Motorcycling Events Group Australia Pty Ltd v Kelly

Judgment 1BASTEN JA: On 6 December 2007, the respondent, David Anthony Kelly, took part in a motorcycle training course at Eastern Creek Raceway, organised by the appellant. Whilst undertaking a training circuit on the track, he was hit by a rider travelling at higher speed in a more advanced training session. The respondent was seriously injured. 2The respondent brought proceedings in the District Court against the appellant, seeking damages for breach of an implied warranty that the appellant would provide training in handling a motorcycle, with due care and skill, pursuant to an implied term in the contract between them. In the alternative, he relied upon a cause of action in tort, alleging negligence on the part of the appellant. He was successful in his contract claim and obtained an award of damages. The appellant appeals against that judgment. 3Because the contract claim invoked a federal law, namely s 74(1) of the Trade Practices Act 1974 (Cth), since replaced, the whole of the proceedings were an exercise of federal jurisdiction: Felton v Mulligan [1971] HCA 39; 124 CLR 367 at 373 (Barwick CJ), 411-412 (Walsh J). That characterisation was of critical importance because it required that any aspect of State law, and particularly the operation of Part 1A of the Civil Liability Act 2002 (NSW) relied on by the appellant, could have effect only through the agency of a federal law. 4The appeal should be dismissed with costs, subject to the following considerations, for the reasons given by Gleeson JA. Effect of exclusion clause 5The contractual terms, more fully set out by Gleeson JA at [67] below, contained an acknowledgment that the respondent was prepared to take his chances of injury, death or property damage and "assume the risk" that he might be injured or killed in the course of the activities: cl 10. Clause 12 ("the exclusion clause") then provided: "The Applicant/Guardian hereby releases and indemnifies [the appellant] ... from any claims or liability for death, personal injury or property damage howsoever caused as a condition of acceptance to partake in the event." 6The liability on which the respondent sued arose from a breach of the implied contractual warranty provided by s 74(1) of the Trade Practices Act which was, at the relevant time, in the following terms: 74 Warranties in relation to the supply of services (1) In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any material supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied." 7Section 74 fell within Part 5, Div 2 of the Trade Practices Act. Section 68, in the same Division, dealt with contractual terms, which would include the exclusion clause, in the following manner: 68 Application of provisions not to be excluded or modified (1) Any term of a contract ... that purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Division; (b) the exercise of a right conferred by such a provision; (c) any liability of the corporation for breach of a condition or warranty implied by such a provision; or (d) the application of section 75A; is void. (2) A term of a contract shall not be taken to exclude, restrict or modify the application of a provision of this Division or the application of section 75A unless the term does so expressly or is inconsistent with that provision or section. 8The reference to s 75A may be put to one side: it dealt with the right of a consumer to rescind a contract in certain circumstances, including where there was a breach of a condition implied in a contract for the supply of goods. That right appeared in Div 3, and thus was not caught by the other paragraphs of sub-s 68(1), dealing with provisions of Div 2. In common with provisions of Div 2 other than s 74, s 75A was concerned with the supply of goods, not services. (Although Part V of the Trade Practices Act was repealed from 1 January 2011, the provisions in force immediately before that repeal continued to apply in relation to acts or omissions that occurred before that date: Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth), Sch 7, item 6.) 9The first step in applying s 68 requires the Court to construe the contractual term. The exclusion clause does not purport expressly to exclude, restrict or modify the operation of s 74(1). However, to the extent that it provides a release from claims or liability which would arise from breach of the implied warranty, it is inconsistent with the conferral by s 74(1) of a right to sue for such breach. Accordingly it is inconsistent with the effect of s 74(1). It is a provision which purports to exclude liability of the appellant for a breach of the implied warranty under s 74(1), contrary to s 68(1)(c). 10It has been held that the term of a contract which contravenes s 68(1) is void, but only to the extent of the contravention: Ruaro v Ferrari [2007] FCA 2022 at [52] and [85] (Emmett J). The consequence of that limitation is that the exclusion clause may be effective to confer immunity on the appellant with respect to liability in tort. 11To determine the effect of the exclusion clause it is then necessary to consider the operation of s 68B of the Trade Practices Act. That provision was in the following terms: 68B Limitation of liability in relation to supply of recreational services (1) A term of a contract for the supply by a corporation of recreational services is not void under section 68 by reason only that the term excludes, restricts or modifies, or has the effect of excluding, restricting or modifying: (a) the application of section 74 to the supply of the recreational services under the contract; or (b) the exercise of a right conferred by section 74 in relation to the supply of the recreational services under the contract; or (c) any liability of the corporation for a breach of warranty implied by section 74 in relation to the supply of recreational services under the contract; so long as: (d) the exclusion, restriction or modification is limited to liability for death or personal injury; and (e) the contract was entered into after the commencement of this section. 12Section 68B commenced on 19 December 2002: accordingly, paragraph (e) was satisfied. For the reasons given by Gleeson JA, the contract between the respondent and the appellant involved the provision of "recreational services" as defined in s 68B(2). Section 68B contains no deeming provision of the kind found in s 68(2): nevertheless, the intended effect of the exclusion clause was to exclude the liability of the appellant for breach of the warranty implied by s 74 in relation to the supply of recreational services and thus fell within s 68B(1)(c). There remain two further aspects of the provision, the scope of each of which is unclear. 13First, the use of the term "only" in the chapeau of sub-s (1) recognises the possibility that the term of the contract could engage s 68 in more than one way. Thus, the contract could involve the supply of goods (not a matter covered by s 74) or it could involve the supply of services not covered by the term "recreational services". If a contract included a term with multiple purposes, it could be void under s 68 for reasons other than the exclusion of liability for breach of a warranty implied by s 74. In such a case, the chapeau would be ambiguous. One construction would be that the term of the contract is not void if its only operation is to exclude liability for breach of the implied warranty with respect to recreational services. Thus, if the exclusion clause has a broader operation, s 68(1) continues to operate. The alternative construction is that the exclusion clause is effective, but only to the extent that it excludes liability for breach of the implied warranty with respect to recreational services. 14It is not necessary to resolve this level of ambiguity for present purposes, because it was not contended that the exclusion clause had any operation which fell within s 68, other than the exclusion of liability for the implied warranty in relation to recreational services. However, a similar difficulty arises with respect to the words which introduce paragraph (d), and the terms of (d) itself. The words "so long as" introduce a precondition (or more accurately two preconditions) to the operation of sub-s (1). It is not a temporal control, but is equivalent to "provided that" or "but only if". 15The condition in paragraph (d) requires that the exclusion be "limited to" liability for death or personal injury. It is this aspect of the provision which causes difficulty for the appellant in the present case. The exclusion clause was not so limited: it extended to liability for "death, personal injury or property damage". In order for the provision to have effect in the present case, it would be necessary to read s 68B(1) as applying to the exclusion clause "to the extent that it operates to exclude, restrict or modify liability for death or personal injury". 16That reading involves radical surgery: it is not the language adopted by the legislature. Nor can the statutory language be described as ambiguous or uncertain. Indeed, the only reason to look for an alternative to the natural meaning of the words used is that the purpose of the restriction is unclear. In addition, the language of s 68B, involving the exclusion, restriction or modification of "liability" appears to pick up the kind of exclusion referred to in paragraph (c), rather than either of paragraphs (a) or (b). It would therefore appear not to save a clause which purported to deny the application of any statutory implied warranty effected by s 74(1), unless it was qualified by reference to liability for death or personal injury, and similarly would not be engaged where the contract purported to exclude the exercise of a right "conferred by" s 74 except to the extent that the right involved a liability to sue for damages for death or personal injury. Applying the same reasoning to paragraph (c), it would appear to be engaged only where the exclusion clause, in its terms, referred only to liability for death or personal injury arising from a breach of the implied warranty. 17General principles of statutory interpretation have a number of features: for example, they - (a) resist the extraction of particular words or phrases from their statutory context; (b) prefer a construction which promotes the apparent purpose of the legislation to one which does not; (c) identify the legal and social context, particularly to identify the "mischief" to which the legislation is directed. These principles derive from the Interpretation Act 1987 (NSW), s 33; Sovar v Henry Lane Pty Ltd [1967] HCA 31; 116 CLR 397 at 405 (Kitto J); CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; 187 CLR 384. 18Usually, the various canons or principles applicable to construing statutes are not applied separately and independently. Generally, an understanding of the meaning of a text will be informed by context and perceived purpose, rather than by identifying some prima facie understanding which is then tested against other considerations. Further, identification of the "purpose" of a statutory provision is itself an exercise in construing the text, understood in its relevant context. When the text is ambiguous, the purpose may also be ambiguous. It may not help to identify a purpose at some high level of generality and then attribute that purpose to the specific and ambiguous provision. In any event, s 68B provides a different kind of problem: the text is clear, but the purpose is not. Two further steps should, however, be pursued. The first is to consider the section in its statutory context; the second is to consider the historical context. 19Addressing the statutory context, one may note that the scope of s 74 extends beyond contracts for the supply of recreational services. Even in relation to a contract for the supply of services, it extends to the fitness of materials supplied in connection with those services for the purpose for which they are supplied. Further, the services will be the subject of an implied warranty that they are reasonably fit for any particular purpose or result specified by the consumer: s 74(2). These considerations do not, however, provide any ready explanation of the limitations with respect to the kinds of relief which may be the subject of an exclusion clause by virtue of s 68B. 20Addressing the historical context in which s 68B was inserted in the Trade Practices Act, its commencement coincided with legislation in various States regulating claims in negligence. One example was the Civil Liability Act in New South Wales, Part 1A of which commenced in December 2002. However, although the social and financial impetus for such legislation arose, at least in part, from concerns about the level of insurance premiums with respect to personal injury claims, the Civil Liability Act was not so limited. Thus, Part 1A applied to "any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise": s 5A(1). The term "harm" was defined to mean personal injury or death, damage to property and economic loss: s 5. Accordingly, that context provides little guidance as to why s 68B(1)(d) should restrict its operation to personal injury or death. 21In these circumstances, there is no clear basis upon which a court could confidently ascribe any meaning to the language of the section, other than its literal or ordinary meaning. As the language is not unclear when given its natural and ordinary meaning, and no clear purpose for the specific restriction is revealed by looking to surrounding provisions or to historical context, the court has no licence to rewrite it: Taylor v Centennial Newstan Pty Ltd [2009] NSWCA 276; 76 NSWLR 379 at [70] (Beazley JA), [83] (Giles JA) and [103]-[104]. On the natural and ordinary meaning of s 68B(1), the exclusion clause did not fall within it and the effect of the exclusion clause was not saved with respect to a breach of the statutory warranty inserted by s 74(1). Accordingly, the appellant's claim to avoid liability, based on the exclusion clause, must fail. Civil Liability Act - recreational activities 22There are limitations imposed on liability in negligence for harm resulting from a recreational activity engaged in by the plaintiff: Civil Liability Act, Part 1A, Div 5. The appellant called in aid s 5M which, so far as relevant provides: 5M No duty of care for recreational activity where risk warning (1) A person (the defendant) does not owe a duty of care to another person who engages in a recreational activity (the plaintiff) to take care in respect of a risk of the activity if the risk was the subject of a risk warning to the plaintiff. 23For the reasons given by Gleeson JA, the requirement for a relevant "risk warning" was satisfied in the present case. The difficulties with the application of s 5M arise for different reasons. 24The first question is whether s 5M has an operation at all in respect of breach of a statutory warranty. Unlike ss 5I and 5L, this provision does not state that a person "is not liable in negligence" for particular harm suffered. Rather, it denies the existence of a duty of care. Whether it applies with respect to a duty arising under a contract is unclear. The language of 'owing a duty of care' tends to be used with respect to a tortious duty imposed by the law, rather than a contractual duty arising pursuant to an agreement, albeit an agreement certain terms of which are prescribed by law. That s 5M was intended to operate only with respect to a tortious duty is supported by the existence of s 5N, which deals separately with an exclusion clause in a contract. However, that effect of s 5M is uncontroversial: there is nothing in the Trade Practices Act which deprives such an exclusion clause of effect in relation to a tortious duty of care. 25Assuming, contrary to the view expressed above, that s 5M can operate to deny the existence of liability under a contract, the next question is whether it can deny the effect of a warranty implied pursuant to a Commonwealth statute. The question whether a State law can have such an operation may be addressed in three stages. The first step is to ask whether there is inconsistency between the State law and the federal law, for the purposes of s 109 of the Constitution. If there is, the State law will be, to that extent, invalid and will not be available in federal (or State) jurisdiction. If not invalid, there will be a question as to the mechanism by which the State law is held to apply in federal jurisdiction. The second step, which involves considering directly the question of federal jurisdiction, is to ask whether the State law is picked up by s 79 of the Judiciary Act, which supplements the conferral of jurisdiction on a State court by s 39(2) of the Judiciary Act and provides that the laws of the State shall "except as otherwise provided by the Constitution or the laws of the Commonwealth" be binding on all courts exercising federal jurisdiction in that State: s 79(1). A third approach is to apply s 80 of the Judiciary Act, which provides: 80 Common law to govern So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters. 26In Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; 67 NSWLR 9 at [41], after reviewing the relevant High Court authority, I concluded: "To deal with the constitutional question before dealing with the operation of s 79 may be seen as inconsistent with the general approach that constitutional questions be addressed last. Furthermore, in a practical sense, the order in which the questions are addressed is unlikely to be significant. Nevertheless, and despite the approach adopted in [Austral Pacific Group Ltd (In liq) v Airservices Australia [2000] HCA 39; 203 CLR 136], the authorities which expressly address the issue require this Court to consider, first, the proper construction of the State law and, secondly, whether, so construed, it is inoperative because of inconsistency with a Commonwealth law. The third step is to determine whether, even if not inconsistent with a Commonwealth law, it is nevertheless not 'picked up' by s 79, because a Commonwealth law otherwise provides." 