”, and further includes “any premises used for the purposes of providing board and lodgings for members of the public as a commercial enterprise and includes a boarding-house, guest-house and lodging-house”. Expressly excluded from the definition are caravan parks, tents, mobile homes or cabins.258 The definition therefore extends the common law definition, and is broader than that in the Victorian Act, as it expressly includes any commercial enterprise providing board and lodgings for the public. Unlike the common law and the Victorian Act (which is based on the common law), the NT Act seems to apply even to boarders and lodgers, so overcoming the difficulties due to the distinction between guest and lodger at common law.259 Further, the NT Act usefully nominates types of accommodation excluded from the operation of the Act.260

7.7 In NSW, an “inn” means a “common inn”, or in other words, an “inn” as defined by the common law. An “innkeeper” is the keeper of an “inn”.261

7.8 The Tasmanian Act includes a definition for an “accommodation provider”, rather than an innkeeper. An accommodation provider is a person who is the holder of an accommodation licence or permit, or who provides tourist accommodation under the authority of a general accommodation exemption. “Tourist accommodation premises” are those premises specified in an accommodation licence or an accommodation permit, or in which tourist accommodation is provided under the authority of a general accommodation exemption.262 The Tasmanian Act is therefore more limited than the common law, which applies to innkeepers irrespective of whether they hold a licence or not. The Tasmanian Act may also be more limited in its application than the Victorian Act, as it applies only to premises that are licensed as tourist accommodation premises. This would depend on the application of the licence system. It is not clear from the Act whether such establishments as guesthouses, bed-and-breakfast operations and other smaller accommodation establishments would be “tourist accommodation premises” under the Act.

258 Section 3, NT Act. 259 See discussion of distinction between a guest and a lodger in Chapter 5. Note that if the NT Act does apply

to boarders and lodgers, it may conflict with other NT legislation dealing specifically with boarders and lodgers, along the lines of the Rooming Houses Act 1990 (Vic.).

260 See Recommendation 3. 261 Section 3, NSW Act. See common law definition of “inn” in Chapter 5. 262 Section 158A(1), Tasmanian Act.

Chapter 7 – Comparison with Other States

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7.9 The WA Act applies only to “licensed premises”, which are those premises specified by the relevant authority in relation to a permit or licence.263 The WA Act is perhaps the most limited in its application, as it is restricted to establishments that have been granted a liquor licence. This indicates the problems that may arise by combining legislation on innkeeper’s liability with legislation governing licensed premises.

“GUEST”

7.10 The ACT Act does not include a definition of “guest”. The common law definition therefore applies.264

7.11 In the Northern Territory, a person is a “guest” only where sleeping accommodation has been engaged by or for him or her.265 This definition is to the same effect as that in the Victorian Act. The definition restricts the common law meaning of guest as, at common law, it is no longer necessary to engage sleeping accommodation to be a guest.266

7.12 In NSW also, a traveller is deemed to be a “guest” only where sleeping accommodation at the inn has been engaged by or for him or her. As noted above, at common law a person need not engage sleeping accommodation to be considered a guest. The Act further specifies when a traveller becomes a “guest” and when he or she ceases to be one, according to the traveller’s entitlement to use the sleeping accommodation as a traveller. In short, a traveller becomes a guest on the day on which he or she is entitled to use the sleeping accommodation, and ends on the day when he or she ceases to be so entitled.267 This is perhaps to the same effect as the Victorian definition of guest. As discussed in Chapter 6, the definition is unclear in this respect, as it may be argued that a traveller is entitled to “use sleeping accommodation” on the day that he or she checks out, as he or she was entitled to use that accommodation for part of that day, albeit not for sleeping. However, it may also be argued that such an interpretation places an unfair burden on the innkeeper who will remain liable even after the guest checks out at, say, 10am, if the property remains on the premises.

7.13 In Tasmania, a “guest” is a person who is temporarily absent from his or her usual residence, and who has engaged sleeping accommodation or on whose behalf sleeping

263 Section 3(1), WA Act. 264 See discussion of the common law definition of “guest” in Chapter 5. 265 Section 4, NT Act. 266 See discussion of common law definition of “guest” in Chapter 5. 267 Section 4, NSW Act.


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accommodation has been engaged, at tourist accommodation premises.268 The Tasmanian definition is therefore similar to that in the Victorian Act. The primary difference is the inclusion of the requirement that a person be temporarily absent from his or her usual residence. This aspect of the definition was no doubt introduced to overcome the problems in the common law in relation to the requirement that a person traditionally had to be a “traveller” to be a guest.269 While the common law has now accepted that even a local resident dropping in to an inn for temporary refreshment may be a guest, the Tasmanian Act prefers the traditional requirement that a person must be away from his or her home, and therefore a traveller, to be a “guest”.

7.14 The WA Act applies to “lodgers”. A person is a lodger if he or she spent the previous night at the premises, or is booked to spend the forthcoming night there. The licensee or a member of his or her family, or an employee, will not be a “lodger” within the meaning of the Act.270 The definition of lodger is, despite the different term, to the same effect as the Victorian Act as it requires a person to book overnight accommodation in order to be considered a “lodger”. Confusion may arise, however, from the use of the term “lodger” given the problematic common law distinction between lodger and guest. The additional requirement that a lodger not be a member of the hotelkeeper’s family or an employee is in effect a restatement of the common law position. At common law, family and employees are well-recognised exceptions to an innkeeper’s liability.

LIABILITY

Exclusion or preservation of common law

7.15 The NSW Act expressly preserves the common law liability of an innkeeper.271

7.16 The NT Act expressly excludes the common law liability of a hotelkeeper.272 However, the Act provides that a hotelkeeper will be generally liable for the loss of or damage to property brought to the hotel by a guest, which is essentially a restatement of the common law position.273

268 Section 158A(1), Tasmanian Act. 269 See discussion in Chapter 5. 270 Section 105(2), WA Act. 271 Section 5, NSW Act. 272 Sections 3(3), NT Act. 273 Section 5, NT Act.


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7.17 The other Acts are silent on this point, which means that, where the legislation does not cover a particular point, the common law will apply.

7.18 The Victorian Act, like the NSW Act, expressly preserves the application of the common law.274 The Committee considers that this is one of the major problems with the Act, given the uncertainty of the common law in this area.275

Liability for goods not in safekeeping

7.19 Under the ACT Act, an innkeeper’s liability for loss of or damage to goods not in safe keeping is limited by the Act to $40.276 In New South Wales, the amount is $100.277 In Tasmania, the sum is nil.278 The prescribed amount in Western Australia and Northern Territory is $200.279

7.20 The caps on liability in other States are therefore all roughly the same as the $100 cap imposed by the Victorian Act.280 It seems that all of the sums prescribed by the Acts are as outdated as that set under the Victorian Act. The Committee considers it preferable to set a cap on liability which cannot be outstripped by inflation, by using a multiple of the daily tariff of an accommodation establishment.281

Statutory notice required

7.21 In all of the States and Territories with relevant legislation, the limitation of liability is subject to the display of a notice as prescribed by the various Acts.282 In New South Wales and the Northern Territory, the notice is included as a Schedule to the Acts, while in Tasmania the notice must be in a form approved by the Commissioner.283 In the ACT the notice must set out the provisions of section 4 of the ACT Act.284 In WA, the notice need not

274 Section 27(1), Victorian Act. 275 See discussion in Chapters 5 and 6, and Recommendation 5. 276 Section 4, ACT Act. 277 Section 7(1), NSW Act. 278 Sections 158A(2) and (3), Tasmanian Act 279 Section 107, WA Act; section 6, NT Act. 280 Section 30(1)(b), Victorian Act. 281 This point is discussed further in Chapter 10 and see Recommendation 16. 282 Section 6, ACT Act; section 7(2), NSW Act; section 158A(3)(c), Tasmanian Act; section 107(c), WA Act;

section 6(2), NT Act. 283 Section 7(2), NSW Act; section 6(2), NT Act; section 158A(3)(c), Tasmanian Act. 284 Section 6, ACT Act.


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be in any particular form but must indicate that liability may be limited to the prescribed amount.285 All of the Acts require that the notice be conspicuously displayed on the premises.286

7.22 In this respect, the Acts are identical to the Victorian legislation.287 The Committee considers it desirable that liability be subject to the conspicuous display of a prescribed notice. Guests are in this way made aware of their rights and obligations under the Act in respect of loss or damage to their property.288

Liability for goods in safe keeping

7.23 In all of the States and Territories with relevant legislation, liability is unlimited where property is deposited with an innkeeper, or his or her servants, for safekeeping.289 In all of the States and Territories except Western Australia, the innkeeper may require the guest to place the goods in a sealed container.290 In Western Australia, there is a broader obligation that the lodger must have complied with any requirements of the licensee with respect to safekeeping.291

7.24 In New South Wales, the Australian Capital Territory and the Northern Territory, liability is also unlimited where property is offered to the innkeeper for safekeeping and was refused, or the guest was unable to deposit the goods for safekeeping due to the default of the innkeeper.292

7.25 The obvious difference between these Acts and the Victorian Act is that liability in Victoria for property deposited for safekeeping is not unlimited, but is subject to a $2000 cap. The Committee considers that the States should, as far as possible, be in line with one another, and that the cap on liability in Victoria in this respect should be abolished.293

285 Section 107(c), WA Act. 286 Section 6, ACT Act; section 7(2), NSW Act; section 158A(3)(c), Tasmanian Act; section 107(c), WA Act;

section 6(2), NT Act. 287 Section 30(4), Victorian Act. 288 See Recommendation 9. 289 Section 4(b), ACT Act; section 7(3)(a), NSW Act; section 158A(3)(b)(i), Tasmanian Act; section 107(b), WA

Act; section 6(3)(b), NT Act. 290 Section 4, ACT Act; section 7(3)(a), NSW Act; section 158A(3)(b)(iii), Tasmanian Act; section 6(3)(b), NT

Act. 291 Section 107(b), WA Act. 292 Section 5, ACT Act; section 7(3)(b), NSW Act; section 6(3)(c), NT Act. 293 See Recommendation 8.


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7.26 The Victorian Act also provides for liability, in line with the Acts in New South Wales, the Australian Capital Territory and the Northern Territory, where property is offered for safekeeping and is refused, or the guest is unable to deposit the goods for safekeeping due to the innkeeper’s default. However, in Victoria the innkeeper may refuse to take property into safekeeping provided she or he has a reasonable excuse for doing so.294 The Committee considers that the extension of liability is reasonable, as the innkeeper should be liable where he or she offers a safekeeping service but has wrongfully refused to take custody of goods offered for safekeeping. However, the Committee prefers the Victorian approach of allowing an innkeeper to refuse to take custody of the property “on reasonable grounds”, as the innkeeper should not be obliged to accept custody of goods which are, for example, dangerous, of excessive value or too large to be placed in safe custody.295 The Committee also considers that an innkeeper should have the right to inspect the property, as provided for in a draft international code on this subject.296

No limitation where innkeeper negligent

7.27 All of the Acts under discussion provide that the limitation on liability does not apply where the damage to or loss of a guest’s property is due to the default, neglect or wilful act of the innkeeper or his or her servants.297

7.28 The Victorian Act is identical in this respect. The Committee holds the view that the imposition of liability on innkeepers for damage or loss caused by their negligent or wilful acts is fair.298 Further, the Committee notes that to attempt to exclude liability for negligent acts may be in breach of State and Federal fair trading legislation.299

Defences

7.29 Most of the Acts are silent on the subject of defences, with the result that the common law defences probably apply. However, the NT Act specifically provides that a hotelkeeper will not be liable where he or she establishes that the loss or damage is due to:

294 Section 30(1)(a)(ii), Victorian Act. 295 See Recommendation 8. 296 See discussion on this point in Chapter 10. 297 Section 4(a), ACT Act; section 7(3), NSW Act; section 158A(3)(a), Tasmanian Act; section 107(a), WA Act;

section 6(3), NT Act. 298 See Recommendation 10. 299 See Chapter 12 for a discussion of the effect of the fair trading legislation on the Victorian Act.


