Review of the Carriers and Innkeepers Act 1958, May 1998Chapter 10 – International Code of Practice[Return to Table of Contents]OVERVIEW10.1 The Office of the Parliamentary Counsel recognised that:
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 CONTRACTUnidroit10.3 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 Convention10.4 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 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 "Hotelkeeper" and "accommodation"10.7 The Draft Convention does not use the outdated expressions "inn" and "innkeeper", but prefers "hotelkeeper" and "accommodation".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:
Otherwise, the meaning of accommodation is unrestricted and appears to include everything from bed-and-breakfast establishments to five star hotels. 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 property10.13 There are five articles in the Draft Convention relating to a hotelkeeper’s liability for property. In summary, they provide as follows. 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.
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. Unlimited liability for property in safe custody 10.21 A hotelkeeper’s liability is unlimited where:
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 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.
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] Defences available to hotelkeeper 10.29 A hotelkeeper will not be liable where the damage, destruction or loss is due to:
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]
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] 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. Liability for vehicles 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] 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 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 CONVENTION10.42 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:
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, 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:
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 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 CONVENTION10.50 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:
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 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 property[384], and the right of the hotelkeeper to inspect property deposited for safekeeping.[385]
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