27If s 5M did not purport to apply of its own force, no constitutional question arose. Where the question to be determined is not whether the common law applies, but whether a particular State statute applies, it may seem curious to commence with s 80, which is directed to the operation of the common law "as modified by the Constitution and by the statute law in force in the State". However, as explained by Gaudron J in The Commonwealth v Mewett [1997] HCA 29; 191 CLR 471 at 522, s 80 is a provision of Commonwealth law which may otherwise provide and to which s 79 is thus subject in its operation. This approach was adopted by the High Court in Blunden v Commonwealth [2003] HCA 73; 218 CLR 330 at [18] (Gleeson CJ, Gummow, Hayne and Heydon JJ). In any event, it is necessary to consider the interaction of s 5M and s 74(1). 28To avoid what appears to be an obvious inconsistency between a Commonwealth law which confers contractual rights and a State law which denies the existence of such rights, the appellant called in aid s 74(2A) of the Trade Practices Act: 74 Warranties in relation to the supply of services ... (2A) If: (a) there is a breach of an implied warranty that exists because of this section in a contract made after the commencement of this subsection; and (b) the law of a State or Territory is the proper law of the contract; the law of the State or Territory applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract. 29As noted above, provisions in Part 1A of the Civil Liability Act may deny the existence of a duty of care or may limit or preclude recovery for a breach of duty. Section 74(2A) in its terms accepts the operation of a State law which limits or precludes liability for breach, but commences with the assumption or precondition that there be a breach of an implied warranty, which in terms assumes the existence and operation of that warranty. Thus paragraph (a) is inconsistent with any law which purports to deny the existence of the warranty from which flows a duty and thus a possible breach. Yet s 5M, if it applies at all, applies to deny the existence of the duty. Accordingly, it is not a law picked up by s 74(2A), so as to derogate from the operation of s 74(1). 30This conclusion is reinforced by the further requirement in s 74(2A) that the State law must operate generally with respect to breaches of other terms of the contract. In other words, the kind of State law to which reference is made is a law which limits liability for breach of contract, such as a law which caps liability, makes provision for reduction of liability on account of contributory negligence or which apportions liability between tortfeasors. Section 5M is not a law of this kind. 31Section 74(2A) is a specific law permitting the operation of some State laws, but not others. If, by virtue of some other general law of the Commonwealth, the State law not picked up by s 74(2A) might be given some operation, on general principles, one would read down the effect of the general law, so as not to produce a different result from that flowing from the specific law. On that approach, it is not necessary to consider the operation of ss 79 or 80 of the Judiciary Act, nor s 109 of the Constitution. However, it may be shortly stated that no different result would flow if one were to consider the other provisions. Section 5M would not be picked up by s 80 so as to apply in federal jurisdiction because s 74(1) makes other provision in respect of the existence of a duty. The same result follows from the application of s 79. 32Although the appellant did rely on s 5M of the Civil Liability Act, no reliance was placed on s 5N, the provision in the Civil Liability Act equivalent to s 68B. In order to put in context the provisions which might exclude the operation of the implied warranty, it is desirable to note why that section does not apply. Section 5N provided: 5N Waiver of contractual duty of care for recreational activities (1) Despite any other written or unwritten law, a term of a contract for the supply of recreation services may exclude, restrict or modify any liability to which this Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. (2) Nothing in the written law of New South Wales renders such a term of a contract void or unenforceable or authorises any court to refuse to enforce the term, to declare the term void or to vary the term. (3) A term of a contract for the supply of recreation services that is to the effect that a person to whom recreation services are supplied under the contract engages in any recreational activity concerned at his or her own risk operates to exclude any liability to which this Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. ... (6) This section does not apply if it is established (on the balance of probabilities) that the harm concerned resulted from a contravention of a provision of a written law of the State or Commonwealth that establishes specific practices or procedures for the protection of personal safety. 33Despite the apparent willingness of the section to give effect to a Commonwealth law (see sub-s (6)), the reference to "any other written or unwritten law" in sub-s (1) should be understood as a reference to State law: Interpretation Act, s 12(1). Nor can such a term be avoided by an order under, for example, the Contracts Review Act 1980 (NSW): s 5N(2). The commencement date of s 5N was 10 January 2003, which suggests that it was intended to provide State support for the Commonwealth introduction of s 68B into the Trade Practices Act. There are, however, numerous respects in which s 5N does not mirror s 68B. For example, it is not limited to a particular provision or set of provisions implying warranties into a contract; nor is it limited to contracts entered into after the commencement of the section. Section 5N was not picked up by s 74(2A) because it was not a law which limited or precluded liability for breach of a term of a contract, but was a law which permitted a contract to make such provision: Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 78 NSWLR 641; 241 FLR 125 and 268 ALR 570 at [96] (in my judgment) and [144] and [153] (Sackville AJA); a conclusion accepted by the High Court on appeal, Insight Vacations Pty Ltd v Young [2011] HCA 16; 243 CLR 149 at [8] and [26]. Further, because it purports to cover the field addressed by s 68, it could only operate in federal jurisdiction subject to any Commonwealth law which otherwise provided: Judiciary Act 1903 (Cth), ss 79 and 80. Other matters 34With respect to other matters raised in the grounds of appeal, I gratefully adopt the reasoning of Gleeson JA. 35MEAGHER JA: I have had the benefit of reading in draft the reasons of Basten JA and Gleeson JA. I agree that the appeal should be dismissed with costs. My reasons for doing so may be stated briefly. In doing so I have not extracted the relevant statutory and contractual provisions which are set out in the reasons of Basten JA and Gleeson JA. 36The primary judge held that the appellant was liable for breach of a warranty that motorcycle tuition services would be rendered with due care and skill. That warranty was implied as a term of the contract for the provision of those services by s 74(1) of the Trade Practices Act 1974 (Cth). The respondent's reliance upon that term meant that his claim arose under federal law and involved the exercise by the District Court of federal jurisdiction conferred by s 39(2) of the Judiciary Act 1903 (Cth). The law which governed the exercise of that jurisdiction was to be identified in accordance with ss 79 and 80 of the Judiciary Act: Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; 223 CLR 251 at [8]. 37Section 79 of the Judiciary Act provides that the laws of a State shall, except as otherwise provided by the Constitution or "the laws of the Commonwealth", be binding on all courts exercising federal jurisdiction in that State in all cases to which they are applicable. The "laws of the Commonwealth" include s 80 which provides, so far as those laws are not applicable or their provisions are insufficient to carry them into effect, that "the common law in Australia" as modified by the Constitution and by the statute law in force in the relevant State shall "so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth" govern the State court exercising federal jurisdiction: The Commonwealth v Mewett [1997] HCA 29; 191 CLR 471 at 522, 544; Blunden v The Commonwealth [2003] HCA 73; 218 CLR 330 at [18]. As Gleeson JA observes, the parties did not address, either before the primary judge or in this Court, how the law governing their dispute was to be determined. 38In his claim for breach of contract the respondent relied upon the common law of contract as modified by s 74(1) of the Trade Practices Act. In its defence the appellant, also relying upon that common law, pleaded, as express terms of the relevant contract, the acknowledgement in cl 10 and the release and indemnity in cl 12. It also relied upon s 5M of the Civil Liability Act, which provides that a person does "not owe a duty of care to another person who engages in a recreational activity to take care in respect of a risk of the activity if the risk was the subject of a risk warning". By doing so it raised factual issues as to whether the respondent was engaged in a "recreational activity" and whether there had been a relevant "risk warning". In reply to the appellant's pleading of cll 10 and 12 as part of the contract, the respondent relied upon s 68 of the Trade Practices Act as rendering those provisions void. That reliance in turn raised for consideration the operation of s 68B(1), and a factual issue as to whether the contract sued upon was for the "supply of recreational services" within s 68B(2). 39On appeal these arguments gave rise to a number of issues which follow from the respondent's reliance upon the warranty implied by s 74(1). The first is whether the relevant contract between the parties was on terms which included cll 10 and 12. I agree with Gleeson JA that it is not necessary to determine this question if, as I consider to be the position, those provisions would have been rendered void by s 68. 40Whether those provisions were or would have been made void by s 68 or saved from the operation of that section by s 68B, depends upon the construction and application of those provisions and whether the relevant contract was for the supply of "recreational services". I agree for the reasons given by Gleeson JA that the subject matter of the contract, irrespective of whether it included cll 10 and 12, was the supply of "recreational services" as defined in s 68B(2). It was not controversial that as relied upon cll 10 and 12 would have the effect of excluding, restricting or modifying the appellant's liability for breach of the warranty implied by s 74 as to the exercise of due care and skill. Subject to the application of s 68B, those terms were rendered void to the extent that they had that effect: Ruaro v Ferrari [2007] FCA 2002 at [85]. 41It is then necessary to consider whether those terms are excluded from the operation of s 68 by s 68B. That section provides that a term of a contract for the supply of recreational services is not void "by reason only" that it purports to have or has an effect in relation to s 74 which would otherwise attract the operation of s 68 "so long as" two conditions are satisfied. The critical condition in the present case is that "the exclusion, restriction or modification is limited to liability for death or personal injury". I agree with Basten JA that the words "so long as" are to be construed as meaning "provided that". The "exclusion, restriction or modification" referred to in paragraph (d) is that which the relevant term in fact achieves or effects. It follows that s 68B only excludes the operation of s 68 in respect of a term which answers the description in s 68B(1)(a), (b) or (c) if the exclusion, restriction or modification made or effected by that term is limited to liability for death or personal injury. The exclusion, restriction or modification made or effected by cll 10 and 12 is not so limited because it extends to liability for property damage. The primary judge was right to conclude that the appellant could not rely upon the terms in those clauses, assuming they formed part of the contract, to limit or exclude its liability for breach of the term implied by s 74. 42The third question which arises is whether s 5M of the Civil Liability Act applies and is an answer to the respondent's claim in contract. That provision only applies to deny a duty of care owed to someone "who engages in a recreational activity" where the risk of that activity has been the subject of a "risk warning". I agree, for the reasons given by Gleeson JA, that the respondent was engaged in a "recreational activity" within the meaning of s 5K of the Civil Liability Act. The respondent conceded on appeal that he had been given a sufficient risk warning. 43The appellant did not argue that s 5M was picked up and applied as a surrogate federal law otherwise than by s 74(2A) of the Trade Practices Act. Specifically, it did not argue that it was picked up and applied by ss 79 or 80 of the Judiciary Act. As Basten JA points out, the application of those provisions would require consideration of whether s 5M was a law which was "applicable" and "not inconsistent" with the Trade Practices Act, within the meaning of s 80, and whether the Trade Practices Act, as a law of the Commonwealth, "otherwise" provided within the meaning of s 79. 44I agree, for the reasons given by Basten JA and Gleeson JA, that s 5M is not a law picked up and applied by s 74(2A). It does not limit or purport to limit or preclude liability for breach of a term of a contract providing for the exercise of due care and skill. Section 5M is concerned only with whether there is a duty of care owed to the person engaged in the recreational activity. Section 74(2A), on the other hand, assumes that there has been a breach of an implied warranty to exercise "due care and skill" in the supply of services to a customer and picks up a State law which limits liability for breach of such a term. 45The law governing the appellant's claim did not include s 5M. That being the position, it is not necessary to decide whether, as a matter of construction, s 5M is directed only to the existence of a duty of care arising in tort. 46The remaining issues in the appeal concern the finding of the primary judge that there was a breach of the implied warranty of due care and skill, and his findings concerning causation, contributory negligence and the award of non-economic loss. In relation to each of these issues I agree with the reasoning and conclusions of Gleeson JA. 47GLEESON JA: This is an appeal from a decision of Curtis DCJ in which his Honour found that the appellant, which traded under the name "The California Superbike School", breached an implied warranty contained in a contract with the respondent, Mr Kelly, that certain motorcycling tuition services would be rendered with due care and skill. This breach occurred when Mr Kelly collided with another motorcycle in the course of undertaking a motorcycling drill during a track session at Eastern Creek Racing Circuit on 6 December 2007. His Honour found that the appellant was liable in damages to Mr Kelly, but reduced the damages by 30 per cent for the contributory negligence of Mr Kelly and awarded damages in the sum of $368,445: Kelly v Motorcycling Events Group Australia Pty Ltd (District Court of New South Wales, Curtis DCJ, 6 July 2012, unreported). 48This appeal is primarily concerned with whether s 74(2A) of the Trade Practices Act 1974 (Cth) picked up and applied, as a surrogate federal law, provisions of the Civil Liability Act 2002, in particular s 5M (no duty of care for recreational activity where risk warning) to the contract between the appellant and Mr Kelly. 49This appeal also concerns an exclusion clause contained in a registration form signed by Mr Kelly immediately prior to participating in the services, and whether s 68B of the Trade Practices Act applied to qualify the general avoiding effect of s 68 of the Trade Practices Act in respect of such exclusion clause if it was a term of a contract for the supply of "recreational services". (As noted by Basten JA at [8], although Part V of the Trade Practices Act was repealed on 1 January 2011, the provisions in force immediately before that repeal continued to apply in relation to acts or omissions that occurred before that date.) 50The appeal also raises a challenge to the discretionary judgments of the primary judge in assessing the extent of contributory negligence of Mr Kelly, and the non-economic loss suffered by him.