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(a) the misconduct or negligence of the guest or his servant or a person accompanying the guest; or

(b) an act of God or the Crown’s enemies; or

(c) the guest assumed exclusive charge and custody of the room in which the property was at the time of the loss or damage.300

7.30 These defences mirror those available at common law.301 As at common law, the NT Act places the burden of proof of these defences on the innkeeper. It is doubtful whether expressly including the defences in legislation adds anything, as they would be implied by the common law. However, it was necessary to include them in the NT Act as that Act expressly precludes the application of the common law relating to innkeeper’s liability. If, as the Committee recommends, new legislation is enacted in Victoria which expressly excludes the operation of the common law, it will be necessary to include specific defences in the new Act. The Committee considers that the above defences are appropriate for inclusion, but that the language should be updated to remove references to any outdated or archaic terms.

RECOMMENDATION 14

The Committee recommends that the new Victorian Act expressly include the common law defences, and that these defences be updated in modern and clear language.

7.31 The NSW Act expressly excludes liability where the traveller is not a guest within the meaning of the Act (unless the loss was due to the negligence of the innkeeper or his or her servants).302 The Victorian Act does likewise.303 It is doubtful, however, whether such a provision is necessary. The liability provisions only apply to the property of a “guest” (or “lodger”) within the meaning of the various Acts, and therefore the innkeeper would not be liable if a traveller was not a “guest”, even without such an express provision.

Liability for vehicles

7.32 In the Northern Territory and in New South Wales, an innkeeper is not liable for damage to or loss of a vehicle brought to the hotel by the guest, or property left in or on the vehicle.304 The ACT Act also does not impose liability on innkeepers for damage to vehicles

300 Section 8, NT Act. 301 See discussion of common law defences in Chapter 5. 302 Section 6(b), NSW Act. 303 Section 29(b), Victorian Act. 304 Section 6(a), NSW Act; section 7(1), NT Act.


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or property on or in vehicles.305 The Tasmanian and WA Acts do not include a provision in respect of damage to vehicles.

7.33 The Victorian Act expressly excludes damage to vehicles.306 The Committee considers that the most valid argument in favour of an innkeeper not being liable for loss of or damage to vehicles is that most cars are insured by their owners for theft and damage. However, that argument could equally be applied to a guest’s property not deposited for safekeeping. The distinction must be that innkeepers are in a better position to protect property which is inside the hotel than in a carpark or in the street, and that the liability for guests’ property generally is a long established and seemingly widely accepted (even by the industry307) principle, that it merits special treatment.308

SUBMISSIONS ON VICTORIA’S ABILITY TO COMPETE

7.34 Submissions to the Committee from hotel owners and representatives of the hotel industry were overwhelmingly in favour of retaining the Act unchanged, while modernising the language of the Act. In short, hotel owners were concerned by the possibility of any increase in liability. Hoteliers argued that increased liability would result in increased insurance premiums and high compliance costs, which would be passed on to the consumer, ultimately to the disadvantage of the tourism industry in Victoria.309

7.35 One of the primary concerns of hoteliers, therefore, is that any change to the legislation would place the Victorian industry in a different position to the other States. However, as indicated above, Victoria is the only State which has a cap on liability for property deposited for safekeeping. While the Committee understands the concerns of hotel owners in relation to increased exposure, for the reasons discussed at length in Chapter 6, it considers it appropriate for Victorian hoteliers to be subject to unlimited liability for property in safekeeping in line with their interstate counterparts.

7.36 The remaining issue with liability then, is liability in respect of property not deposited for safekeeping. As outlined above, the legislation in other States and Territories imposes a cap on liability that is roughly equivalent to the Victorian limit. Again, hotel owners are opposed to any change of this limit on liability for the reasons given above.310

305 Section 4, ACT Act. 306 Section 29(a), Victorian Act. 307 See discussion of submissions below. 308 See Recommendation 11. 309 See discussion of submissions in Chapter 6. 310 See discussion of submissions in Chapter 6.


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The Committee notes the concerns of the hotel industry, but considers the sum of $100 to be outdated for the reasons discussed in Chapter 6. An alternative method of capping liability favoured by the Committee is discussed in Chapter 10.311

INNKEEPER’S LIEN

7.37 The innkeeper’s lien has been abolished in NSW312, and retained in the NT Act.313 The ACT and Tasmanian Acts are silent on the issue.

7.38 The Victorian Act has also abolished the innkeeper’s lien.314 As outlined in Chapter 5, the Committee considers that innkeepers and their guests should be protected from the uncertainties of the common law, and therefore agrees with the abolition of the common law lien. The Committee holds the view that disputes between innkeepers and guests should be resolved by the application of fair and clearly drafted legislation.

311 See Recommendation 16. 312 Section 8, NSW Act. 313 Section 9, NT Act. 314 Section 31, Victorian Act.

COMPARATIVE TABLE OF LEGISLATION IN AUSTRALIAN STATES AND TERRITORIES.315

PROVISION

VIC

Carriers and Innkeepers Act 1958

NSW

Innkeepers Act 1968

ACT

Innkeepers’ Liability Act 1902

Tasmania

Liquor and Accommodation

Act 1990

NT

Hotelkeepers Act 1981

WA

Liquor Licensing Act 1988

Definition of Inn Yes Yes Yes Yes “accommodation

provider”

Yes “hotel”

Yes “licensed premises”

Definition of Guest Yes Yes No Yes Yes Yes “lodger”

Liability for negligence/wilful acts

Yes Yes Yes Yes Yes Yes

Liability for goods not deposited or offered for safe-keeping

$100 $100 $40 Nil $200 $200

Liability for goods in safe-keeping

$2000 (if notice

displayed)

unlimited unlimited unlimited unlimited unlimited

Option to refuse safekeeping with reasonable excuse

Yes No No No No No

Display of notice required

Yes Yes Yes Yes Yes Yes


No No Yes no provision No no provision

315 This table is based on Table 1 in Review of the Innkeepers Act 1968: Discussion Paper, Chief Secretary’s Department, New South Wales, 1990.


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C H A P T E R 8 R E V I E W O F L E G I S L A T I O N I N O T H E R S T A T E S

OVERVIEW

8.1 As was discussed in the preceding Chapter, most of the States and Territories of Australia have legislation similar to the Victorian Act. Governments in two States have taken the view that the legislation is archaic and in need of review. In New South Wales and the Australian Capital Territory, preliminary reviews have been carried out and discussion papers published in relation to the relevant legislation.

NEW SOUTH WALES

Problems identified

8.2 In 1990 the Chief Secretary’s Department of New South Wales issued a discussion paper entitled Review of the Innkeepers Act 1968. The paper identified the following “significant” problems with the legislation:

1. The … Act is archaic, outmoded and largely irrelevant to the needs of the accommodation industry and the travelling public in the 1990’s ….

2. …[T]he Act does not define “inn” so it is impossible for the industry and the travelling public to know which accommodation establishments are covered by the Act.

3. The Act continues to use outmoded terminology - inn, common inn, innkeeper - without reference to modern language or facilities.

4. Since the legislation was framed at the beginning of the century, a wide range of accommodation establishments has developed …. hotels, motels, motor inns …. [The Act] is totally inadequate because it ignores the existence of this range of establishments, and therefore does not address the extent to which the operators of these other establishments should be liable for the personal property of their guests.

5. The provisions of the Act do not appear to be well known in the accommodation industry, the insurance industry or by the travelling public.


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6. The Act makes innkeepers fully liable for the goods of their guests if the goods are deposited for safe-keeping (or if the innkeeper refuses to accept the goods for safekeeping), even if the innkeeper is not negligent or at fault ….316

7. The Act places this unlimited liability on innkeepers without regard to the size or facilities of the inn or to the nature of the goods….

8. The unlimited liability provisions mean that NSW innkeepers cannot purchase insurance cover to cover the full extent of their liability under the law.

9. [New South Wales] inns could be seen to be disadvantaged in this respect compared to Victorian inns where legislation provides a $2000 limit on liability (except for negligence of the innkeeper) [where the goods are deposited for safe-keeping]….

10. The Act requires innkeepers to be fully liable for goods that they have not seen or do not know exist, and for goods that the traveller may have privately insured.

11. The Act excludes motor vehicles and contents from the liability of innkeepers on the basis that it is common for owners of motor vehicles to insure their vehicles against loss. It could be argued that the availability of travel insurance for personal property is justification for limiting the absolute liability of innkeepers for goods received or offered for safekeeping.

12. To obtain the protection of the Act, innkeepers must display a notice (outlining the innkeeper’s liability) in the reception area and guest’s room. The review concluded that these signs are not extensively used throughout the industry. Establishments not displaying the notice therefore place themselves in a difficult legal position should a claim arise.

13. The notices have the advantage of providing some (limited) information to the public. However, the signs should be in simple language and in community languages to the appropriate clientele of the facility.317

8.3 The discussion paper concluded that the problems with the NSW legislation also applied generally to other States. However, the paper stated, inquiries made to other states indicated “a general lack of interest and concern, and no moves to change the legislation”.318

8.4 The Committee considers that most of the problems identified above also exist in relation to the Victorian legislation. However, the Victorian Act does include a definition of “inn”, unlike the NSW Act which relies entirely on the common law definition. Also, of course, the Victorian Act does not currently impose unlimited liability on innkeepers for property deposited for safekeeping.

316 Note that this is not the position in Victoria, where liability for goods in safe custody is limited to $2000 by

section 30(1)(a) of the Victorian Act. 317 Chief Secretary’s Department, New South Wales, Review of the Innkeepers Act 1968: Discussion Paper,

January 1990, pp. 7 - 9. 318 ibid., p. 9.

Chapter 8 - Review of Legislation in Other States

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Recommendations

8.5 The paper recommended that the NSW Act be repealed and replaced by a new Act, to be developed according to the following principles:

1. The purpose of the new Act should be to establish the extent of liability of accommodation establishments in NSW for the personal property of the travelling public so that the interests of the travelling public and the accommodation industry are best served and appropriately balanced.

2. The Act should operate to limit the application of the common law liability of hotels, motels and other accommodation establishments in New South Wales.

3. The Act should have a modern title to reflect its main purpose and application, for example, the Accommodation Establishments Liability Act 1990. It should use modern terminology and simple language.

