Trip Hazard – Exclusion Clause Limits Liability

In The Thistle Company of Australia Pty Ltd v Bretz & Anor [2018] QCA 6 (‘Thistle’) the Queensland Court of Appeal considered an exclusion of liability clause in an engineering consulting contract. The decision in Thistle confirms that exclusion clauses may be an effective tool in limiting the potential liability of consultants.

Background: Injuries sustained after tripping on plinth

The first respondent, Mr Bretz, sustained injuries after tripping over a raised section surrounding a petrol pump at a service station (‘Plinth’) owned by the applicant, Thistle Company of Australia (‘Thistle’). The Plinth was not marked with signage and had recently been painted black, effectively obscuring the visibility of it against the surrounding ground.

Mr Bretz commenced proceedings in the District Court claiming negligence against Thistle. Thistle then joined and sought indemnity from Tam Farragher & Associates Ltd (‘TFA’), the designers of the Plinth.

The trial judge held that Thistle breached its duty of care to Mr Bretz in painting the Plinth black and not providing effective signage. The third party proceedings between Thistle and TFA were dismissed on the basis of the exclusion clause in the contract between them which stated:

After the expiration of one (1) year from the date of invoice in respect of the final amount claimed by [Tam Farragher] pursuant to clause 5, [TFA] shall be discharged from all liability in respect of the services whether under the law of contract, tort or otherwise.

Appeal Court’s Decision

On appeal, Thistle (among other things) argued that TFA should be held liable notwithstanding the exclusion clause because:

1. there was no evidence that the period of one (1) year in the exclusion clause had expired;
2. TFA failed to ensure, through adequate supervision, that the Plinth was constructed in accordance with their design and this amounted to a breach of contract; and
3. due to its breach of the contract, TFA’s liability did not arise ‘in respect of the services provided under the contract’ and therefore fell outside of the exclusion clause.

The Court of Appeal dismissed Thistle’s argument that the exclusion clause was ineffective, deeming that it operated to exclude liability of TFA relating to Mr Bretz’s injuries. Philippides J stated that the exclusion clause applied because:

1. the final invoice issued had expired more than twelve months prior in 2010; and
2. the complaint was clearly in respect of the services that had been contracted (thus protecting TFA from liability).

The decision in Thistle confirms that a well drafted exclusion clause can be effective in limiting and avoiding potentially significant liabilities. If you require any advice about interpreting or including exclusion clauses in your contracts, feel free to contact our Litigation team by submitting an online enquiry or calling us on (07) 5592 1921.