Nature of the claim 51The amended statement of claim in the District Court pleaded a claim to damages relying on a cause of action in both contract and in tort. 52The contract claim relied upon an implied warranty that the services which the appellant supplied would be rendered "with due care and skill" within the meaning of that phrase in s 74(1) of the Trade Practices Act, which, at the relevant time, provided: "Warranties in relation to the supply of services 74(1) In every contract for the supply (otherwise than by way of competitive tender) by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied. ... (2A) If: (a) there is a breach of an implied warranty that exists because of this section in a contract made after the commencement of this subsection; and (b) the law of a State or Territory is the proper law of the contract; the law of the State or Territory applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract. ... ." 53There was an admission by the appellant on the pleadings of an agreement between the parties by which Mr Kelly agreed to pay a fee for and the appellant agreed to provide a Level II course as part of the California Superbike School; that the agreement was an agreement for services within the meaning of the Trade Practices Act; and that the implied warranty under s 74 was a term of the agreement. 54The appellant denied that it was negligent for it to permit riders on the track undertaking different levels of training courses at the same time, including much more experienced riders who are likely to ride at much higher speeds than Mr Kelly and would therefore overtake Mr Kelly at a high speed, giving rise to the risk of harm to Mr Kelly. 55The appellant relied, by way of defence, upon certain provisions of the Civil Liability Act to assert that it had no liability to Mr Kelly by reason of s 5I (materialisation of inherent risk) and s 5L (obvious risks of dangerous recreational activities), and that it did not owe a duty of care to Mr Kelly by reason of s 5M (recreational activity where risk warning). 56No attention appears to have been given by the parties at trial to the basis upon which these provisions of the Civil Liability Act were applicable to Mr Kelly's contract claim, although the primary judge did refer (at [26]) to s 74(2A) of the Trade Practices Act in the context of noting that s 5N was inapplicable. 57The appellant also relied upon an exclusion clause in a registration form signed by Mr Kelly, to suggest that it was not liable for any personal injury caused by the appellant's want of care. 58As to the exclusion clause, Mr Kelly contended that it was not incorporated as a term of the contract and, in any event, it was rendered void by s 68 of the Trade Practices Act, which provided: "68 Application of provisions not to be excluded or modified (1) Any term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) that purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Division; (b) the exercise of a right conferred by such a provision; (c) any liability of the corporation for breach of a condition or warranty implied by such a provision; or (d) the application of section 75A; is void. ... ." 59The appellant contended that the exclusion clause was a term of the contract, that the services provided to Mr Kelly were "recreational services" as defined in s 68B(2) of the Trade Practices Act and that the exclusion clause was effective by reason of s 68B, which qualified the general avoiding effect of s 68 of the Trade Practices Act. Section 68B provided: "68B Limitation of liability in relation to supply of recreational services (1) A term of a contract for the supply by a corporation of recreational services is not void under section 68 by reason only that the term excludes, restricts or modifies, or has the effect of excluding, restricting or modifying: (a) the application of section 74 to the supply of the recreational services under the contract; or (b) the exercise of a right conferred by section 74 in relation to the supply of the recreational services under the contract; or (c) any liability of the corporation for a breach of a warranty implied by section 74 in relation to the supply of the recreational services under the contract; so long as: (d) the exclusion, restriction or modification is limited to liability for death or personal injury; and (e) the contract was entered into after the commencement of this section. (2) In this section: ... injury means any physical or mental injury. personal injury means: (a) an injury of an individual (including the aggravation, acceleration or recurrence of an injury of the individual); or (b) the contraction, aggravation, acceleration, or recurrence of a disease of an individual; or (c) the coming into existence, the aggravation, acceleration or recurrence of any other condition, circumstance, occurrence, activity, form of behaviour, course of conduct or state of affairs in relation to an individual that is or may be harmful or disadvantageous to, or result in harm or disadvantage to: (i) the individual; or (ii) the community. recreational services means services that consist of participation in: (a) a sporting activity or a similar leisure-time pursuit; or (b) any other activity that: (i) involves a significant degree of physical exertion or physical risk; and (ii) is undertaken for the purposes of recreation, enjoyment or leisure. (3) The definition of injury in subsection (2) does not, by implication, affect the meaning of the expression injury when used in a provision of this Act other than this section."

The judgment below 60The primary judge commenced his reasons with a description of the appellant's business which teaches motorcycle cornering skills with courses held at Phillip Island or Eastern Creek Racing Circuits. These courses are conducted in four stages, described on its website as Level I, Level II, Level III and Level IV. Each stage occupied one whole day of tuition, comprising five classroom sessions and five track sessions. 61The respondent, Mr Kelly, had completed a Level I course on 29 October 2007. On 21 November 2007, his daughter booked and paid for attendance at the Level II course for 6 December 2007. This booking was made via the internet. It was during the second track session of this Level II course that Mr Kelly, when crossing from one side of the track to the other, was struck by a motorcycle ridden by another student attending the Level III course and suffered very serious injuries. 62The primary judge described the circumstances of the accident in the following terms: "6. In the course of the drill upon which he was engaged, Mr Kelly was instructed to ride on the far left hand side of the course, while closely observing the track in front of him. His rear vision mirrors were masked "to assist concentration". His speed was restricted to 60 km/h. After one lap, he was to cross from the extreme left hand side of the course to the extreme right-hand side and continue his observations. 7. In order to complete this task it was necessary for Mr Kelly to cross the path of other riders concurrently participating in a Level III drill at speeds of up to 120 km/h. In the course of the crossing he was struck by one of these riders, then travelling at a speed in excess of 100 km/h. 8. Mr Kelly complains that the Level III students should not have been permitted onto the track at the same time as the Level II students. 9. Mr Steven Brouggy, the managing director and sole shareholder of the defendant, conceded in evidence that the defendant's system gave rise to a foreseeable risk of injury. The school no longer permits other riders on the track when Level II students are conducting this drill." 63The primary judge noted (at [12]) that it was common ground that Mr Kelly was also at fault. This was because Mr Kelly had turned abruptly into the path of the motorcycle that struck him and had been warned of the presence of other faster riders on the track and told to look out for them. He had ignored instructions to cross the track gradually, after passing turn 1 of the track, at which place the riders at the Level III course had been warned to expect the deviation of the slower riders. 64The primary judge stated (at [14]) that it was not necessary to consider the claim in negligence because the relationship between the parties was contractual. The primary judge reasoned that if the exclusion clause was effective, Mr Kelly had waived his right to sue and could not succeed in negligence in any event. Alternatively, if the exclusion clause was ineffective, he could rely upon the warranty of due care and skill implied by s 74 of the Trade Practices Act and need only prove the same facts as would establish the cause of action in negligence. 65Although the primary judge referred (at [11]) to the appellant's reliance on various provisions of the Civil Liability Act, he did not go on to consider the application of these provisions as a defence to the respondent's claim; in particular, the "risk warning" defence raised under s 5M. This appears to be a consequence of the primary judge only considering the contract claim and not considering that s 5M might apply to such a claim.