4. Accommodation establishments which should be picked up by the legislation are those establishments (whether licensed or unlicensed), acting on a regular for profit business basis, which operate primarily to provide temporary accommodation to the travelling public. Under this definition, hotels and motels would obviously be included. Guesthouses, hostels, lodges and private hotels would be excluded unless their primary purpose was providing temporary accommodation to travellers.

5. Exclusions to the Act should be made for specific facilities, for example:

- accommodation provided on a vehicle or craft

- accommodation provided in a caravan

- establishments which are set up for non-profit purposes

- establishments whose primary function is not the provision of accommodation

- accommodation which by its nature cannot be reasonably or adequately secured.

6. Establishments providing accommodation for use by the travelling public on a regular business basis and for profit have a duty of care to provide appropriately secure facilities for travellers and their personal property.

7. These establishments have an obligation to provide security that is appropriate to the standard of the facility and the tariff charged to the traveller.

8. They should have a general and unlimited liability for personal property of their guests where this property is lost, damaged or stolen as a result of the fault, neglect or wilful act of the manager/operator of the facility or of his or her staff.

9. As part of the duty of care, and in return for the tariff paid by the traveller, the manager/operator of the facility should have some liability for the property of guests, even where the loss/damage/theft does not result from the manager/operators neglect or wilful act. This liability however should be limited according to the following principles.

10. The manager/operator and his/her staff should have no liability for loss, damage, theft of vehicles, property left in or on vehicles ….


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11. The operator should not be liable when the loss or damage was caused by an event which the operator exercising the care which the circumstances called for, could not have avoided and the consequences of which he/she could not have prevented.

12. The operator should have a general duty to provide facilities for safe custody and to receive securities, valuable articles and money offered for safe custody.

13. The operator should have the option to reasonably refuse property for safekeeping if the property offered is:

- dangerous or illegal

- cumbersome or bulky in terms of size or weight

- of excessive value having regard to the size or standing of the establishment.

14. Where the operator is not bound to receive goods for safekeeping due to the goods being dangerous, cumbersome, or of excessive value (having regard to the size and standing of the establishment), he/she should not be liable for these goods if they are stolen, damaged or lost (unless the operator is negligent or at fault).

15. The liability of the operator should be unlimited:

- for property accepted for safekeeping

- for property the operator refused to accept for safekeeping which he/she was bound to accept as a general duty.

16. The operator should be entitled to examine property which is tendered for safe keeping and require that it be put in a fastened or sealed container.

17. The liability of the operator for property other than that received by him for safe custody (and other than that referred to in 13 and 14 above) should be a maximum of $500 in respect of any single event ….

18. The operator's liability for the property of guests should apply in those situations where the operator takes charge of this property outside the premises of the establishment, and also during and for a reasonable period before and after the time the guest is entitled to the accommodation.

19. The operator should not be liable for the personal property of guests to the extent that damage, destruction or loss of the property is due to the negligence or to the wilful act or omission of the guest, of any person accompanying the guest, or in his employment or of any person visiting him; to an unavoidable and irresistible event which cannot be imputed to him; to the nature of the property

20. The operator should not be liable for the property of guests in situations where the guest assumes exclusive charge and custody of the property or the room so as to show an intention to relieve the operator from all responsibility.

21. Just as operators have a right to know the extent of their liability under the law, travellers also have the right to be informed about the liability provisions that apply to the establishment. For this reason it is important that the provisions in the Act requiring a notice to be displayed in the reception office and in the room occupied by the guest be retained.

22. The display of the notice should continue to be a condition for limiting the liability of operators to $500 in respect of goods not offered for safekeeping.

23. The notice displayed should be written in simple language so that it is easily understood by travellers.

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24. In establishments which have a known non-English-speaking clientele, the notice displayed should also be in the appropriate community languages. Alternatively, the notice should be shown in English and translated into the appropriate language(s) and included in the Guest Information material.

8.6 The recommendations made above are in part derived from a draft Unidroit convention, which is discussed in Chapter 10. The Committee agrees with the principles outlined above subject to several reservations. First, the Committee considers that guesthouses which provide temporary accommodation to people would and should be covered by the proposed legislation. Secondly, the Committee prefers not to set a limit of $500 on liability for goods not placed in safekeeping, which figure would soon be outstripped by inflation and again be in need of review. Rather, the Committee prefers the method proposed by Unidroit, which is discussed in Chapter 10.319

8.7 The Committee also notes that, despite problems being identified with the unlimited liability provision for goods in safe keeping, the review recommended that any new legislation retain this feature. The Committee considers, for the reasons discussed in Chapter 6, that liability for goods in safe custody should be unlimited in Victoria.320 Finally, the Committee is of the view that a general duty to provide safekeeping facilities should not be imposed on accommodation providers.321 Given that the proposed new Victorian legislation would cover many different forms of accommodation, it seems inappropriate to impose such a general duty which may place an unfair burden on small operators, such as bed-and-breakfast establishments and small country motels.

Current position in New South Wales

8.8 The review of the NSW Act went no further than the preparation of the discussion paper. The Act has not yet been amended or repealed as a result of the preliminary recommendations made in the paper. However, the NSW government expects to complete a review of the Act in 1998 as part of the national competition policy reforms.

AUSTRALIAN CAPITAL TERRITORY

8.9 A working paper on the Innkeepers Liability Act 1902 (NSW) in force in the ACT was prepared under the Australian Capital Territory Legislation Review Program.322

319 See Recommendation 16. 320 See Recommendation 8. 321 See discussion in Chapter 6 and Recommendation 8. 322 Australian Capital Territory, Legislation Review Program, Research Paper: Innkeepers , 1992.


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8.10 The paper put forward a number of preliminary recommendations, including the following:

2 Laws concerned with travellers should apply unambiguously to accommodation establishments operating for profit such as a [sic] hotels, motels, or other places where an owner or occupier holds out that s/he will receive travellers and will provide them with sleeping accommodation.323

3 Laws concerned with travellers should, where possible, conform to fair domestic and international practice ….324

5 As a matter of principle, the liability of members [hotelkeepers] should be determined in accordance with the following rules:

liability should be unlimited where it is possible for a member to obtain insurance on a reasonable basis and

liability should be limited where it is not possible to insure against the risk.325

8.11 The Committee agrees with these broad principles, but considers it necessary to provide greater detail in its recommendations. It is of the view that detailed recommendations will provide clarification of the particular changes which should be made to the Victorian legislation.

323 ibid., p. 2. 324 id. 325 ibid., p. 4.

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C H A P T E R 9 U N I F O R M L E G I S L A T I O N

NEED FOR A NATIONAL LEGISLATIVE SCHEME

Current trend toward national uniform legislation

9.1 In Australia, the current trend appears to be in favour of uniform legislation in relation to matters of national importance. A recent example is the Consumer Credit Code. The advantages of uniform legislation are obvious - those people and industries affected by the legislation, and those advising on it, need not be familiar with seven different Acts and regulations in order to conduct their business or advise their clients. Uniform legislation also benefits consumers, who become aware of their rights in every Australian jurisdiction.

Need for uniform legislation in respect of innkeepers

9.2 The Chief Secretary’s Department of New South Wales, in its discussion paper of 1990, remarked that there was no uniformity between States in the legislative approaches adopted. In contrast, the paper noted moves at the international level to unify rules relating to the contracts of hotelkeepers. Further, the discussion paper stated that the problems with the New South Wales legislation identified in the preceding Chapter, also applied to the legislation of other States.326

9.3 One commentator explained the need for a national scheme in relation to the law governing innkeepers:

Accommodation is a key component of a major interstate industry which requires more uniformity in approach among the States and Territories. Tourism is also an increasingly important industry in Australia’s international trade, which requires laws that conform to the developing international standards and practices on these issues. What is needed in Australia is a uniform Tourist Accommodation Act which meets the contemporary needs of the industry and consumers and deals with the rights and obligations of hotels and guests in a clear, fair and simple manner.327

326 Chief Secretary’s Department, op. cit., p. 1. The Unidroit draft convention is discussed in the Chapter 10. 327 Atherton, op. cit., p. 462.


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9.4 The research paper prepared by the ACT Attorney General’s Department identified one of the practical problems arising from the existence of different legislation in each State and Territory.

A number of ACT motels/hotels are linked to interstate or international organisations. In such circumstances, training of managerial staff may take place out of the ACT (sometimes with unfortunate results).

The paper noted that a number of interstate companies had assumed that the 1968 NSW Act applied in the Australian Capital Territory, and accordingly acted to their prejudice.328

9.5 Perhaps as a result of such problems, some innkeepers would clearly support the move to a national scheme. The Committee received the following evidence from the General Manager of the Melbourne Hilton Hotel:

Talking about the Victorian legislation now, because Queensland has already gone out, if we change anything it would make sense to change it nationally so all States are covered by the same rule because the present situation is confusing enough.329

9.6 The Committee agrees that the development of a national scheme of legislation is desirable as it would reduce confusion on the part of innkeepers and guests, and would be in the best interests of Australia, given the importance of tourism to the nation.

328 ACT, Legislation Review Program, op. cit., pp. 2 - 3. 329 SARC, Minutes of Evidence, public hearing 19.7.95, p. 43.

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C H A P T E R 1 0 I N T E R N A T I O N A L C O D E O F P R A C T I C E

OVERVIEW

10.1 The Office of the Parliamentary Counsel recognised that:

International codes of practice may be a useful reference for ascertaining how the issues affecting accommodation providers throughout the world are being dealt with at an international level and may be relevant to any proposal for national uniform legislation for the industry.330

10.2 This Chapter outlines the provisions of the Unidroit Draft Convention on the Hotelkeeper’s Contract, and compares the Draft Convention to the Victorian Act. The Chapter then summarises submissions and evidence presented to the Committee in relation to the possible adoption of the Draft Convention in Victoria.

DRAFT CONVENTION ON THE HOTELKEEPER’S CONTRACT

Unidroit

10.3 The International Institute for the Unification of Private Law (“Unidroit”) is an independent, inter-governmental organisation based in Rome. Its purpose is to harmonise and coordinate the private law of member states and to prepare gradually for the adoption by the various states of uniform rules of private law. Unidroit has 56 member states, of which Australia is one.331

Draft Convention

10.4 In 1989 Unidroit issued a Preliminary Draft Convention on the Hotelkeeper’s Contract (“Draft Convention”). The Draft Convention was considered at the meeting of Unidroit’s Governing Council in 1991. Member states were asked to report back with their recommendations. However, at a meeting of the Governing Council in 1992, further

330 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 8. 331 This information was obtained from the Internet at http//ananse.irv.uit.no/trade_law/nav/unidroit.html


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development of the Draft Convention was discontinued because of a lack of interest by member states.

10.5 The 1989 Draft Convention was based on an earlier draft convention prepared in 1977 and 1978. The 1989 Draft Convention modified the 1978 draft convention to address what was considered “the unjustified imbalance in favour of the guest”.332 The provisions of Chapter IV of the 1989 version, on the liability of a hotelkeeper for damage to property, are based on those of a 1962 Convention, in force between several of the member states, including France and Italy.333 The 1962 Convention is not, however, in force in Australia.

