Review of the Carriers and Innkeepers Act 1958, May 1998

Chapter 6 – Carriers and Innkeepers Act 1958

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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 The language and style of the current Act, even though substantially rewritten as recently as 1970, are outdated.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.

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 summary[187], 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.

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 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, 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.

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 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.

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:

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]

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.

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:

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; 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 liability[221], 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 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]

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 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

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]

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.

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]

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 both 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]

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.

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 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.

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.

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.


Footnotes

[185]

Atherton, op. cit., p. 450.

[186]

These submissions are discussed towards the end of this Chapter.

[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.

[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.

[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.

[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.

[203]

Section 27(2), current Act.

[204]

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

[205]

Sections 27(1), current Act.

[206]

See discussion of extent of common law liability in Chapter 5.

[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.

[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.

[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.

[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.

[221]

See discussion of incidence of claims and submissions of innkeepers in relation to increased claims due to unlimited liability in Chapter 11.

[222]

Section 30(4).

[223]

Submission from AHA, 11.5.95, p. 2.

[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.

[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.

[232]

Section 29(b).

[233]

Section 29(a).

[234]

Section 31.

[235]

The insurance issue is discussed in Chapter 11.

[236]

The incidence of claims is discussed in Chapter 11.

[237]

The role of private insurance is discussed in Chapter 11.

[238]

Submission from Minister for Small Business and Minister for Tourism, 8.7.97, pp. 1-2.

[239]

Submission from AHA, 11.5.95, p. 1.

[240]

ibid., p.2.

[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.

[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.

[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.

[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.

[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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