The contract claim 66The primary judge referred to the terms of the appellant's Policies Sheet accepted by Mr Kelly's daughter when she booked the Level II course on the appellant's website on 21 November 2007, and the terms of the registration form which Mr Kelly received by post a few days later. Mr Kelly completed and signed the registration form on 6 December 2007, before participating in the Level II course during which he was injured. 67The registration form contained the following heading and terms: "ACKNOWLEDGEMENT OF DANGER AND RELEASE FROM LIABILITY ... 3. The Applicant/Guardian knows that motorcycle activity/riding is a dangerous recreation and that participation in the activities of the Motorcycling Events Group Australia trading as California Superbike School at above will expose the Applicant to the risk of serious injury or death. This possibility of injury or death can happen because of mechanical equipment failure, the Applicant's own actions while riding, track and weather conditions, the actions or failures to act of other people, including other riders on the track with the Applicant, or any combination of these or other factors. 4. The Applicant/Guardian recognises that the Applicant may be injured or killed as a result of the Applicant's own or someone else's negligence, either active or passive or by an equipment failure of the sort which would permit suit against a manufacturer or supplier on a theory of strict (product) liability. 5. The Applicant/Guardian hereby applies to the proprietor of Motorcycling Events Group Australia trading as California Superbike School, its servants, agents, executors, heirs and assigns which includes all employees, tutors, marshals, rescue personnel and agents to partake at the event herein. ... 10. In addition, by signing this agreement and participating in the activities as student/ride day participant of the Motorcycling Events Group Australia trading as California Superbike School, the Applicant/Guardian acknowledges that the Applicant is prepared to take the Applicant's chances of injury, death or property damage, and assume the risk that the Applicant may be injured or killed while participating in the school or ride day activities. ... 12. The Applicant/Guardian hereby releases and indemnifies Motorcycling Events Group Australia trading as California Superbike School and all persons referred to in 5 & 6 above from any claims or liability for death, personal injury or property damage howsoever caused, as a condition of acceptance to partake in the event. ... 16. The Applicant/Guardian knows that the Applicant/Guardian must sign this contract before the Applicant may participate in any of the activities Motorcycling Events Group Australia trading as California Superbike School at above or elsewhere. The Applicant/Guardian is hereby inform if the Applicant does not wish to sign this agreement, and therefore not participate in the school/ ride day activities, the Applicant is entitled refund of any tuition or fees which the Applicant has paid, less a $25.00 processing charge. 17. IN CONSIDERATION of being permitted to compete, officiate, observe, work for, or participate in any way the EVENT(S) or being permitted to enter for any purpose any RESTRICTED AREA (defined as any area requiring special authorisations, credentials, or permission to enter any area to which admission by the general public is restricted or prohibited), EACH OF THE UNDERSIGNED, for herself/himself, her/his personal representatives, heirs and next of kin agree to be bound by this Agreement. This document was signed freely and voluntarily relating to the school/ride day to be held as above." 68The primary judge noted (at [21]) that counsel for Mr Kelly contended that the contract was completed before he signed the release on 6 December 2007, and therefore the release in cl 12 of the registration form was not a term of the contract. The primary judge considered that it was unnecessary to decide that question if the release was ineffective in any event. He then addressed whether Mr Kelly was bound by the release. The primary judge (at [23]) rejected Mr Kelly's submission that the activity he was engaged in was not "recreational", within the meaning of the expression "recreational services" in s 68B(2) of the Trade Practices Act. However, he held that s 68B was inapplicable because the exclusion clause was not limited to liability for death or personal injury; it also covered liability for "property damage". Thus s 68 operated to render the release void. 69On the issue of breach of contract, the primary judge found (at [29]) that the appellant breached the implied warranty that the services would be rendered with due care because it caused Level III riders to ride on the track at Eastern Creek at the same time as Mr Kelly, at speeds greatly in excess of the speed at which Mr Kelly was instructed to travel. 70On the issue of causation, the primary judge found (at [30]) that Mr Kelly's actions in turning suddenly, in the wrong place, and in disregard of the presence of the approaching Level III rider was a cause of his accident, but went on to find (at [31]) that the appellant's system of permitting faster riders on the track was also a cause of Mr Kelly's injury. 71The primary judge (at [41]) apportioned culpability of 70 per cent to the appellant and 30 per cent to Mr Kelly. 72The primary judge determined (at [50]) pursuant to s 16 of the Civil Liability Act that the damages to be awarded to Mr Kelly for non-economic loss should be 50 per cent of the most extreme case ($442,000) and allowed $221,000, before the reduction for 30 per cent contributory negligence. No issue arises on appeal in relation to the other items of loss and damage.

Issues on appeal 73The appellant raised six grounds of appeal which in turn raised various sub-issues. Grounds 1(a)(i) (relating to assumption of risk under Div 4 of Pt 1A of the Civil Liability Act) and (ii) (relating a dangerous recreational activity: s 5L of the Civil Liability Act) were not pressed during the hearing. The respondent relied upon five grounds in its amended notice of contention. The grounds of appeal that were pressed raised the following issues: (1)Reliance on clauses in the registration form (cl 3 and cl 4) and oral instructions given to riders in the Level II group, operating as a risk warning which negated a duty of care, because s 74(2A) of the Trade Practices Act picked up and applied, as a surrogate federal law, s 5M of the Civil Liability Act to the contract for services. (2)Reliance on clauses in the registration form (cl 10 and cl 12) as a term of a contract for the supply of recreational services within s 68B of the Trade Practices Act, to exclude, restrict or modify the application of s 74 in respect of death or personal injury. (3)Factual challenges to the negligence finding in relation to the breach of the implied warranty of due care and skill (including complaint that in applying s 74(2A) of the Trade Practices Act, the requirements of s 5B of the Civil Liability Act must be addressed). (4)Causation of injury. (5)Challenge to the apportionment of culpability (including whether the principles in s 5C of the Civil Liability Act applied). (6)Challenge to the assessment of non-economic loss.

The character of the jurisdiction - federal jurisdiction 74The written submissions of the parties approached the question of whether certain provisions of the Civil Liability Act applied to the respondent's claim, solely by reference to s 74(2A) of the Trade Practices Act. Those submissions paid no attention to the identification of the character of the jurisdiction being exercised by the Court - whether State or federal. The issue of federal jurisdiction was referred to in passing by the appellant in its oral submissions. The respondent did not make any oral submissions on this issue. 75The identification of the character of the jurisdiction being exercised by the Court - whether State or federal - is important as it may affect the law applicable to the controversy: CSL Australia Pty Ltd v Formosa [2009] NSWCA 363; (2009) 261 ALR 441 at [22] (Allsop P, Basten JA and Handley AJA). 76As explained in CSL Australia Pty Ltd v Formosa at [24], where this Court is exercising federal jurisdiction by reason of s 39(2) of the Judiciary Act 1903 (Cth), the law to be applied will be a law (whether Commonwealth, State or general law) which operates in federal jurisdiction by virtue of a law of the Commonwealth Parliament. The relevant provisions are to be found in s 79(1) and s 80 of the Judiciary Act, which provide: "79 State or Territory laws to govern where applicable (1) The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable." [Emphasis added]. "80 Common law to govern So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters." [Emphasis added]. 77A matter will arise in federal jurisdiction if "a party on either side of the record relies upon a right, immunity or a defence derived from a federal law": Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251 at [32] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. Thus, in Edwards v Santos Ltd [2011] HCA 8; (2011) 242 CLR 421, French CJ, Gummow, Crennan, Kiefel and Bell JJ agreed with Heydon J at [45] that: "While claim to damages for breach of contract is a claim for relief under State law, if the contract is in respect of a right which is a creature of federal law, the claim arises under the federal law. This is so whether the State law is common law, like the law of contract or statute law ...". 78Since the respondent sought, in the present case, to rely upon the statutory warranty created by s 74(1) of the Trade Practices Act, a law of the Commonwealth, the District Court was exercising federal jurisdiction within the terms of s 76(ii) of the Commonwealth Constitution: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9 at 21 [32] per Basten JA. The exercise of federal jurisdiction, in a case such as the present, was explained by the High Court in Austral Pacific Group Limited (in liq) v Airservices Australia [2000] HCA 39; (2000) 203 CLR 136 at 141 per Gleeson CJ, Gummow and Hayne JJ in the following terms: "[9] The claim in contract for damages for breach of obligations imposed by provisions such as ss 71 and 74 of the Trade Practices Act involved obligations that are statutorily created and take effect by a legal fiction, namely that the parties made a contract including the relevant obligations. That is how Brennan J analysed the matter in Arturi v Zupps Motors Pty Ltd. It follows that a party claiming damages for breach of such an obligation asserts a right which owes its existence to federal law [LNC Industries Ltd v BMW (Aust) Ltd [1983] HCA 39; (1983) 151 CLR 575 at 581] thereby, in a State court, attracting the exercise of federal jurisdiction invested under s 39(2) of the Judiciary Act." 79The investment of the District Court with federal jurisdiction, enlivened s 79 and s 80 of the Judiciary Act. The operation of these provisions with respect to various provisions of the Civil Liability Act, is considered below.

Risk warning - ground 1(a)(ii) 80The appellant submitted that cl 3 and cl 4 of the registration form (set out at [67] above) and the oral instructions given to riders in the Level II group, including the respondent, constituted a "risk warning" to the respondent in respect of a "recreational activity" as referred to in s 5M of the Civil Liability Act. The oral instructions included to only change line on the track between turns 1 and 2; to be careful as there were faster riders on the track; and to avoid sudden changes of direction without first checking for other riders by looking over one's shoulder. The appellant next submitted that it did not owe a duty of care to the respondent in respect of the risk of that activity because s 5M of the Civil Liability Act was picked up and applied, as a surrogate federal law, by s 74(2A) of the Trade Practices Act to the contract with the respondent. 81Section 5M of the Civil Liability Act provides: "5M No duty of care for recreational activity where risk warning (1) A person (the defendant) does not owe a duty of care to another person who engages in a recreational activity (the plaintiff) to take care in respect of a risk of the activity if the risk was the subject of a risk warning to the plaintiff. ... (3) For the purposes of subsections (1) and (2), a risk warning to a person in relation to a recreational activity is a warning that is given in a manner that is reasonably likely to result in people being warned of the risk before engaging in the recreational activity. The defendant is not required to establish that the person received or understood the warning or was capable of receiving or understanding the warning. (4) A risk warning can be given orally or in writing (including by means of a sign or otherwise)." 82"Recreational activity" is defined in s 5K of the Civil Liability Act as follows: "recreational activity includes: (a) any sport (whether or not the sport is an organised activity), and (b) any pursuit or activity engaged in for enjoyment, relaxation or leisure, and (c) any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people ordinarily engage in sport or in any pursuit or activity for enjoyment, relaxation or leisure." 83The respondent accepted on appeal the first step of the appellant's submission that the respondent was given a sufficient "risk warning" for the purposes of s 5M, particularly from the oral instructions given to the riders in the Level II group by the appellant. However, the respondent disputed the second step in the appellant's submission for two reasons. First, that as a matter of construction, s 74(2A) of the Trade Practices Act did not pick up and apply, as a surrogate federal law, s 5M of the Civil Liability Act to the contract for services to the respondent. Secondly, that the respondent was not engaged in a "recreational activity" as defined in s 5K of the Civil Liability Act. 84As previously noted, the primary judge did not address in his reasons the appellant's defence based on s 5M of the Civil Liability Act, although he did reject (at [23]) the respondent's submission that the activity in which he was engaged was not "recreational", in the context of the definition of "recreational services" in s 68B(2) of the Trade Practices Act.