10.6 The Draft Convention includes Articles on: the liability of a hotelkeeper for loss or damage to property; the conclusion and performance of a hotelkeeper’s contract; the liability of a hotelkeeper for failing to provide accommodation; the payment of moneys in advance; and liability for personal injuries and death.

“Hotelkeeper” and “accommodation”

10.7 The Draft Convention does not use the outdated expressions “inn” and “innkeeper”, but prefers “hotelkeeper” and “accommodation”. A “hotelkeeper” is a person who undertakes to provide accommodation under a hotelkeeper’s contract.334 A “hotelkeeper’s contract” means a contract by which one person, acting on a regular business basis, undertakes for reward to provide another with temporary accommodation and ancillary services in an establishment under his or her supervision.335

10.8 “Accommodation” does not include accommodation provided to the guest:

(a) on a vehicle being operated as such in any mode of transport (eg trains);

(b) by a non-profit making establishment (eg a hostel or refuge); or

(c) by an establishment whose primary aim is not the provision of accommodation.336

Otherwise, the meaning of accommodation is unrestricted and appears to include everything from bed-and-breakfast establishments to five star hotels.

332 Unidroit, Preliminary Draft Convention on the Hotelkeeper’s Contract , September 1989, para. 7. 333 ibid., Commentary , para. 47. 334 Article 1(2). 335 Article 1(1). 336 Article 1(4).

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10.9 As discussed in Chapter 6, the Committee considers it desirable to substitute more appropriate terms for “inn” and “innkeeper”. The Committee sees a need for terms which, like the Unidroit definitions, do not import any of the common law uncertainty. However, “hotelkeeper” may be too restrictive, as it is not immediately obvious that the definition would include the owners and managers of forms of accommodation other than hotels. “Accommodation” is a very broad term, which clearly may include all forms of accommodation available. Further, it is desirable that any definition of accommodation make it clear that certain types of accommodation such as caravans, trains and so on, which are governed by other legislation or which are inappropriate for governance under this type of legislation, do not come within the ambit of the new Act.337

“Guest”

10.10 For the purposes of the Draft Convention, “guest” means any person who is entitled to occupy accommodation under a hotelkeeper’s contract.338

10.11 This definition is fairly similar to that in the Victorian Act, as it defines a guest according to his or her entitlement to use the accommodation. However, there is no requirement that the accommodation be overnight or sleeping accommodation, unlike in the Victorian Act. In practice, however, this will undoubtedly be the reason why people do engage accommodation.

10.12 The above definitions of “guest”, “accommodation” and “hotelkeeper” are useful as they seem to overcome the problematic common law distinction between guest and lodger. At common law, a person will be a lodger where he or she books accommodation in advance, and then takes up the accommodation on those terms.339 The concept of an innkeeper’s contract appears broad enough to encompass both contracts made on the spot, once the guest is at the hotel, and those made in advance. However, this common law problem may be addressed in Victoria by a new definition of “guest”.340

Hotelkeeper’s liability for damage to or loss of guest’s property

10.13 There are five articles in the Draft Convention relating to a hotelkeeper’s liability for property. In summary, they provide as follows.

337 See Recommendation 3. 338 Article 1(3). 339 See Chapter 5 for a discussion of this distinction. 340 See Recommendation 4, where the Committee recommends the use of the term “accommodation user”.


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Basic premise

10.14 A hotelkeeper is liable for any damage to, or destruction or loss of, property brought to the premises of the hotel, or of which he or she takes charge outside the premises of the hotel. The hotelkeeper will be liable during, and for a reasonable period before and after, the time when the guest is entitled to accommodation.341

10.15 The general principle, that a hotelkeeper is liable for the damage to or loss of property, is substantially the equivalent of the liability imposed by the Victorian Act. However, the requirement that a hotelkeeper be liable for a reasonable period after and before the entitlement to accommodation is not found in the Victorian legislation, or in the Act of any other State. The Committee considers that this requirement makes a great deal of sense. In practice, guests often leave their property in the possession of the hotelkeeper for the periods after checking in but prior to the room being ready, and after checking out but before departure. Luggage is often left in hotel reception areas during these periods, at the direction of the hotelkeeper. The Committee holds the view that the hotelkeeper should be liable for loss of or damage to property in this situation.

10.16 However, it could be argued that the provisions of the current Victorian Act already achieve that result. As the liability exists on days during which the guest is entitled to use a room at the accommodation establishment, that would include the period after checking in, even before a room is provided. Arguably, liability would last even after checking out on the day of departure as, for the first part of the day, the guest had an entitlement to use the room, so the liability should last for the rest of that day. If that interpretation is correct, the extra requirement in the Unidroit Draft Convention adds little to the Victorian Act. However, there is some room for doubt as to the period during which an innkeeper may be liable.342 The Committee considers it advisable to make the period of liability clear in the new legislation.

RECOMMENDATION 15

The Committee recommends that the new Victorian legislation make it clear that the accommodation provider is liable for loss and damage to property under his or her control or supervision for a reasonable period before and after the guest is entitled to use the accommodation.

341 Article 13. 342 See discussion in Chapter 6 on the definition of “guest” under the Victorian Act.


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Obligation to receive property for safe custody

10.17 A hotelkeeper is bound to receive securities, money and valuables for safe custody. Such property may only be refused where it is dangerous or, having regard to the size or standing of the hotel, it is of excessive value or cumbersome.343 A hotelkeeper may examine property tendered to him or her for safekeeping, and may require that it be placed in a fastened or sealed container.344

10.18 The Victorian Act does not impose an express obligation on innkeepers to receive property offered for safekeeping. However, an innkeeper will be liable where he or she refuses goods for safekeeping without reasonable excuse, which provision effectively achieves the same result as the Unidroit obligation.345 The Committee takes the view that there should be no such general obligation on accommodation providers to accept property for safekeeping, given the range of establishments to be covered by the legislation.346 However, the Committee considers that where an accommodation provider chooses to provide the safekeeping service, then he or she should be liable where he or she unreasonably refuses to accept property for safekeeping.347

The Victorian Act does not give the innkeeper a right to inspect the property being deposited, although the innkeeper may require a guest to place the property in a container and fasten or seal the container.348 The Committee considers that innkeepers should have the right to inspect the property being deposited, by way of protection against any fraudulent claims.349

10.20 The Draft Convention is more specific than the Victorian Act in relation to the situations where a hotelkeeper may refuse property offered for safekeeping. This may be considered useful, as it makes the rights of the parties more certain. However, the Victorian Act, by permitting refusal with a “reasonable excuse”, has the advantage of flexibility and may apply to occasions not foreseen by Draft Convention. The Committee does not therefore see a need to adopt the Unidroit provision in this respect.

343 Article 14(1). 344 Article 14(2). 345 Section 30(1)(a)(ii), Victorian Act. 346 See discussion in Chapter 6 and Recommendation 8. 347 See Recommendation 8. 348 Section 30(2), Victorian Act 349 See Recommendation 8.


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Unlimited liability for property in safe custody

10.21 A hotelkeeper’s liability is unlimited where:

(a) the property has been deposited with him or her; or

(b) he or she has refused to receive property which he or she is bound to receive for safe custody.350

10.22 Under the Victorian Act, the liability of the innkeeper for goods deposited for safekeeping is limited to $2000. That sum was set in 1970 and is therefore outdated. The Committee considers that it is appropriate for an innkeeper to be subject to unlimited liability where the goods are in his or her safekeeping, for the reasons outlined in Chapter 6.351

Limitation of liability for property not in safe custody

10.23 The liability of the hotelkeeper for property not deposited or refused for safe keeping may not exceed (in respect of a single event) 50 times the charge for the accommodation.352

10.24 Liability for property not in safekeeping is limited to $100 under the Victorian Act. Again, this cap was set in 1970 and has been outstripped by inflation. The Committee considers that multiplication of the daily tariff of a hotel or other accommodation establishment is a useful method for determining liability, as it reflects the different standing of various accommodation establishments. It seems just that a five star hotel should be liable to a greater extent than a small country motel. First, because a five star hotel is likely to spend more on security arrangements and be less at risk. Secondly, a guest staying at a five star hotel is likely to be travelling with more valuables than one staying in a small country motel. However, the Committee is mindful that this liability is imposed where the innkeeper is not at fault in any way for the loss or damage to the property. The Committee therefore holds the view that 50 times the tariff is excessive. Five times the tariff seems to the Committee to be a more reasonable limitation of liability.

10.25 In practice, this method of calculating liability is likely to have little impact on smaller businesses, such as country motels.353 For example, if the daily tariff for a room in a Bendigo

350 Article 14(3). 351 See Recommendation 8. 352 Article 15(1).


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motel is $50, then the maximum liability in respect of one event would be $250, only two and a half times the current limit of $100. Whilst in a four-star hotel with a daily tariff of, say, $200, the maximum liability in respect of a single event would be $1000. The Committee considers that these amounts would be sufficient to cover the types of items that would not normally be placed in safe custody and that may be stolen from a guest’s room, such as sunglasses, perfume, and cameras.

10.26 The Committee recognises that there may be some difficulty in determining the daily tariff of an accommodation establishment, as many hotels (for example) offer rates that vary according to the season and the client. However, the Committee understands that most hotels have a “standard room rate”, which rate is reduced or increased as appropriate. The Committee considers that this standard daily rate would be the appropriate tariff to base calculations on for the determination of liability for property not deposited for safekeeping.

RECOMMENDATION 16

The Committee recommends that the limit on an accommodation provider’s liability for property not deposited for safekeeping be set at five (5) times the value of the standard daily tariff of the room in the relevant accommodation establishment being occupied by the accommodation user, or to the use of which the accommodation user is entitled.

No limitation of liability where hotelkeeper negligent

10.27 A hotelkeeper’s liability will not be limited as above where the damage, destruction or loss is caused by his or her negligence, or that of his or her employees.354

10.28 The Victorian Act includes a provision to the same effect. Such liability is in line with obligations placed on every person under common law negligence principles. Further, the Committee recognises that any attempt to limit or exclude liability for negligent acts may be in breach of Commonwealth and State fair trading legislation.355 The Committee also considers that, on grounds of fairness, innkeepers should be liable where loss of or damage to guests’ property is caused by their negligence, or that of their servants.356

353 The Committee recognises that one of the major concerns of hoteliers is the effect of any increased liability

on hotels and other accommodation establishments run as small businesses: see further the submissions from hoteliers at the end of Chapter 6.

354 Article 15(3). 355 See further Chapter 12. 356 See Recommendation 10.


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Defences available to hotelkeeper

10.29 A hotelkeeper will not be liable where the damage, destruction or loss is due to:

(a) the negligence or the wilful act or omission of the guest; (b) an unavoidable and irresistible event which cannot be imputed to the

hotelkeeper; (c) the nature of the property.357

10.30 The Victorian Act does not expressly include any of these defences. However, the first two defences reflect some of the defences available at common law, but phrased in more modern language, which are implied into the Victorian Act. The second defence appears to include both the common law defences of acts of God and acts of the sovereign’s enemies. The Committee agrees that an innkeeper should not be liable in these situations, and considers that the updating of the defences in modern, easily understood language is desirable.358 The third defence above is not derived from the common law but is, in the Committees view, a sensible addition. Not included in the Draft Convention, however, is the common law defence that a guest had exclusive possession of the property. As this defence is particularly difficult to establish and of very limited application, the Committee considers that its exclusion is of little significance.359

RECOMMENDATION 17

The Committee recommends that the defence in Article 16 of the Unidroit Draft Convention in relation to the nature of the property be added to the list of common law defences referred to in Recommendation 14.

