JOHN DORAHY'S FITNESS CENTRE PTY LTD v BUCHANAN [1996] NSWCA 278

JOHN DORAHY'S FITNESS CENTRE PTY LTD v BUCHANAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY P, COLE JA and COHEN AJA 6 December 1996, 18 December 1996 [1996] NSWCA 278

CONTRACTS — Claim for personal injury — Whether exclusion clause should be enforced — Applicability of Contracts Review Act 1980

Respondent becomes member of appellant's gymnasium by signing contract called "Membership Agreement" - Respondent injured whilst using defective exercise machine in gymnasium - Respondent awarded damages in negligence for personal injury by District Court in the sum of $46,000 - Appeal by gymnasium owner on grounds that exclusion clause in "Membership Agreement" operated to prevent respondent recovering damages for personal injury in negligence and for breach of contract - Construction of exclusion clause - Intention of parties to contract - Operation of exclusion clause in the present case - Whether Contracts Review Act 1980 operated so as to make exclusion clause unenforceable.

Held: appeal dismissed by majority (Mahoney P and Cohen AJA, Cole JA dissenting)

(i) The appellant was liable to the respondent for breach of contract, that breach causing the personal injury suffered by the respondent.

(ii) (per Mahoney P) On the proper construction of the "Membership Agreement", and having regard to the intention of the parties, the exclusion clause contained in the

Conditions of Membership did not operate so as to release the respondent's claim in contract.

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500; Photo Production Ltd v Securicor Ltd [1980] AC 827; Metropolitan Gas Co v Federated Gas Employees Union (1925) 35 CLR 449; Baltic Shipping Company v Dillon (1993) 176 CLR 344, (1991) 22 NSWLR 1; applied.

(iii) If the exclusion clause operated to release the claim in contract and in negligence, the contract was harsh and oppressive within the terms of the Contracts Review Act 1980, and the court should refuse to enforce the exclusion clause insofar as it would operate to prevent the respondent suing the appellant for damages for breach of contract and for negligence.