(a) Section 5M, Civil Liability Act 85Section 5M, along with the other provisions of Div 5 of Pt 1A of the Civil Liability Act were introduced into the Act by the Civil Liability Amendment (Personal Responsibility) Act 2002 (s 3 and Sch 1, item 1). Those provisions are directed to liability arising from a "recreational activity" as defined in s 5K, which is set out at [82] above. 86Division 5 of Pt 1A of the Civil Liability Act applies "only in respect of liability in negligence for harm to a person (the plaintiff) resulting from a recreational activity engaged in by the plaintiff" (s 5J(1)). The term "negligence" is defined in s 5 as "failure to exercise reasonable care and skill". Since Pt 1A of the Civil Liability Act applies "to any claim for damages for harm resulting from negligence" (s 5A), no matter how the claim is framed, the consequence is that Div 5 of Pt 1A can be engaged in respect of claims in contract: Insight Vacations Pty Ltd v Young [2011] HCA 16; (2011) 243 CLR 149 at [18]. A claim for damages for breach of the implied warranty in s 74(1) of the Trade Practices Act is properly viewed as a claim for damages for breach of contract: Arturi v Zupps Motors Pty Ltd [1980] FCA 164; (1980) 49 FLR 283; Wallis v Downard-Pickford North Queensland Pty Ltd [1994] HCA 17; (1994) 179 CLR 388 at 396. 87The terms of s 5M of the Civil Liability Act are set out at [81] above. The language of s 5M, "... does not owe a duty of care ..." is expressly directed to negating any duty, rather than limiting or excluding liability for a breach of duty. This language may be contrasted with that used in s 5L (relating to obvious risks of dangerous recreational activities), "... is not liable in negligence for harm suffered by another person ...", which assumes the existence of a duty of care, but excludes liability for breach. The different language of these provisions is significant. 88These two provisions are directed to different circumstances. The language of s 5M, negating a duty of care, reflects the context of its subject matter, namely an anterior risk warning having been given to the plaintiff to take care in respect of a risk of the recreational activity. Such a risk warning has the effect of negating any duty of care owed to the plaintiff in respect of the risk the subject of that warning. By contrast, provisions such as s 5L (relating to obvious risks of dangerous recreational activities) are framed in terms of excluding liability arising in negligence for harm to a person in the specified circumstances.

(b) The operation of s 74(2A) Trade Practices Act 89The operation of s 74(2A) of the Trade Practices Act was considered by the High Court in Insight Vacations Pty Ltd v Young at [10]-[13] and [21]-[26], in the context of whether s 74(2A) picked up and applied s 5N(1) of the Civil Liability Act, with the consequence that an exemption clause could be given effect in relation to a contract for the supply of services constituted by a European holiday package. 90In this Court, in Insight Vacations Pty Ltd v Young it was held that s 74(2A) did not pick up and apply s 5N because the latter was not a provision that of itself limited or precluded liability; instead it merely authorised a contractual provision limiting or precluding liability for breach of the implied statutory warranty in a contract for supply of recreational services: Insight Vacations Pty Ltd v Young [2010] NSWCA 137 at [96] per Basten JA and [153] per Sackville AJA; contra Spigelman CJ at [30]. The High Court upheld this reasoning (at [26]) and the outcome on the additional basis, that s 5N did not apply to contracts for services to be performed wholly outside New South Wales (at [35]). 91The terms of s 74(2A) of the Trade Practices Act are set out above. The provision requires the satisfaction of the two conditions stated in (a) and (b) of s 74(2A), namely, that there has been a breach of the warranty implied by operation of s 74(1) into a contract for the supply of services, and that the law of New South Wales is the proper law of that contract. 92As explained by the plurality in Insight Vacations (at [12]), the consequence of satisfaction of those two conditions is that s 74(2A) picks up and applies, as a surrogate federal law, a relevant law of New South Wales that meets the description given in s 74(2A); namely, a law of that State that "applies to limit or preclude liability for the breach, and the recovery of that liability ... in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract" (that is, a term of the contract other than the term implied by s 74(1)). 93The matters identified in the two preceding paragraphs give rise to the question whether s 74(2A) may operate to pick up and apply a State law which purports to negate the very existence of the statutory warranty in s 74(1). In Insight Vacations v Young, Sackville AJA at [144] expressed the view, in the context of s 5N of the Civil Liability Act, that the language of s 74(2A) was not apt to do so. His Honour reasoned (at [146]) that the language of s 74(2A) appears to require the existence of the implied warranty and a breach of that warranty before the provision applies a State law. A similar view was expressed by Basten JA at [103]. These views were implicitly confirmed by the High Court's statement in Insight Vacations (at [11]-[12]) that the conditions stated in (a) and (b) of s 74(2A) must be satisfied for the section to be engaged. 94The relevant distinction identified by the majority in this Court in Insight Vacations v Young, is between a State law that merely limits or precludes liability for breach of the warranty implied by s 74(1), and a State law which purports to negate the very existence of the statutory warranty. Although the views of Sackville AJA and Basten JA in Insight Vacations v Young were strictly obiter, they are consistent with the High Court's subsequent view of s 74(2A) in Insight Vacations. In my view, they ought to be followed and applied in the present case. 95Section 5M of the Civil Liability Act does not meet the description given in s 74(2A) of the Trade Practices Act. By its terms, s 5M is a State law which negates the very existence of a duty of care owed to the person engaged in the recreational activity. It does not limit or purport to limit or preclude liability for breach of a term of a contract providing for the exercise of due care and skill. 96It follows that s 74(2A) does not operate to pick up and apply s 5M of the Civil Liability Act, as a surrogate federal law, applicable to the contract in the present case. This is sufficient to dispose of the appellant's contention that because a risk warning was given, s 5M provides a statutory defence to the respondent's claim for damages for breach of the implied warranty in s 74(1) of the Trade Practices Act.

Is s 5M limited to a tortious duty of care? 97Another argument which was raised during oral submissions against the application of s 5M in the present case, was that s 5M might be construed as only directed to a duty of care arising in tort, and as not extending to a contractual duty of care, including a duty arising under the implied warranty. It is unnecessary to resolve this question for the purposes of this appeal. This is because the appellant did not put its case on the basis that s 5M directly negated the implied warranty under s 74(1) of the Trade Practices Act in a way which precluded the existence of the implied warranty in s 74(1). 98Rather, the appellant's submissions accepted the existence of the implied warranty under s 74(1) and, for the purposes of the argument, the primary judge's finding of breach of that warranty, but contended that by virtue of s 74(2A), s 5M operated to preclude or limit liability for breach of the implied warranty. The appellant did not, nor could it contend that s 5M negated the very existence of the implied warranty under s 74(1) of the Trade Practices Act without raising a direct inconsistency argument under s 109 of the Constitution. The appellant did seek to not raise such an argument.

(c) Recreational activity 99The respondent's amended notice of contention raised the issue of whether the activity in which the respondent was engaged was a "recreational activity" within the meaning of s 5K of the Civil Liability Act. The primary judge did not determine this issue as his finding (at [23]) was restricted to the application of s 68B of the Trade Practices Act to the contract, and in particular the definition of "recreational services". As previously noted, the definition in s 68B is in slightly different terms to the definition of "recreational activity" in s 5K of the Civil Liability Act. 100The respondent submitted that the activity of teaching motorcycling skills was a serious business and that such instruction was not a recreational activity. In my opinion, this submission should be rejected. The respondent was engaged in a recreational activity. 101First, it will be observed that the expression "recreational activity" is broadly defined in inclusive terms in s 5K of the Civil Liability Act. Although in Belna Pty Ltd v Irwin [2009] NSWCA 46, Ipp JA (at [15]) (McColl JA and Handley AJA agreeing) refrained from expressing an opinion as to whether the definition is intended to be exhaustive, it is unnecessary, in the present case, to look beyond the express terms of the definition. 102Secondly, the emphasis in the definition in s 5K is on engaging in the relevant pursuit or activity for the purposes of enjoyment, relaxation or leisure. 103Thirdly, the goal of the activity is relevant in determining whether the activity is or is not a recreational activity: Belna Pty Ltd v Irwin at [14]. In that case, Ipp JA (McColl JA and Handley AJA agreeing) relied upon a questionnaire in which the plaintiff described her short-term goals in undertaking the exercise program as being to "enjoy life" as a basis for finding the program fell within s 5K(b) of the definition of "recreational activity". 104Fourthly, the respondent submitted that regard must be had to the particular activities engaged in by the plaintiff at the relevant time. This may be accepted. The respondent's purposes in undertaking the course were conceded on appeal to be relevant (AT tcpt, p 31, lines 20-27). There was a finding by the primary judge (at [24]) that the respondent wanted to update his skills to become more efficient in cornering when undertaking recreational rides with his wife on weekends. The particular activity engaged in by the respondent at the relevant time was practising a cornering drill on the Eastern Creek racetrack. The fact that the drill was preceded by classroom tuition and that one of the teachers was following on the track behind the respondent does not detract from the ordinary and general description of motorcycle riding at a racetrack as being a "recreational activity". The respondent had been riding motorbikes for about 42 years. His aim in undertaking the Level II course was to obtain skills to equip him for the enjoyment of leisure-time activities when riding on country roads. 105In my view, the respondent was clearly engaged in the activity for enjoyment or leisure within the definition of "recreational activity" in s 5K(b). 106It is unnecessary to consider the potential application of s 5K(c) of the definition of "recreational activity". It should be noted however, that the respondent's submission that Eastern Creek Raceway was not a public open space is not determinative. In Belna Pty Ltd v Irwin at [16] Ipp JA held that the parenthetical words in (c) of the definition did not confine the general meaning of the other words in that paragraph. Clearly, the introductory parenthetical words "such as" are not intended to be exhaustive.

Exclusion clause - ground 1(b) 107The appellant relied upon the exclusion of liability in cl 10 and cl 12 of registration form (see [67] above). The primary judge did not expressly consider cl 10, but noted (at [25]) in relation to cl 12, that it was not limited to liability for death or personal injury; it also purported to exclude property damage. For this reason, the primary judge found that the clause did not satisfy the conditions of s 68B of the Trade Practices Act, and thus was rendered void by s 68 of the Trade Practices Act. 108The appellant submitted that the primary judge misconstrued s 68B of the Trade Practices Act and that it should be read as applying severably so that the exclusion of liability remained effective insofar as it excluded liability in respect of "personal injury". 109The appellant conceded on appeal (AT tcpt p 24, lines 19-24) that putting a "blue pencil" through the words "or property damage" in cl 10 would involve rewriting the clause and would not be permissible. This concession must equally apply to cl 12, which also contains the words "or property damage". 110The appellant sought to uphold the effectiveness of cl 10 and cl 12 in two ways. First, the appellant submitted that cl 10 can be read separately so that one could divide up the last phrase "and assume the risk that the applicant may be injured or killed while participating in the school or ride day activities" from the rest of the clause. 111The appellant's submission suffered from the difficulty that standing alone, this collection of words in cl 10 (relating to an assumption of risk), could not be given any sensible meaning as having the effect of only excluding liability for death or personal injury, applying ordinary principles of construction in relation to the operation of exclusion clauses: see Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500. Ultimately, the appellant did not press its submission that cl 10 could be read as if it included only the words "assume the risk ..." (AT tcpt p 25, lines 36-39). 112Secondly, the appellant submitted that s 68B of the Trade Practices Act should be construed so that the expression "so long as" in s 68B(1) really meant "to the extent that", and on this basis, cl 10 and cl 12 should be construed as not being void to the extent that they excluded liability for death or personal injury. 113The respondent submitted that the primary judge did not err in concluding that s 68B of the Trade Practices Act did not apply to cl 12, and implicitly also to cl 10, because the exclusion clause was not limited to liability for death or personal injury. 114The respondent further submitted that s 68B of the Trade Practices Act had no operation because the activity in which the respondent was engaged was not "recreational services" within the meaning of s 68B(2). The respondent also submitted that the registration form itself, which contained the exclusion clause relied upon by the appellant, was not part of the contract.

Consideration 115The effect of s 68B is to qualify the general avoiding effect of s 68(1) of the Trade Practices Act in respect of a term of a contract for the supply of "recreational services" by excluding from the general avoiding effect a term that excludes, restricts or modifies the application of s 74 in respect of death or personal injury: Insight Vacations at [25].