Obligation on guest to inform hotelkeeper

10.31 A guest must inform the hotelkeeper of any damage to or loss of property as soon as is reasonably possible, otherwise he or she will be entitled to compensation only where the damage or loss was caused by the negligence or wilful act or omission of the hotelkeeper.360

357 Article 16. 358 See Recommendation 14. 359 See further Chapter 5 on this defence, and Recommendation 14 in relation to defences generally. 360 Article 17.


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10.32 This obligation is not derived from the common law, nor is it to be found in the legislation of Victoria or any other Australian State or Territory. This requirement seems a reasonable one, as innkeepers should not be subject to having claims made against them months or even years after the alleged loss or damage occurred. “As soon as is reasonably possible” is, of course a very loose concept. Provided that it is applied flexibly, this concept may serve its purpose and be in the interests of both parties. However, there may be situations where a guest is unable to notify a hotelkeeper of the loss or damage as soon as might be considered reasonably possible due to the vagaries of travel (particularly international travel) and other problems, such as language difficulties. It does not seem fair that a person in that position should lose all rights to compensation (in the absence of an intentional or negligent act by the hotelkeeper). Justice may best be served by introducing a limitation period for claims of, say, six months, with an obligation on the innkeeper to extend the period when presented with a reasonable excuse for not making a claim within the six month period. Any attempt to amend the law in this respect would, however, need to consider the effect of the Limitation of Actions Act 1958 (Vic.).

Hotelkeeper vicariously liable for servants

10.33 A hotelkeeper is responsible for the acts and omissions of his or her servants acting in the course of their duties.361

10.34 The Victorian Act does not include a separate provision imposing vicarious liability on innkeepers for the acts and omissions of their servants. However, the liability provisions refer to an innkeeper and “his servants”. Further, normal principles of vicarious liability would apply to innkeepers. The Committee agrees that innkeepers should be vicariously liable for the acts of their servants, and believes that the current Victorian Act achieves this result.


10.35 A hotelkeeper is not liable for damage to or loss of vehicles, property left in vehicles or live animals.362

10.36 The Victorian Act includes a provision to like effect.363

361 Article 18. 362 Article 1(5). 363 See discussion of the policy reasons for this exception to innkeeper’s liability in Chapter 6, and see also

Recommendation 11.


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Hotelkeeper’s lien over guest’s property

10.37 The Draft Convention confers on the hotelkeeper the right to retain any property of commercial value brought to the hotel by the guest, as a guarantee for payment of the charge for the accommodation and other services provided by the hotelkeeper.364 The hotelkeeper does not, however, have the right to retain a guest’s property in this manner where the sum owing to the hotelkeeper is owed by a person other than the guest.365

10.38 The innkeeper’s lien has been abolished by the Victorian Act. As noted in Chapter 6, the Committee envisages situations where a hotelkeeper seeking to enforce a lien may result in an unpleasant confrontation. Such a dispute may be very disruptive for the innkeeper’s business, and extremely inconvenient for a guest left without his or her belongings. For these reasons, the Committee does not favour the reintroduction of the lien in Victoria.366

Contracting out of Draft Convention

10.39 Article 18 of the Draft Convention provides that any agreement between a hotelkeeper and a guest will be void to the extent that it derogates from the provisions of the Draft Convention.

10.40 There is no equivalent provision in the Victorian Act. The Committee considers that the inclusion of a similar provision in the Victorian Act may be useful, as it would ensure that relations between innkeepers and guests are uniformly governed by the legislation. However, the provision may operate unfairly as it is not clear what the situation would be where a guest’s property is lost or damaged, but the agreement is void. The Committee would not wish such a provision to prevent innkeepers from being liable where they otherwise would be, but for the contract with the guest being void. Further, the Committee notes the potential for such a provision to be considered void according to the reasoning of the High Court in Wallis v Downard-Pickford.367

Status of Draft Convention

10.41 As the Draft Convention has not been finalised and adopted by the member states of Unidroit, it is not binding on Australia. However, as indicated above, it is a very useful guide to possible reform of the law relating to “innkeepers”. This was recognised by the

364 Article 11(1). 365 Article 11(1). 366 See discussion of this point in Chapter 6, and see also Recommendation 12. 367 See further Chapter 12 on the impact of the High Court decision on the Victorian Act.


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ACT Attorney General’s Department which, in its research paper, recommended that the Unidroit principles should be adopted in their entirety “unless insurance costs are unreasonable”.368

SUBMISSIONS AND EVIDENCE ON DRAFT CONVENTION

10.42 The Committee received submissions from the hotel industry and other interested associations, which opposed the adoption of the Draft Convention in Victoria.

10.43 The AHA had the following to say on the possibility of adopting the Unidroit Draft Convention:

To the best of our knowledge and belief, this extremely "ambit" convention, which was drafted in Rome in 1989 has never been ratified, adopted, or attained any force of law.

To that extent any comment is hypothetical only, but we would reject entirely proposed Article 13.

Were the hotelkeeper to be made totally responsibly for the safety and care of guests property with unlimited liability, this would be an uninsurable situation, or the cost of any premium so prohibitive, as not to be in guest or hotel industry interests. It would certainly deter investment in the hotel industry.

Obviously the hotelkeeper could not protect or safeguard guest's property if not in the hotelkeeper's possession, nor is there protection for the hotelkeeper against guest's carelessness, negligence or fraud.369

10.44 The Committee notes the AHA’s objections, but believes the AHA has misinterpreted the Draft Convention. Under the Draft Convention, liability is only unlimited for property in safe keeping, in line with the unlimited liability for property in safe custody imposed in every State and Territory in Australia other than Victoria.370 Liability for property not in safe keeping is limited to an amount 50 times the tariff of the accommodation establishment. Further, there is express protection for innkeepers under the Convention in the case of negligent acts by the guest which cause the damage or loss.371

10.45 VECCI “strongly opposed” the introduction of the provisions of the Unidroit Draft Convention in Victoria on the basis that its introduction would place Victoria out of step with other jurisdictions by imposing a cost on Victorian innkeepers which was not borne by innkeepers in other States.372 The Committee understands VECCI’s concerns, but notes that,

368 ACT, Legislation Review Program, op. cit., Possible Recommendation No. 10. 369 Submission from AHA, 28.2.96, p.3. 370 See comparison of Australian legislation in Chapter 7. 371 Article 16. 372 Submission from VECCI, July 1996, pp. 4-5.


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in fact, Victoria is currently out of step with other Australian jurisdictions as it is the only State to have a cap on liability in respect of goods in safekeeping. Therefore, the introduction of this aspect of the Draft Convention would bring Victoria in to line with the other States and Territories. However, the Committee agrees that the introduction of liability in the amount of 50 times the daily tariff for property not in safekeeping would impose a greater cost on Victorian accommodation establishments than that borne by the industry elsewhere in Australia. The Committee considers that some rise in liability is defensible as the current cap was set in 1970. For the reasons outlined above, the Committee supports the use of a multiple of the tariff as a basis for liability for property not in safekeeping, but regards the figure of 50 times the tariff as excessive. The Committee therefore recommends above that the figure be set at five (5) times the value of the standard daily tariff of the room occupied by the accommodation user in the relevant accommodation establishment.373

10.46 In relation to the Unidroit Draft Convention, the office of Parliamentary Counsel Victoria (“OPC”) commented that:

The provisions in Chapter IV of the draft Convention [ie those in relation to a hotelkeeper’s liability for loss of or damage to property] could be adopted to provide unlimited liability in respect of goods deposited with innkeepers and to fix liability in respect of goods not so deposited.

The latter limitation [in respect of goods not deposited for safekeeping] would apply to non-corporate innkeepers only, thus creating a distinction between the liability of corporate and non-corporate innkeepers. This distinction may be desirable: a hotel that is part of a large commercial chain is in a better financial position to recoup investment in providing improved security than a small country bed-and breakfast. Non-corporate innkeepers may limit their liability in respect of goods not deposited with them by incorporating a term to that effect in any contract374 with their guests and ensuring that guests have notice of the term at the time that the contract is made.375

10.47 The Committee understands that the distinction referred to by the OPC between corporate and non-corporate innkeepers would be due to the impact of the High Court decision in Wallis v Downard-Pickford. That decision may render invalid any provisions in State legislation seeking to set caps on liability for negligent acts by corporate innkeepers.376 In any event, the Committee considers that the use of the multiplication of daily tariff method of determining liability for property not in safekeeping would provide sufficient distinction between corporate and non-corporate, or large and small, accommodation establishments. Indeed, that is one of the most appealing factors of using this method to

373 See Recommendation 16 above. 374 It seems that innkeepers may not limit their common law liability in this way. See further Chapter 6. 375 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, pp. 8-9. 376 This decision is discussed in Chapter 12.


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calculate liability. The OPC also took this view, commenting that the Unidroit method would provide an appropriate method for calculating premiums for different types of establishments.377

10.48 The Bar supported the views put in the research paper prepared by the Attorney-General’s Department of the Australian Capital Territory.378 That research paper, as the Bar noted, supported the introduction of the Unidroit Draft Convention, subject to the availability of insurance.379

10.49 Mr Anthony Mackintosh, Regional Manager of the Insurance Council of Australia, told the Committee that he did not see the need for the introduction of legislation along the lines of the Unidroit Draft Convention. Mr Mackintosh regarded as “silly” the notion of making the limit on liability a multiple of the accommodation tariff. In relation to the recommendation in New South Wales that the Unidroit principles be adopted unless insurance costs were unreasonable, Mr Mackintosh commented that he did not think that the insurance costs would be unreasonable as he did not see it as a great risk.380

COMMITTEE’S CONCLUSIONS ON DRAFT CONVENTION

10.50 Despite the concerns of some Victorian hoteliers, the Committee considers that the Unidroit Draft Convention is not, in fact, vastly different from the current Victorian legislation. The primary differences (referring to the Draft Convention only) are:

(a) the notion of a hotelkeeper’s contract;

(b) unlimited liability for property deposited for safekeeping; and

(c) the method of calculating liability for property not in safekeeping, being 50 times the daily accommodation tariff.

10.51 The Committee has not chosen to recommend the concept of the hotelkeeper’s contract for adoption in Victoria, as it considers that the common law problems identified in Chapter 5 may be overcome by new definitions of “guest”, “inn” and “innkeeper”.381 While the Committee has recommended that innkeepers be subject to unlimited liability for property deposited for safekeeping, this is for a variety of reasons discussed at length in

377 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 9. 378 See Chapter 8 above. 379 Submission from the Victorian Bar, 17.6.95, pp. 1 - 2. 380 SARC, Minutes of Evidence, public hearing, 19.7.95, p. 28. 381 See Recommendations 3 and 4.


