Review of the Carriers and Innkeepers Act 1958Chapter 12 - Fair Trading Legislation[Return to Table of Contents]OVERVIEW2.1 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 Act12.2 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:
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] 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 warranties12.9 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. 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 Australian Constitution dictates that the latter prevails and the former is void to the extent of the inconsistency.[433] Inconsistency between Victorian Act and TPA12.11 The decision of the High Court in Wallis v Downard-Pickford (North Queensland) Pty Ltd[434] 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:
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. 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:
12.17 This point is reiterated in section 30 itself:
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:
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 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:
12.21 Counsel noted the uncertainty surrounding the possibility of this type of inconsistency:
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 representation12.24 Section 53 of the TPA prohibits a corporation, in connection with the supply of services, from making:
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 Top[449], 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 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:
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:
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