"So long as" 116The manner in which s 68B is to operate in relation to a term of a contract which excludes, restricts or modifies, or has that effect in relation to the application of s 74 to the contract, is expressed to be "so long as" the exclusion, restriction or modification is "limited to liability for death or personal injury". The words "so long as" are words of limitation which impose a requirement that the relevant term of the contract "is limited to", that is, do no more than exclude, restrict or modify liability for death or personal injury. 117If the qualification of the general avoiding effect of s 68(1) which s 68B(1) provides for was intended to have a broader operation such that a term excluding, restricting or modifying the application of s 74 to the contract was void only to the extent that the exclusion, restriction or modification related to liability otherwise than for death or personal injury, then the words "so long as" would be most inappropriate to achieve that result. The language appropriate to achieve such a wider excision from the operation of s 68(1) would have been words such as "insofar as" or "to the extent that" in place of the words "so long as". 118The construction of s 68B outlined above may be contrasted with the construction given to the operation of s 68(1) of the Trade Practices Act: see Ruaro v Ferrari [2007] FCA 2022 at [52] and [85] per Emmett J; Renehan v Leeuwin Ocean Adventure Foundation Ltd [2006] NTSC 4; (2006) 17 NTLR 83 at [81]; Qantas Airways Ltd v Aravco Ltd [1996] HCA 12; (1996) 185 CLR 43. Those cases hold that s 68(1) has the effect to render a term of a contract void only to the extent that it modifies the operation of, relevantly, s 74. The reasoning given in these authorities is that s 68(1) does not strike down valid contractual arrangements except insofar as the arrangements purport to or have the effect of excluding, restricting or modifying the benefits intended to be conferred by provisions such as s 74. These authorities were referred to by the High Court, without disapproval, in Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 at 405 [30], in relation to the meaning of the word "provision" in s 45(1) of the Insurance Contracts Act 1984 (Cth). 119The contrary view of s 68(1), that it has the effect to render the entire term "void" not just void "to the extent that" it purports to have the effect of excluding, restricting or modifying the application of, relevantly, s 74, has been suggested by Taperell, Vermeesch and Harland, Trade Practices and Consumer Protection, 3rd ed, Butterworths at [1745]. The reason given by those authors is the absence of the words "to the extent that" in s 68(1). That view was adopted by Beech-Jones J in Nair-Smith v Perisher Blue Pty Ltd [2013] NSWSC 727 at [93]. 120It is unnecessary for this appeal to express a view concerning this difference of opinion in relation to s 68(1) and the effect of its operation. It is sufficient to note that the approach taken to s 68(1) in the authorities referred to above, which renders a "term" of a contract void only to the extent that it modifies the operation of, relevantly, s 74 is not open in relation to s 68B. This is because the language of the latter provision imposes a requirement that the relevant term does no more than exclude, restrict or modify liability for death or personal injury.

What do the terms provide for? 121It is next necessary to identify what the relevant terms of the registration form provide for, when considering the effect of the operation of s 68B in the present case. The form of words used and their collection in one clause does not mean that there is only one term in cl 10 and cl 12 respectively: see BAT Industries plc v Qantas Airways Limited [1994] ATPR 41-354 at 42,625 per Giles J. 122As to cl 10 of the registration form, it provides for two things: an acknowledgement that the respondent is prepared to take his chances of injury, death or property damage and an assumption of the risk that he may be injured or killed whilst participating in the relevant activities. 123As to cl 12 it also provides for two things: a release and an indemnity, but in each case the subject matter is the same, namely any claims or "liability for death, personal injury or property damage". 124In the case of the acknowledgment in cl 10 and the release and indemnity provided for in cl 12, the exclusion, restriction or modification referred to that is sought to be given effect to by the term in question is not limited to liability for death or personal injury. In each case, the exclusion, restriction or modification extends to liability for property damage. 125The possible separate operation of a term in cl 10 relating to the assumption of risk that the respondent may be killed or injured does not arise, as the appellant conceded that these words could not be given any sensible meaning separate from the remainder of cl 10: see [109] above. That concession was properly made. Standing alone these words cannot be construed as an exclusion, restriction or modification of the application of s 74 in respect of death or bodily injury: compare Lormine Pty Ltd v Xuereb [2006] NSWCA 200 at 18-20 per Mason P (McColl JA and Hunt AJA agreeing). 126It follows that the relevant terms in cl 10 and cl 12 of the registration form are not saved by s 68B of the Trade Practices Act, and accordingly are rendered void by s 68 of the Trade Practices Act.

Recreational services - s 68B(2) 127The respondent's amended notice of contention raised the issue of whether the appellant supplied "recreational services" within the meaning of s 68B of the Trade Practices Act. The respondent contended that contrary to the primary judge's finding (at [23]), the contract between the appellant and the respondent was not for the supply of recreational services. The submissions on this issue were similar to those considered above in relation to the meaning of "recreational activity" in s 5K of the Civil Liability Act, but it should be noted that the latter provision is in slightly different and wider terms to the definition of "recreational services" in s 68B(2). 128The definition of "recreational services" in s 68B(2) of the Trade Practices Act is set out at [59] above. The definition is inclusive, having regard to the use of the descriptor "means". 129The reference in the definition to "services that consist of participation in" the identified activities is somewhat awkward. It is difficult to determine the sense in which a corporation supplies services that "consist of participation in" a sporting activity or other designated activity. In my view, this must be taken to have been intended to be as a reference to participation by the customer, rather than the corporation. 130It was submitted that the course being undertaken by the respondent was not conducted on a public open space and was not being engaged in by the respondent for enjoyment, relaxation or leisure, nor was it a sport. The fact that an activity is not conducted on a public open space is not determinative. As to the purpose for which the respondent engaged in the activity, as already noted, counsel for the respondent conceded that this was relevant, and this was the subject of a finding by the trial judge which is not challenged. 131The primary judge found (at [24]) that the respondent used his motorcycle for recreation on weekends and noted the respondent's evidence that he attended the course because he wanted to update his skills. This was a reference to the respondent's evidence that the object of doing the skills course was so that he could become more efficient in cornering when riding on country roads. In my view, the primary judge did not err in having regard to the nature and purpose of the activity in which the respondent was engaged, when determining whether or not it came within the definition of "recreational services" supplied by the appellant. 132In s 68B(2)(a) of the definition of "recreational services", primary emphasis is given to the nature of the activity, being either a "sporting activity" or a "similar leisure-time pursuit". In s 68B(2)(b), emphasis is given to both the nature of the activity, relevantly one which involves a significant degree of physical exertion or physical harm, and the purpose for which the activity is undertaken, relevantly "recreation, enjoyment or leisure". 133The nature of the tuition services supplied by the appellant may be gained from its business trademark on its website: "Cornering: Discover the art". The appellant was offering instruction in the manner of obtaining exhilaration in controlling a motorcycle through corners. The fact that such skills may be generally useful to the participant, including when riding a motorcycle to and from work, does not detract from the respondent having undertaken the activity for the purposes of recreation, enjoyment or leisure. It may be taken from the primary judge's finding (at [24]) that the respondent's goal in undertaking the skills course was to obtain cornering skills to equip him to better enjoy leisure-time activities when riding on country roads for recreation. 134The purpose for which the activity is undertaken is to be assessed objectively, taking into account the subjective intention of the participant. The primary judge's finding (at [24]) as to the intentions of the respondent justified his Honour's further finding that the activity which the respondent was undertaking, constituted "recreational services" within the meaning of s 68B(2) of the Trade Practices Act. No error has been demonstrated by the appellant with regard to this finding.

Term of the contract 135In view of the conclusion above, that the exclusion clauses relied upon by the appellant are rendered void by s 68B of the Trade Practices Act, it is unnecessary to resolve the further issue raised by the respondent's amended notice of contention that those clauses were not terms of the contract for supply of services. 136In my view, ground 1(b) of the notice of appeal is not made out.

The finding of negligence - ground 1(c) 137The appellant challenged the finding by the primary judge of breach of the implied warranty of due care and skill under s 74 of the Trade Practices Act. The appellant's submission had two aspects. First, that the trial judge failed to, but should have, addressed the requirements of s 5B of the Civil Liability Act. The appellant initially contended that s 5B applied by virtue of s 74(2A) of the Trade Practices Act, but as explained below, shifted its position during oral argument. 138Secondly, that the primary judge failed to apply the approach to negligence mandated in Roads and Traffic Authority of New South Wales v Dederer [2007] HCA 42; (2007) 234 CLR 330 at [46]-[47]. It was contended by the appellant that this would have resulted in a finding that the appellant was not subject to a duty to remove all other users of the track at the time of the Level II courses. 139As the District Court was exercising federal jurisdiction when determining the respondent's claim for damages for breach of the implied warranty under s 74 of the Trade Practices Act, it is necessary to identify the basis upon which the law to be applied to the respondent's claim is contended by the appellant to be either a State law, such as s 5B of the Civil Liability Act, or the general law for determining negligence.

Does s 5B apply? 140The appellant's written submissions contended that s 5B of the Civil Liability Act applied by virtue of s 74(2A) of the Trade Practices Act. However, during the course of oral argument, the appellant accepted that s 74(2A) did not pick up s 5B, as the latter was a State law which applies in determining breach, not a law that limits or preludes liability for breach (AT, tcpt 28, lines 15-31). As explained below, this concession was properly made. This concession led the appellant to rely on s 39(2) of the Judiciary Act 1903 (Cth), which was raised by a member of the Court during oral argument. The unstated premise of the appellant's reliance on s 39(2), is that the District Court was exercising federal jurisdiction (which is correct), and that s 5B was picked up by operation of s 79 or s 80 of the Judiciary Act. The latter argument is considered below. 141The respondent submitted that there was no requirement for the primary judge to consider s 5B of the Civil Liability Act when dealing with the contract claim. The primary basis for this submission was that s 74(2A) of the Trade Practices Act did not pick up s 5B. 142The respondent did not make any submissions on the question of whether s 5B was picked up by operation of s 79 or s 80 of the Judiciary Act. The respondent side stepped this issue by submitting that even if the primary judge should have taken into account the requirements of s 5B of the Civil Liability Act, it is inevitable that he would have found that a reasonable person in the position of the appellant would have taken appropriate precautions of not allowing the faster and slower riders on the track at the same time. The respondent contended that there would not have been any "burden" in taking the precaution to avoid the risk of harm to the respondent, the change to the appellant's system, which had been implemented since the accident, without any suggestion of inconvenience or expense to the appellant.

(a) Section 74(2A) Trade Practices Act and s 5B 143Section 5B of the Civil Liability Act is concerned with whether a person is "not negligent" in failing to take precautions against a risk of harm. The section presupposes the existence of the law of negligence, and operates against its background. Thus, s 5B(1) sets out three preconditions that must co-exist before a liability in negligence arises, when the type of negligence alleged is failure to take precautions against a risk of harm arising, and s 5B(2) provides a non-exhaustive list of factors the Court is required to take into account in deciding whether that the third of those preconditions (the burden of taking precautions to avoid the risk of harm) exists: Roads and Traffic Authority of New South Wales v Refrigerated Roadways Pty Ltd [2009] NSWCA 263; (2009) 77 NSWLR 360 at 397 [173] per Campbell JA (McColl JA agreeing, and Sackville AJA agreeing with additional observations at [443]). 144For s 74(2A) to operate to pick up and apply a State law, it requires both the existence of the implied warranty and a breach of that warranty (see [90]-[92] above). However, insofar as s 5B applies to a liability arising other than in tort (see s 5A(1) Civil Liability Act), s 5B is a State law which applies in determining breach, not a law that limits or precludes liability for breach. For this reason, s 5B had no application in the present case by virtue of s 74(2A) of the Trade Practices Act.