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Chapter 6.382 The Committee has also recommended the adoption of the Unidroit method of calculating liability for property not in safekeeping, but has recommended that the tariff be multiplied by only five times, rather than 50 times.383

10.52 The Draft Convention provides other useful ideas which are appropriate for adoption in Victoria, such as the defence in Article 16 in relation to damage to or loss of property caused by the nature of the property384, and the right of the hotelkeeper to inspect property deposited for safekeeping.385

382 See Recommendation 8. 383 See Recommendation 16. 384 See Recommendation 17. 385 See Recommendation 8.

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C H A P T E R 1 1 I N S U R A N C E C O V E R A N D C L A I M S

OVERVIEW

11.1 Insurance cover may protect an innkeeper in respect of his or her exposure under the Act or, if the Act were to be repealed without replacement, in respect of his or her unlimited liability at common law. Whether insurance cover is adequate protection will depend on the availability and cost of insurance for such liability. Submissions to the Committee from hotel owners indicated that one of their greatest fears was that increased liability due to amendment or repeal of the Act would lead to higher insurance premiums.

11.2 A further issue is the role of any insurance cover held by the guest that may cover the loss of or damage to his or her property while staying at a hotel. For instance, the loss or damage may be covered by travel insurance, house and contents insurance, or vehicle insurance. Some hotel owners have argued that the availability of this type of insurance is a further reason for not increasing the liability of innkeepers or, in fact, limiting their liability even further.

11.3 Relevant also is the number of claims currently made by guests against innkeepers and by innkeepers under insurance policies. It may be that the number of claims by both groups is very small and does not greatly impact on an innkeeper’s business. In which case, innkeepers may need no, or no further, protection against liability. Finally, the potential effect of unlimited liability on claims must be considered.

INSURANCE COVER FOR INNKEEPERS

Current position

11.4 The Australian Hotels Association (“AHA”) informed the Committee that no hotel in Australia carries insurance cover specifically against loss or damage to guests’ property. This is so irrespective of whether legislation similar to the Victorian Act exists in a particular State or not. Rather, all hotels carry comprehensive public liability insurance, which covers death or injury to guests and loss or damage to guests’ property. The AHA indicated that, in respect of cover for guests’ property, many policies have reasonably high excess provisions

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of $1,000 and more. Therefore, it was submitted, there is no real cover for guests’ property up to these excess levels. The AHA indicated that a South Australian hotel had reported to the organisation that additional premiums to cover the excess were “astronomical and not to be contemplated”.386

11.5 However, the AHA also indicated that the cost of public liability insurance seemed to be reasonably consistent throughout the States with a cover of $15 million attracting a premium of some $5,500.387

11.6 The President of the Victorian Accommodation Association, Mr Anthony Sheer, told the Committee that, when hoteliers take out insurance, most of the insurance companies “take it as referring to overall risk throughout the whole country”. Mr Sheer considered parity between States, in terms of the cap on liability, to be “essential” as the tourism industry should have an international viewpoint. However, he added that he thought there was relative parity between the States at that time.388

11.7 It appears that, in those States with legislation limiting innkeepers’ liability, public liability insurance policies normally stipulate that the cover is subject to the limitations stipulated under the Act, and require the insured party to comply with the provisions of the Act. Therefore, if the innkeeper does not display the sign required by the Act, the insurance cover may not apply.389 However, evidence presented during a review of the NSW legislation indicated that, in relation to insurance cover for hotels, claims for personal injury were seen as a more critical issue than the property loss aspect.390

11.8 The Regional Manager of the Victorian Branch of the Insurance Council of Australia, told the Committee that he considered the Act had little relevance as there were so many areas of insurance to cover the situation. He stated:

Cover is available and one wonders why an innkeeper requires protection under the Act.391

11.9 The Chief Executive Officer of the AHA, Mr Alan Giles, informed the Committee that most hotels used an insurance broker to buy insurance, and that hotels purchased an insurance package. Currently, insurance to cover loss of a guest’s property was not part of

386 Submission from Australia Hotels Associa tion, 28.2.96, p. 2. 387 id. 388 SARC, Minutes of Evidence, public hearing 19.7.95, p. 13. 389 Chief Secretary’s Department, op. cit., p. 12. 390 id. 391 SARC, Minutes of Evidence, public hearing 19.7.95, p. 24.

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the package for smaller hotels, which gained some comfort from the notice limiting liability.392

11.10 The Committee notes that most hoteliers are currently covered by their insurance policies for loss of or damage to guests’ property, with smaller establishments possibly being an exception. The Committee further notes that there appears to be no difference in premiums payable between States that have legislation limiting innkeepers’ liability and those without such legislation.

Likely effect of greater or unlimited liability

11.11 Perhaps the greatest concern voiced by the Victorian hotel industry in respect of the proposed repeal or amendment of the Act, has been the potential effect of increased or unlimited liability on the cost and availability of insurance cover. The submissions and evidence presented to the Committee on this matter varied considerably from suggesting that insurance cover would be available and at a reasonable cost, to declaring that insurance cover would not be available or would be prohibitively expensive.

11.12 In New South Wales, a discussion paper issued in relation to a review of that State’s Innkeepers Act 1968 stated, in a list of problems identified with the Act, that the unlimited liability provisions in respect of property deposited for safekeeping meant that New South Wales innkeepers could not purchase insurance cover to cover the full extent of their liability under the law.393 However, the same Report goes on to state that:

Insurance cover is available for hotels and motels to cover their liability for guests[sic] property under the Act. Standard public liability policies include cover for personal injury and loss or damage to property.394

11.13 By contrast, during a review of the relevant Act in the Australian Capital Territory, industry sources indicated that they had no difficulty in securing appropriate insurance against loss caused by personal or property claims.395 Consequently, the research paper made a preliminary recommendation that liability should be unlimited where it was possible for a hotel keeper to obtain insurance on a reasonable basis, and that liability should be limited where it was not possible to insure against the risk.396

392 ibid., p. 39. 393 Chief Secretary’s Department, op. cit., p. 8. 394 ibid., p. 12. 395 ACT, Legislation Review Program, op. cit., p. 3. 396 ibid., p. 4.


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11.14 The AHA submitted that, if the Act were repealed, this would be an uninsurable situation, or the cost of the premium would be so prohibitive as to be against the interests of both hoteliers and guests.397 Mr Giles gave evidence before the Committee that the repeal of the Act could have a greater impact on small hotels that did not have security equivalent to, say, five star hotels:

Perhaps some larger five-star hotels that have adequate protection, security and modern, up-to-date locking systems may be able to purchase insurance cover at a reasonable rate. The difficulty is when you go down the scale a bit and you have country hotels and smaller hotels that offer accommodation which just do not have that sort of in-built protection. That precludes them from getting insurance at minimum premiums.398

11.15 The President of the AHA, Ms Margaret Kearney, told the Committee that it would be very difficult, if not impossible to insure against the loss of cash. However, in relation to property other than cash, there was “a possibility of insurance”. Ms Kearney added that the cost of insurance was an “extreme cost” on a business, and that Mr Gromotka (see below) had received advice from his insurers that it would substantially increase his premiums. The flow on effect of increased insurance premiums, she warned, would be to make the Victorian hotel industry less competitive as the cost would be passed on to the consumer.399

11.16 The General Manager of the Melbourne Hilton Hotel, Mr Peter Gromotka, elaborated on the insurance issue:

… we checked with our insurance company which had great concerns. It did not spell out a figure on how much money it would cost or what the premium would be, but it raised concerns when I indicated there was a possibility of us not having any minimum liability as part of the Innkeepers Act and that we would dismantle any notification signage. Our insurance company was greatly concerned that if that were to happen, it could increase customer claims.400

11.17 According to the Victorian Employers’ Chamber of Commerce and Industry (“VECCI”), the insurance a hotelier purchased was predicated on the basis that there was a cap on liability. If the Act were repealed and there was no longer a cap on liability, VECCI considered, this could result in insurance premiums rising. VECCI submitted:

… advice from insurers also indicates that the cost of insurance cover, specifically over guest property could be extremely high if limits on hotel keeper liability were repealed, and may, in

397 Submission from Australian Hotels Association, 28.2.96, p. 3. 398 SARC, Minutes of Evidence, public hearing, 19.7.95, p. 38. 399 ibid., p. 31. 400 ibid., p. 33.


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many cases, be uninsurable. We pointed out in our verbal submission that such premiums would add a substantial cost to investment in Victoria's hotel industry.401

11.18 The RACV considered that, if the statutory limit of liability of innkeepers were removed, the “prudent innkeeper” would take an additional policy of insurance to cover additional risks. The RACV predicted that this would lead to an outcry from the hospitality industry relating to the increase of overheads but, by contrast, indicated that any increase in insurance premiums would probably be “quite small”.402

11.20 The Manager of the Victorian Branch of the Insurance Council of Australia, Mr Anthony Mackintosh, initially told the Committee that he did not think that, if the Act were repealed, there would be an explosion of claims and a dramatic increase in insurance premiums for innkeepers as claimed by hotel owners:

I could not be absolutely certain, but it would be hard to see that. People lock their motel and hotel rooms. I do not think they rely on the fact that the innkeeper has a liability. Most people that travel like that have insurance under these contracts, or if they are from overseas they have travel insurance or something.403

11.21 However, following later consultations with members of the insurance industry, Mr Mackintosh indicated that reliance on the limitation of liability was quite common, especially when responding to recovery claims being made by insurance companies enforcing their subrogation rights under domestic contracts issued to claimants:

Repealing of the Act would have an effect. It would transfer some of the losses from [an insurance] company’s domestic portfolios [ie from personal and home insurance policies] to the liability portfolio of the hotel or motel’s insurer. Unfortunately there are no figures available to give an indication of the extent of this transfer.404

11.22 However, Mr Mackintosh stated that he was “not aware of any variation at all” in the rates for insurance cover in Victoria under the Act, as compared to Queensland where there was unlimited liability.405 In fact, he informed the Committee, the differences in rates of insurance between States reflected factors such as the occurrence of natural disasters.406

11.23 The Committee understands the concerns of hotel owners in relation to the impact on insurance premiums of amendment or repeal of the Act. However, the Committee considers

401 Submission from VECCI, July 1995, p. 4. 402 Submission from RACV, 24.5.95. 403 SARC, Minutes of Evidence, public hearing 19.7.95, p. 28. 404 Submission from Insurance Council of Australia, 6.12.95, p. 1. 405 SARC, Minutes of Evidence, public hearing 19.7.95, p. 26. 406 ibid., p. 28.


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that the submissions and evidence indicate that insurance cover is available to cover loss of or damage to guests’ property, except possibly in the case of cash. The Committee was not presented with any evidence of the impact of unlimited liability on insurance premiums, in terms of dollar amounts. Further, the evidence suggests that there is in fact no difference in insurance premiums between those States with legislation limiting innkeepers’ liability, and those States without such legislation. The Committee notes also that all States with relevant legislation except Victoria impose unlimited liability on innkeepers for property deposited for safekeeping. While the New South Wales review of the Innkeepers Act 1968 suggested at one stage that insurance cover could not be obtained for this unlimited liability, it later contradicted itself on this point. The review of the Australian Capital Territory legislation suggested that insurance cover was available.