(b) Section 79 and s 80 Judiciary Act and s 5B 145The question is what is the applicable law in the action commenced by the respondent, in particular does s 5B of the Civil Liability Act apply when a State court is exercising federal jurisdiction? That inquiry directs attention, in the first instance to s 80 of the Judiciary Act and the next step, if it is necessary to take it to provide an answer to the particular question that arises, is provided by s 79 of the Judiciary Act: Blunden v Commonwealth of Australia [2003] HCA 73; (2003) 203 ALR 189 at 194 at [16]-[17]. 146As to s 80 of the Judiciary Act, two observations may be made concerning the provisions of the relevant federal statute law. First, the Trade Practices Act does not provide a statutory civil cause of action for breach of s 74(1). Secondly, that Act does not provide a code as to the standard of conduct required to discharge the warranty of due care and skill implied in a contract for the supply of services. 147It is necessary therefore for the respondent to look to the common law in Australia to provide the liability of the appellant in contract for breach of the implied warranty. The applicable law in the exercise of the necessary federal jurisdiction is, by s 80 of the Judiciary Act, directed to be the common law in Australia as modified, for the respondent's claim, by the statute law in force in the State of New South Wales: Blunden v Commonwealth of Australia at [35]. 148It may be accepted that the "General principles" in s 5B of the Civil Liability Act (as well as the "Other principles" in s 5C) modify the common law in regard to claims for damages for harm resulting from "negligence", that is, the failure to exercise reasonable care and skill, to which Part 1A of the Act applies, whether the claim is framed in contract, tort, statute or otherwise (s 5A(1), Civil Liability Act). 149The question which arises is can it be said that the Civil Liability Act, in particular s 5B and s 5C, as part of the "statute law in force in the State ... in which the Court in which the jurisdiction is exercised", is "not applicable" to the case brought by the respondent by the laws of the Commonwealth, in particular, the Trade Practices Act? In my view, this question should be answered in the negative. This is because, as explained above, the Trade Practices Act does not provide a code as to the standard of conduct required to discharge the implied warranty of due care and skill. Further, the s 5B requirements, and the other principles in s 5C, are not inconsistent with the implied warranty in s 74(1) of the Trade Practices Act. 150I conclude that s 80 of the Judiciary Act does pick up and apply s 5B (as well as s 5C) to the respondent's claim for damages for breach of the implied warranty in s 74 of the Trade Practices Act. On this basis, it is unnecessary to proceed to the next step of considering s 79 of the Judiciary Act.

(c) Section 5B requirements are met 151Notwithstanding the failure of the primary judge to address the requirements of s 5B in his consideration of the respondent's contract claim, in my view, those requirements are met in the present case. 152As to s 5B(1), when considering the "risk of harm" as a consequence of the failure to take precautions against such a risk, the risks are to be assessed prospectively: Sibraa v Brown [2012] NSWCA 328 at [41] per Campbell JA (Hoeben JA and Tobias AJA agreeing). In this regard, there was no issue in the present case that a reasonable person in the appellant's position would have foreseen that its system of combining slow and fast riders on the track posed a risk of injury to riders crossing from one side of the track to the other. This was conceded by Mr Brouggy, the appellant's managing director. 153It may be taken, based on the evidence of Mr Brouggy, that this risk of harm was "not insignificant" (s 5B(1)(b)). The standard for risk being "not insignificant" is not particularly high and, in my view, is well satisfied in the present case: Shaw v Thomas [2010] NSWCA 169 at [44] per Macfarlan JA (Beazley and Tobias JJA agreeing); Sibraa v Brown at [49]. 154The critical question is whether a reasonable person in the position of the appellant would have taken the precautions of the respondent alleged should have been taken (s 5B(1)(c), s 5B(2)). Those precautions were said to be to not permit other riders on the track when Level II students were conducting the relevant drill. 155The considerations identified in s 5B(2) of the Civil Liability Act are: the probability that harm would occur, the likely seriousness of the harm, the burden of taking precautions to avoid the risk, and the social utility of the activity that created the risk. In this case, the main focus is on the first three of those considerations. 156First, although there had been no incident of the type that occurred in the present case over the previous 11 years during which the appellant had conducted such courses, there remained a significant probability that harm would result if the appellant did not take care to not permit other riders on the track when Level II students were conducting the relevant drill. 157Secondly, if harm were to arise from an accident between riders, it is likely that anyone who suffered injury as a consequence would suffer harm of a serious nature, as occurred in the present case. 158Thirdly, the burden of taking precautions to avoid the risk of harm was not great. The primary judge found (at [39]) that an alternative system was available and required no expenditure. As to the final consideration, no issue arose as to the social utility of the activity that created the risk of harm. The appellant did not suggest any other factors were applicable in the present case.

Breach of due care and skill 159If my conclusion that s 5B of the Civil Liability Act applied in the present case is wrong, then it is necessary to address the appellant's complaint in relation to the primary judge's finding of breach of the implied warranty of due care and skill by reference to common law principles. It was common ground on appeal that the standard of due care and skill required of the appellant may be informed by common law principles of negligence. Although not identified by the parties, this is because s 80 of the Judiciary Act, picked up and applied the general law of the State of New South Wales concerning negligence. 160The appellant contended that because of the established safety of the system in place, which had been tested at multiple venues over multiple years, the duty imposed on the appellant by the implied warranty under s 74(1) of the Trade Practices Act, did not extend to the removal of all other users of the track at the time of the Level II courses. The appellant submitted that the obligation which the primary judge found was owed by the appellant to the respondent (who was also found to be a careless participant in the activity) was more stringent than the duty owed to all other participants. This was argued to be inconsistent with the approach to negligence mandated by the High Court in Roads and Traffic Authority of New South Wales v Dederer at [46]-[47]. 161The test of whether the appellant failed to render its services to the respondent with due care and skill is one of reasonableness: Indico Holdings Pty Ltd v TNT Australia Pty Ltd (1997) 41 NSWLR 281 at 285E per Giles J. In this regard, the respondent submitted that the appellant's system of combining fast and slow riders posed a risk of injury to riders crossing from one side of the track to the other. The respondent contended that in a context of a foreseeable risk of life threateningly serious injury to a person in the position of the respondent, the appellant should have responded by taking simple action, which would not have involved expense. This action was to separate fast and slow riders on the track. 162As noted above, there is no issue in the present case that the risk of harm arising from the appellant's system of combining slow and fast riders on the track was foreseeable. 163The absence of any prior injuries or complaints over the previous 11 years during which the appellant had conducted such courses, whilst relevant to the degree of probability of the occurrence of the risk, is not determinative of the reasonable response of the party sought to be made liable for a breach of duty of care: Bujnowicz v Trustees of the Roman Catholic Church [2005] NSWCA 457 at [42] per Tobias JA (Santow and Ipp JA agreeing), citing Fairfield City Council v Petro [2003] NSWCA 150 at [21] and [34]; Roads and Traffic Authority v McGregor [2005] NSWCA 388 at [81]. 164The appellant's essential complaint was that the primary judge did not sufficiently disclose his reasoning for the finding of the breach of the implied warranty. In my view, this complaint is without foundation. 165First, the relevant finding by the primary judge (at [29]) was that the appellant breached the warranty that the services would be provided with due care and skill, because it caused Level III riders to ride on the track at Eastern Creek at the same time as the respondent at speeds greatly in excess of the speed at which the respondent was instructed to travel. 166Secondly, there was evidence which supported this finding. Mr Brouggy, the appellant's managing director, admitted that the system of combining slow and fast riders posed a risk of injury to riders crossing from one side of the track to the other (Black 136P-137X). He also conceded that a rider could become "disorientated as to precisely where they are on the track" (Black 151R-U). This factor added to the magnitude of the risk and degree of probability of it occurring. 167Thirdly, the primary judge found (at [39]) that an alternative system, which was available to the appellant and required no expenditure, would be to not permit other riders on the track when Level II students were conducting the relevant drill. 168No error has been shown in the primary judge's assessment of the reasonable response of the appellant to the foreseeable risk of injury to the respondent when riding on the track. 169In my view, ground 1(c) of the notice of appeal is not made out.

Causation - ground 1(d) 170The appellant complained that the primary judge did not determine, nor disclose reasoning, whether there was or was not any contribution by any act or omission of the appellant that provided a cause of the accident. This submission should be rejected. 171As already noted above, the primary judge found (at [29]), that the appellant's system of permitting faster riders on the track was a cause of the appellant's injury. His Honour also found (at [30]) that the respondent's own actions in turning suddenly, in the wrong place (thereby ignoring instructions), and in disregard of the presence of the approaching Level III rider, were also a cause of his accident. 172The primary judge found (at [33]) that the accident would not have occurred but for the actions of the appellant in permitting Level III riders to circulate on the track at speeds greatly in excess of the speeds to which Level II riders were limited. He also noted that the Level II riders were handicapped by the masking of their rear vision mirrors and the instructions to concentrate on what was ahead of them. 173The appellant's submissions acknowledged that the primary judge correctly observed (at [31]) that it was sufficient to fix liability to the conduct in question, if it is a cause of an event, it is not necessary that it be "the" cause: Barnes v Hay (1988) 12 NSWLR 337. 174The primary judge's reasoning process was sufficiently exposed (at [30]-[33]). No error has been demonstrated.

Contributory negligence - ground 2 175The appellant dealt with contributory negligence, in both its written and oral submissions, very briefly. The appellant's written submissions contended that the respondent's own actions were overwhelmingly the cause of his injury, and that an assessment of his contributory negligence as less than 50 per cent was unsustainable. Counsel for the appellant said in oral submissions that the apportionment should be turned around such that the relative culpability was 70 per cent for the respondent and 30 per cent for the appellant. It was submitted that there had been an obviously stark departure from that which was required, if the respondent was going to look after his own safety when riding on the track in the presence of other riders.

Section 9, Law Reform (Miscellaneous Provisions) Act 1965 176The primary judge (at [34]) proceeded on the basis that contributory negligence operated as a defence in the present case pursuant to s 9 of the Law Reform (Miscellaneous Provisions) Act. This was in accord with the approach of both parties at the trial (Black 196C-G). No attention was given by the parties either at trial or on appeal as to why this was so. Two possibilities may be considered. First, s 74(2A) of the Trade Practices Act. Secondly, s 79 or s 80 of the Judiciary Act. The first provides a sufficient answer in the present case. 177Section 9 of the Law Reform (Miscellaneous Provisions) Act is a State law which applies to reduce the liability of a defendant to a plaintiff for damages recoverable in respect of a "wrong" to such extent as the Court thinks just and equitable having regard to the plaintiff's share in the responsibility for the damage. "Wrong" is defined in s 8 to mean, amongst other things, an act or omission that amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort: s 8(b). 178The implied warranty created by s 74(1) of the Trade Practices Act, implies into relevant contracts a term which contains the primary obligation to take due care and skill in the provision of services and a secondary obligation to provide compensation for breach: Wallis v Downard-Pickford at 396. This contractual duty of care is concurrent and co-extensive with a duty of care in tort owed by the appellant to the respondent when providing the relevant services. 179The apportionment provision in s 9 of the Law Reform (Miscellaneous Provisions) Act, applies to "limit or preclude" liability for the breach of the implied warranty in s 74(1) of the Trade Practices Act. Accordingly, s 74(2A) operates to pick up and apply s 9 (the contributory negligence defence) as a surrogate federal law, to limit the appellant's contractual liability for breach of the implied warranty in s 74(1).

Section 5R, Civil Liability Act 180Section 5R (standard of contributory negligence), like s 5S (contributory negligence can defeat claim) of the Civil Liability Act presuppose that someone has been contributorily negligent. These provisions operate to modify the way in which the law of contributory negligence operates under the Law Reform (Miscellaneous Provisions) Act 1965 rather than create by themselves any particular rights or defences: ACQ Pty Ltd v Cook [2008] NSWCA 161; (2008) 72 NSWLR 318 at 350 [158] per Campbell JA (Beazley JA, as her Honour then was, and Giles JA agreeing). 181It is unnecessary however to consider whether s 5R of the Civil Liability Act (standard of contributory negligence) has any relevance to the present case. This is because, although at trial the appellant referred to s 5R of the Civil Liability Act in its oral closing submissions (Black 196G-M), the appellant did not place any reliance on s 5R on appeal. In particular, no submissions were made on appeal that s 5R applied or that, if applicable, the primary judge's assessment of the respondent's contributory negligence was not in conformity with the standard referred to in s 5R.

Legal principles governing contributory negligence 182The relevant principles in accordance with which a plaintiff's damages are reduced by reason of the plaintiff's contributory negligence were stated by the High Court in Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALR 529 at 532-533: "The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42-49 and Broadhurst v Millman [1976] VR 208 at 219 and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination." 183Contributory negligence is determined objectively from the facts and circumstances of the case, which includes what the plaintiff knew or ought to have known at the time: Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 522 at 558 [16].

The primary judge's decision on contributory negligence 184The primary judge found (at [30]) that the respondent plainly ignored instructions that he was to cross the track only after completing turn 1 and that he was to do so slowly and gradually, and to be alert to the presence of Level III riders on the track. He found that the respondent turned suddenly in the wrong place, and in disregard to the presence of the approaching Level III rider with whom he collided. 185The respondent's carelessness for his own interests concerned the type of risk that in fact was a cause of the particular damage that he sustained. 186In assessing the relative culpability of the parties, the trial judge reasoned as follows: "38. The defendant had cause to know that the accident in which Mr Kelly was injured was not an improbable occurrence, and that his very serious injuries were a likely consequence. Notwithstanding his evidence that no similar accident had occurred during the 300 - 500 courses conducted by him previously, Mr Brouggy said that he was aware at the time that there was a chance that Mr Kelly may impede the path of a faster rider when crossing from the left side of the track to the right. 39. The danger to Mr Kelly was easily obviated by the simple measure of conducting the Level II and Level III drills sequentially rather than concurrently. This remedy, subsequently adopted, required no expenditure by the defendant. 40. Although Mr Kelly must be taken as having knowledge of the gravity of the risk, his fault was a casual act of negligence that would not have had the same consequence were it not for the defendant's faulty system."

Appellate review of apportionment decisions 187Apportionment decisions are afforded strong protection from judicial intervention, the rationale being that the apportionment legislation entrusts the primary judge with "a very wide discretion". Identification of what is a reasonable range for apportionment of responsibility involves an individual choice or discretion, as to which there may well be differences of opinion by different minds, because it involves a balance and relative emphasis and of weighing different considerations: see Pennington v Norris (1956) 96 CLR 10 at 15-16 per Dixon CJ, Webb, Fullagar and Kitto JJ; Podrebersek v Australian Iron & Steel Pty Ltd at 532; Joslyn v Berryman at [157] per Hayne J. See also Nominal Defendant v Rooskov [2012] NSWCA 43; (2012) 60 MVR 350 at [122]-[123] per Campbell JA (Young JJA and Garling J agreeing). 188A challenge to the primary judge's finding on apportionment of culpability involves an evaluative judgment, subject to review only in accordance with the constraints in House v The King (1936) 55 CLR 499, or at least it must be shown that the decision is outside the reasonable range for such a decision: see Costa v The Public Trustee of NSW [2008] NSWCA 223 at [103] per Basten JA, compare Hodgson JA at [18]; and Ipp JA at [40].

Wrong apportionment for failure to follow instructions? 189In assessing the relative culpability of the parties in the present case, the objective circumstances include the manner and circumstances in which the respondent did not take care for his own safety: he turned suddenly, in the wrong place, and in disregard of the presence of other riders (thereby ignoring instructions). Against this it was said by counsel for the respondent that the respondent's motorbike had travelled at least two-thirds of the way across the track before the impact occurred. Although an abrupt move, there was evidence of a following rider that it was a diagonal movement across the track. The respondent had no recollection of the circumstances of the accident, but appears to have got the corners mixed up having just finished the complete circuit of the track for the first time on that day. It may be accepted that the respondent's carelessness was a momentary misjudgement. 190The relative importance of the respondent's carelessness is to be weighed against the contributing acts of the appellant in conducting its training course. This had two relevant aspects. First, permitting the presence of faster riders on the track at the same time as the respondent was undertaking the Level II drill, and secondly, requiring the respondent's rear view mirrors to be mandatorily blacked, so that he would only concentrate on what was ahead. 191The respondent was obliged to ride in the circumstances the appellant put him, which included the danger of colliding with the much faster riders on the track. The respondent's error was one, which the appellant conceded through Mr Brouggy was foreseeable, where a rider could become "disorientated as to precisely where they are on the track" (Black 151 R-U). The primary judge referred to these matters earlier in his reasons (at [31]-[33]) and found (at [40]) that the appellant's faulty system had the greater causal potency. 192Whilst there is room for argument that the differential in the comparative blameworthiness of the parties and the causal potency of their actions was not as great as that assessed by the primary judge, I would not disturb the primary judge's apportionment. It has not been demonstrated that the primary judge obviously misunderstood the evidence, or assessed the evidence incorrectly in assigning a much greater degree of causal potency to the appellant's faulty system. The primary judge's assessment of relative culpability has not been shown to be unreasonable.

Significance of subsequent action by the appellant 193The appellant also complained that the primary judge erred in considering action taken by the appellant subsequent to the respondent's injury as relevant to contributory negligence. That action was conducting the Level II and the Level III drills sequentially rather than concurrently. The appellant submitted that this was not permitted by s 5C of the Civil Liability Act, in particular s 5C(c) which provides: "5C Other principles In proceedings relating to liability for negligence: ... (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk." 194The respondent's written submissions implicitly accepted that s 5C(c) of the Civil Liability Act applies in the present case, but contended that s 5C did not oblige the primary judge to ignore evidence of a change made to the appellant's system after the accident. The unstated assumption in the submissions of both parties is that s 5C(c) of the Civil Liability Act is picked up and applied by s 74(2A) of the Trade Practices Act to a relevant contract for the supply of services containing the implied warranty under s 74(1). No consideration was given by the parties to whether s 5C(c) of the Civil Liability Act meets the description given in s 74(2A) of a State law that applies to "limit or preclude liability for the breach (of the statutory warranty) ...". 195Section 5C(c) is directed to the significance of subsequent action taken by a defendant when determining the existence of a liability in respect of the failure to take action that would have avoided a risk of harm. It effectively restates the position at common law, where evidence of action taken by a defendant following an accident was not evidence of negligence: see Davis v Langdon (1911) 11 SR (NSW) 149. The effect of s 5C(c) is that subsequent action by a defendant is not indicative of a failure to exercise reasonable care in not having taken such action previously to avoid a risk of harm to a plaintiff. 196By its terms, s 5C(c) does not "limit or preclude" liability for the breach of the implied warranty under s 74(1). For this reason, it does not meet the description in s 74(2A) of the Trade Practices Act. 197However, for the reasons given above in relation to s 5B (see [101]-[106]), s 5C(c) is a law which operates in relation to the respondent's claim when the Court is exercising federal jurisdiction by reason of s 80 of the Judiciary Act. 198In my view, whether or not the approach to contributory negligence as stated in s 5(C)(c), or the common law, is applied in the present case the primary judge did not err, when he observed (at [9]), that the appellant no longer permitted other riders on the track when Level II students are conducting their drill. This observation was made in the context of noting the concession by Mr Brouggy, the appellant's managing director, that its systems at the time of the accident gave rise to a foreseeable risk of injury. Furthermore, the primary judge's observation (at [39]), that the subsequent change in the appellant's system required no expenditure by the appellant, was made in the context of whether the risk of harm to the respondent was easily obviated, not that the change in the appellant's system, in and of itself, was to be taken as evidence of negligence on its part. 199In my view, ground 2 is not made out.

Non-economic loss - ground 3 200The appellant only briefly dealt with this ground of appeal in its written and oral submissions. The appellant submitted that the primary judge's assessment of non-economic loss at 50 per cent of the most extreme case was manifestly excessive. The appellant contended that the assessment of non-economic loss could be no more than 35 per cent of the most extreme case. 201In support of this contention, the appellant complained that the primary judge gave only a cursory summary of the effects of the respondent's injuries upon his life; failed to provide a proper analysis of the evidence and provide sufficient reasons for the conclusions reached; incorrectly focused on the respondent's pre-accident fitness compared with contemporary members of the public for which there was no evidence before the Court; and gave no weight to the activities which the respondent continued to be capable of doing notwithstanding his injuries. 202The primary judge dealt with the claim for non-economic loss at [42]-[50]. He noted that Mr Kelly was 58 years old when the accident occurred and was extraordinarily fit before the accident. His Honour referred to the nature of the injuries suffered by Mr Kelly, the extended time spent in Westmead Hospital of nearly one month, including an induced coma for three days, the subsequent chest pains, difficulties in breathing and suffering which Mr Kelly experienced during the period of his recuperation and thereafter. He also noted the weakness, pain and restriction of movement in Mr Kelly's right arm, shoulder and neck and the impact this had on his quality of life. His Honour observed (at [49]) that: "49. The injuries have had a catastrophic and permanent effect upon the quality of Mr Kelly's life. Extremely few people of his age enjoyed the lineaments of physical prowess to such a degree." 203As in the case of ground 2, the appellant must show error in the House v The King sense, or at least that the assessment was outside the reasonable range for such a decision: see [188] above. 204When considering the sufficiency of the reasons provided by the primary judge for his assessment of the severity of non-economic loss to a proportion expressed as a percentage of the most extreme case, the observations of Bryson JA (with whom Young CJ in Eq and Hunt AJA agreed) in Doubleday v Kelly [2005] NSWCA 151 at [35] are pertinent, namely that such a finding of facts: "...is not a finding which can be justified by cogent detailed reasoning, in the mathematical terms which the requirement to reach a percentage seems to invoke, nor in any other terms. 'A most extreme case' is itself not a highly defined concept, and includes extreme disabilities of various kinds which could not readily be compared with each other. To my mind a high degree of generalisation is required, and a contention that there has been an error faces the difficulty that there will in most cases be a fairly wide range of percentages within which the conclusion might reasonably fall. Little of exposition as there is in the expression, I feel bound to say that the discernment of the reasonably available range is a matter of impression and cannot be further elucidated." 205Contrary to the appellant's submission, a fair reading of the primary judge's reasons for his assessment of non-economic loss is far from being a "cursory summary". The appellant's complaint also ignores the significant advantage the primary judge had in observing the respondent, both in the witness box and in the privacy of chambers, where the primary judge examined the sites of injury and scarring on the respondent's upper body. 206The primary judge was entitled to take into account the respondent's exceptional pre-accident health, physical prowess and lifestyle when assessing the impact and extent of the respondent's injuries and disabilities as a percentage of the most extreme case. The respondent's multiple injuries were very serious and resulted in permanent life changing consequences. There was no challenge to the primary judge's finding (at [49]) that the respondent's injuries have had a catastrophic and permanent effect upon the quality of his life. 207In my view, the appellant has failed to demonstrate relevant error by the primary judge in assessing non-economic loss.

Conclusion and orders 208None of the appellant's grounds of appeal have been made out. Accordingly, I propose the following orders: (1)Appeal dismissed. (2)Appellant to pay the respondent's costs.

Amendments 14 October 2014 - Correction to s5N(2) Amended paragraphs: 32 10 December 2014 - Edit to quote, 2nd last line "does not" changed to "does so". Amended paragraphs: 7 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 December 2014