Insurance cover relevant to guests

11.24 A guest may have insurance cover that would apply where his or her goods are damaged or lost when staying at a hotel. A traveller may have taken out one or more of the following types of insurance: travel insurance; vehicle insurance; or insurance in respect of house contents.

11.25 A review of the NSW Act resulted in a discussion paper, which identified the following issue:

The Act excludes motor vehicles and contents from the liability of innkeepers on the basis that it is common for owners of motor vehicles to insure their vehicles against loss. It could be argued that the availability of travel insurance for personal property is justification for limiting the absolute liability of innkeepers for goods received or offered for safekeeping.407

11.26 VECCI noted that many items lost by guests in hotels would be covered by personal insurance, and considered it appropriate that the loss be borne by that insurance policy.408

11.27 As indicated above, Mr Mackintosh told the Committee that the Act seemed to have little relevance because there were so many areas of insurance that covered the situation.409 He advised that under the Insurance Contracts Act 1984 (Cwlth) policies of insurance coverage are prescribed and include cover for goods temporarily removed from the owners place of

407 Chief Secretary’s Department, op. cit., p. 8. 408 Submission from VECCI, July 1995, p. 3. 409 SARC, Minutes of Evidence, public hearing 19.7.95, p. 24. Compare later comments of Mr Mackintosh at

paragraphs 10.15 and 10.16 above.


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residence.410 However, Mr Mackintosh admitted that was a great deal of under-insurance and non-insurance by people in respect of cover for house contents.411

11.28 It might be expected that a traveller from another country visiting Australia would have travel insurance. Mr Mackintosh confirmed that travel insurance would cover the loss of or damage to a guest’s property in a hotel.412 However, the NRMA in New South Wales believed that few domestic travellers take out travel insurance. This view was supported by counter staff at the NSW Travel Bureau, who indicated that domestic travellers rarely purchase travel insurance for travel in New South Wales.413 Mr Nigel Roberts, Manager of the Sheraton Towers Southgate, stated that, while guests might have some form of insurance, in his experience, individual travel insurance was the last resort of a guest who instead often relied on his or her personal insurance.414

11.29 The Committee recognises the force in the policy based argument identified by the NSW review. However, the Committee considers it likely that the rate of insurance cover for cars is much higher than the rate of insurance cover for house contents or personal insurance. Further, as a matter of fairness, it seems more reasonable for an innkeeper to be strictly liable for property brought into the hotel, than for a vehicle which may be left on the street, or in a distant carpark. The Committee also recognises that there is a strong tradition of an innkeeper being strictly liable for loss of or damage of a guest’s property even where not in safekeeping. In addition, the Committee acknowledges that even the hotel industry appears to accept that a measure of care in this regard is desirable.

CLAIMS

Claims by guests against innkeepers

11.30 A review of the NSW Act was unable to establish a clear need for making changes to the legislation on the basis of the theft problem in the industry alone. The available evidence indicated that, in New South Wales in the preceding few years, burglary and theft from hotels averaged around 1,200 cases at a total value of around $1.1 million per year. These figures related to all incidents reported, not just guests’ property. It is likely that a considerable number of these cases related to the theft of hotel property, such as televisions

410 ibid., p. 25. 411 ibid., pp. 26 to 27. 412 ibid., p. 28. 413 Chief Secretary’s Department, op. cit., p. 13. 414 SARC, Minutes of Evidence, public hearing 19.7.95, p. 39.


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from guest rooms. These figures indicated a New South Wales average of less than one burglary or break and enter per hotel or motel, per year (reported to the police).415

11.31 A similar review in the Australian Capital Territory was informed by the hotel industry that there had been no recent difficulty with liability issues and that, where there is loss of or damage to a guest’s property, this was usually picked up by the innkeeper in the interests of good customer relations and paid in full without regard to the statutory limitation of liability.416

11.32 The AHA acknowledged that, while there was a continuing number of small claims in Victoria, there was no evidence of major or large scale claims. The AHA submitted that the low incidence of claims was due to the existence of the legislation, and particularly the prescribed notices, which created a discipline in guests to accept responsibility for safeguarding their property.417

11.33 VECCI indicated that it was the experience of many innkeepers that guests who claimed to have lost property in a hotel room later found that the item was lost elsewhere or simply misplaced. VECCI considered that the current Act was a “workable compromise” between the rights of the parties. Further, as claims were made on a random basis, the Act enabled innkeepers to make some practical judgments about their level of exposure for loss for any given period.418

11.34 The President of the Victorian Accommodation Association and owner of several accommodation establishments, Mr Anthony Sheer, told the Committee that no claims had been made against him as an “innkeeper” during the last 12 months.

11.35 In practice, Mr Gromotka stated, if any claims were made against the hotel, attempts were made to settle them amicably and there had never been a problem in his experience. However, he pointed out, theft or loss of items was not such a big issue in five star hotels which had various forms of security and protection.419 This practice of settling claims amicably was confirmed in a 1988 article on hotel theft published by the Australian Consumers Association in its “Choice” magazine. An AHA spokesman was quoted as saying that he had never heard of a dispute regarding a hotelkeeper’s liability for theft of a guest’s goods. The spokesman further stated that most hotel owners would refund the full

415 Chief Secretary’s Department, op. cit., pp. 11 and 12. 416 ACT, Legislation Review Program, op. cit., p. 3. 417 Submission from Australian Hotels Association, 28.2.96,, p. 3. 418 Submission from VECCI, July 1995, pp. 2 and 3. 419 SARC, Minutes of Evidence, public hearing 19.7.95, p. 36.


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value of stolen goods in the interest of good customer relations and to protect their reputations.420

11.36 Mr Gromotka stated that he did not believe there was any difference in practice or payout between a Hilton Hotel in Queensland, where there is no legislation limiting an innkeeper’s liability, and a Hilton Hotel in Victoria.421 Mr Roberts concurred, saying that there was no difference in practice or payout between a Sheraton Hotel in Victoria and a Sheraton Hotel in Queensland.422

11.37 The evidence presented to the Committee suggests that the incidence of claims is not high. As was submitted by the AHA, the low incidence of claims may be due to the existence of the Fourth Schedule notice which encourages people to be responsible for their property. However, the Committee considers that the low incidence may equally be explained on the ground that the majority of guests are responsible people who take care of their belongings irrespective of the presence of statutory notices in hotel rooms.

Claims by innkeepers under insurance policies

11.38 In NSW, an insurance firm specialising in providing insurance cover to hotels advised that there had been no claims made in the preceding 12 month period by hotels on their insurance cover. GIO further indicated that claims in respect of personal injury were of greater concern to innkeepers and their insurance companies than claims for property loss or damage.423

11.39 The Committee notes the very limited evidence presented to it in relation to this type of claim, and is unable to draw any conclusions on this point.

Likely effect of unlimited liability on claims

11.40 Innkeepers expressed concern that the removal of caps on liability would see an explosion of fraudulent and mistaken claims by guests against innkeepers.

11.41 The AHA submitted that the introduction of unlimited liability could result in unreasonable claims being made against hotels.424

420 Australian Consumer Association, Hotel Theft - Who Pays?, Choice, August 1988, p. 13. 421 SARC, Minutes of Evidence, public hearing, 19.7.95, p. 37. 422 id. 423 Chief Secretary’s Department, op. cit., p. 12. 424 Submission from AHA, 11.5.95, p. 1.


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11.42 Mr Gromotka told the Committee that the Hilton Hotel’s insurance provider was greatly concerned that the repeal of the Act would lead to a sudden increase in customer claims and also false claims.425 The industry was also concerned about increased litigation. Mr Gromotka thought that the number of cases would “blow out”.

11.43 The Committee notes the concerns of hotel owners that the introduction of greater or unlimited liability may lead to more claims being made by guests. In this Report, the Committee recommends that liability be increased in respect of goods not placed in safe custody, and be unlimited in respect of goods in safekeeping. The Committee considers that there will be no explosion of false or mistaken claims in respect of property in safekeeping as a guest cannot claim falsely or mistakenly that an item has been stolen when it is in the possession of the innkeeper. The issue, then, is what impact increased liability will have on the incidence of claims for property not in safekeeping. The Committee believes it must assume that the vast majority of guests are responsible and honest people, who will not make unnecessary or false claims. The Committee notes that those guests wishing to defraud innkeepers may currently claim up to $100 in any event. Given that there will continue to be a reasonable limit on liability, the Committee considers that increasing the liability threshold is unlikely to result in an explosion of claims, genuine or false.

425 SARC, Minutes of Evidence, public hearing 19.7.95, p. 33.

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C H A P T E R 1 2 F A I R T R A D I N G L E G I S L A T I O N

OVERVIEW

12.1 The Victorian Act, and the equivalent Acts in other States, were introduced to impose a limit on the liability of innkeepers where a guest’s property was lost or damaged through no fault of the innkeeper. However, any attempt by the States to limit liability in this manner may be inconsistent with State and Federal fair trading legislation, and so rendered void.

TRADE PRACTICES ACT 1974 (CWLTH)

Application of Trade Practices Act

12.2 The Commonwealth Trade Practices Act 1974 (Cwlth) (“TPA”) applies to contracts for the supply of services by a corporation to a consumer. The TPA defines “services” as including:

[A]ny 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 ….426

12.3 “Supply”, in relation to services, includes “provide, grant or confer”.427 These definitions almost certainly include the provision of services by an innkeeper to a guest, whether the supply of accommodation, or of safe custody and storage of goods facilities.428

12.4 Therefore, where an innkeeper is a “corporation”, any services it provides to guests will be subject to the implied warranties in section 74 of the TPA, described below.429 A “corporation” includes a trading corporation formed within Australia.430

426 Section 4(1), TPA. 427 Section 4(1), TPA. 428 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 4; Atherton, op. cit., p. 460. 429 Submission from Office of Parliamentary Counsel Victoria, op. cit., p. 4. 430 Section 4(1), TPA.


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12.5 An alternative view is that the acceptance for safe custody of goods by the innkeeper would not be part of the “contract” for the supply of services to the guest, being the provision of accommodation services. Rather the acceptance of the goods would form a separate agreement for the provision of safe custody services. On the principles of contract law, the failure of the guest to make a payment for the keeping of safe custody of the goods would mean that there was not a binding contract which was enforceable against the innkeeper. Therefore, no warranties would be implied by the TPA.

12.6 A further limitation on the application of the TPA is that the implied warranties apply only where a person acquires services as a “consumer”. A person acquires services as a consumer where the price of the services is $40,000 or less, or, if more than $40,000, where the services are of a kind ordinarily acquired for personal, domestic or household purposes.431

12.7 Section 68(1) of the TPA renders void any term of a contract that purports to exclude, restrict or modify the application of any of the provisions of Part V, Division 2. Both sections 68 and 74 appear in that Division of the TPA.

12.8 The Committee notes that innkeepers which are corporations will be subject to the warranties in section 74(1) of the TPA, as the definition of services in the TPA is likely to include the supply of accommodation and safe custody services.

Implied warranties

12.9 Subsection 74(1) of the TPA implies into contracts for the supply of services by a corporation to a consumer, a warranty that the services will be rendered with “due care and skill”, and that any materials supplied in connection with those services will be reasonably fit for the purpose for which they are supplied.

Inconsistency between Victorian Act and TPA

12.10 The provisions of the Carriers and Innkeepers Act 1958 (Vic.) purporting to limit the liability of innkeepers may be inconsistent with the warranties implied by section 74 of the TPA, and the prohibition on contracting out of section 74 contained in section 68 of the TPA.432 Where there is a conflict between a State law and a Commonwealth law, the

431 Section 4B, TPA. 432 Submission from Office of Parliamentary Counsel Victoria, 1.8.95. See further Chapter 3.

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Australian Constitution dictates that the latter prevails and the former is void to the extent of the inconsistency.433

12.11 The decision of the High Court in Wallis v Downard-Pickford (North Queensland) Pty Ltd434 has been discussed at length elsewhere in this Report.435 In short, the High Court held that the provisions of a Queensland Act purporting to limit the liability of a carrier for loss of or damage to goods in carriage were inconsistent with sections. 68 and 74 of the TPA, and so invalid.

12.12 The reasoning in Wallis may be applied, by analogy, to that part of the Victorian Act relating to innkeepers. The Office of Parliamentary Counsel Victoria (“OPC”) advised the Committee that:

The provisions of s. 30 of the C&I Act purporting to limit the liability of innkeepers in respect of goods deposited with them may be void by virtue of s. 68 of the TPA …. The limitation of the innkeeper’s liability to $2000 in s. 30(1)(a) purports to restrict the liability of a corporate innkeeper for any breach of the warranty in s. 74 of the TPA, and would, therefore, appear to be void to the extent that it is inconsistent with the TPA …. Where the goods are lost or damaged in any other case (that is, they were not deposited with the innkeeper but were, for example left in the guest’s room), the application of the provisions of the TPA is less clear. It could be argued that the provision of a room to a guest constitutes the provision of a service within the meaning of s. 4 of the TPA (the provision of the right to occupy the room as a licensee) and that the implied warranty in s. 74 applies so that any limit on the innkeeper’s liability is void.436

12.13 As noted above, it is probable that the provision of accommodation does constitute the supply of a service within the meaning of the TPA. The sections in the Victorian Act limiting liability in respect of both property deposited for safekeeping and property not so deposited could therefore be void on the above analysis. The issue is whether there is any inconsistency between section 30 of the Victorian Act and the TPA.

12.14 There is, however, an argument that section 30 of the Victorian Act is not inconsistent with sections 68 and 74 of the TPA. This argument, outlined at length in Chapter 3 in relation to the provisions relating to carriers, applies with even greater force to the provisions regulating innkeepers.

433 Section 109 of the Commonwealth Constitution provides: When a law of a State is inconsistent with a law of the

Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. 434 (1994) 68 ALJR 395 435 See Chapter 3. 436 Submission from Office of Parliamentary Counsel Victoria, 1.8.95, p. 4.


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12.15 Section 74 of the TPA implies a warranty into contracts for the supply of services that the services will not be supplied negligently, negligence being the equivalent to the lack of “due care and skill” referred to in that section.437

12.16 Under the Victorian Act, the limit on an innkeeper’s liability contained in section 30 clearly does not apply where a guest’s goods are damaged through the negligence of the innkeeper:

Nothing in this Act shall affect the liability of any person for loss of, or damage to, property caused by his default, neglect or wilful act, or that of his servant.438

12.17 This point is reiterated in section 30 itself:

Sub-section (1) [which imposes the limit on liability] shall not have effect where the cause of the loss or damage was some default, neglect or wilful act of the innkeeper or his servant.439

12.18 Under the Carriage of Goods by Land (Carriers’ Liabilities) Act 1967 (Qld), the relevant legislation in Wallis, it seems that the provision limiting liability overrode the provision which made carriers liable for their negligent acts. This explains why the plaintiff was forced to plead inconsistency with the TPA.440 The reverse is true of the Victorian Act, at least in relation to that part of the Act governing innkeepers, with the provision imposing the limitation of liability being explicitly subject to the section imposing liability for negligence. It is therefore arguable that, as the provisions in relation to innkeepers do not attempt to limit liability for negligent acts, there is no inconsistency between them and sections 68 and 74 of the TPA in the sense outlined in Wallis.

12.19 As noted in Chapter 3, the Committee sought the advice of counsel on this matter. Peter Hanks, of the Victorian Bar, advised the Committee that:

Because the Victorian Act does not oust the liability of an innkeeper contemplated by the [TPA], it cannot be said … that the Victorian Act detracts from the full operation of a right granted by the [TPA]. It follows that there is no direct inconsistency between the provisions of the Victorian Act dealing with innkeepers’ liability and the [TPA].441

12.20 While there is no direct inconsistency, there remained the possibility of indirect inconsistency. This occurs where the Commonwealth legislation is intended to be the sole

437 See Chapter 3. 438 Section 26(2), Victorian Act. 439 Section 30(5), Victorian Act. 440 See further Chapter 3. 441 Peter Hanks, Memorandum of Advice, 22.2.98, p. 6.


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authority in relation to a particular matter, and the State Act then attempts to enter the “field” which is covered by the Commonwealth Act. According to counsel:

… it does not follow that the relevant provisions of the Victorian Act are not inconsistent with the [TPA]. It will be recalled that, in Wallis , Toohey and Gaudron JJ said that it was “unnecessary to consider whether, as a separate head of inconsistency, ss. 68 and 74 [of the TPA] purport to `cover the field’ …”. If the conclusion was reached that those sections of the [TPA] were intended by the Commonwealth Parliament to prescribe the exclusive law on the subject of corporations’ liability for any loss flowing from their contractual provision of services (to cover that field), then any attempt by the Victorian Act to regulate the same matter (enter the field) would generate inconsistency within s.109 – so that those provision of the Victorian Act would be invalid.442

12.21 Counsel noted the uncertainty surrounding the possibility of this type of inconsistency:

It is not possible to express an unequivocal opinion on this point. The critical question is whether an intention to cover the field can be inferred from the provisions of the [TPA]. Because this is a matter of inference, a final conclusion would have to await the outcome of litigation.443

12.22 However, a finding of this type of inconsistency would have little practical effect as the relevant provisions of the Victorian Act and the TPA produce the same result. Both Acts make an innkeeper (that happens to be a corporation) liable for loss of or damage to a guest’s property caused by the innkeeper’s negligence. As this is the case, litigation on the matter is a “remote prospect”.444

12.23 The Committee notes that there exists the possibility of a finding of indirect inconsistency between Victorian legislation imposing caps on the liability of innkeepers and the TPA. However, the Committee recognises that this risk is remote, provided any new Victorian legislation does not seek to restrict the liability of an innkeeper for negligent acts. The Committee does not, therefore, consider it necessary to review its recommendation to introduce new legislation imposing caps on the liability of innkeepers.445

Misleading representation

12.24 Section 53 of the TPA prohibits a corporation, in connection with the supply of services, from making:

442 id. 443 id. 444 ibid., p. 7. 445 See Chapter 6.


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(g) … a false or misleading representation concerning the existence, exclusion or effect of any condition or warranty, guarantee, right or remedy.

12.25 One view is that the phrase “right or remedy” is not limited to the rights or remedies provided under the TPA, but includes other rights and remedies, such as those possessed by a guest at common law against an innkeeper in respect of the guest’s property.446

12.26 If that is so, then, in those States where the liability of innkeepers is governed by the common law, the display of a notice or the inclusion of a term in a contract which attempts to limit or preclude liability may not only be ineffective at common law, but also breach section 53 of the TPA. As innkeepers are not able to contract out of their liability at common law, any representation to the contrary is likely to be false or misleading within the meaning of section 53.447 Liability under section 53 is strict. In other words, it would be irrelevant that innkeepers or their representative bodies honestly believed that the notice was accurate.448

12.27 Further, even in those States which have legislation limiting liability, the display of a notice, or the inclusion of a term in a contract, which purports to limit or exclude liability other than in accordance with the relevant Act, may also contravene section 53 of the TPA. The agreement in Oakford Executive Apartments Ltd v Van der Top449, which stated that the apartments would not be liable to compensate guests for loss, theft or damage of property brought into the apartments (contrary to the provisions of the Victorian Act) is a good example of a term which would probably breach section 53 of the TPA.

12.28 The Committee notes that innkeepers which are corporations displaying notices seeking to restrict their liability contrary to statute or common law may be in breach of section 53 of the TPA.

FAIR TRADING ACT 1985 (Vic.)

12.29 The Fair Trading Act 1985 (Vic.) (“FTA”) includes a provision which is the equivalent of section 53 of the TPA. As the FTA is not restricted in its application to corporations, section 12(h) will apply to innkeepers that are not incorporated.

12.30 Section 12 of the FTA prohibits the making of misrepresentations, in trade or commerce, in connection with the “supply” of “services” to a “consumer”. The FTA definitions of “supply” in relation to services, and “consumer” are identical to the TPA

446 Atherton, op. cit., p. 460. 447 In relation to the ability of innkeepers to contract out of their liability, see Chapter 5. 448 Atherton, op. cit., p. 460. 449 See discussion of this case in Chapter 5.


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definitions. For present purposes, the definition of “services” in the FTA is also identical to that in the TPA.

12.31 The Committee notes that innkeepers which are not incorporated may breach section 12 of the FTA in the following situations:

(a) in a jurisdiction where there is no legislation limiting liability - by displaying a notice or including a term in a contract with the guest which purports to preclude the innkeeper’s common law liability; or

(b) in States with legislation limiting innkeeper’s liability - by the display of a notice or the inclusion of a term in a contract with the guest which purports to restrict liability to a greater extent than permitted by the relevant Act.

GOODS ACT 1985 (Vic.)

12.32 The Goods Act 1985 (Vic.) (“GA”) clearly applies to that part of the Act dealing with carriers.450 Just as clearly, due to the very limited definition of services, the GA does not apply to the Act in so far as it relates to innkeepers.451

12.33 The Committee therefore notes that, if an innkeeper is not a corporation and so subject to the TPA, no warranties or conditions as to due care and skill and so on will be implied into the contract between innkeeper and guest.

12.34 However, the Committee notes the intention to amend the FTA to include warranties which mirror sections 68 and 74 of the TPA, as part of the Hilmer reforms. In the context of these proposed changes, the Minister for Fair Trading, the Hon Jan Wade MP, commented that:

… consumers should have the right to sue carriers and innkeepers for loss or damage caused to property in the course of providing a service. Such rights should not be able to be excluded by terms of the contract for the service. Furthermore, consumers who have rights to sue corporate carriers and innkeepers should have the same rights in relation to non-corporate carriers and innkeepers. This promotes consistency and certainty in the law. Non-corporate carriers and innkeepers should adopt measures to insure themselves accordingly.452

450 See Chapter 3. 451 Section 84(1), GA. 452 Minister for Fair Trading, letter to SARC, 19.7.95, p. 1.


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