Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

‘One of the purposes of clauses that exclude or limit liability is to enable that party relying upon them to be able, as it were, to rule off its books once the monetary amount of the temporal limitation has been reached. There are clear commercial advantages inherent in this: including, of course, in relation to the cost of insurance. Looking at the matter objectively, what the parties sought to achieve was to specify precisely and exclusively, so far as the law allows, the monetary and temporal limits of any liability that [the engineer] might have with the developers under the contract between them.

The words “or otherwise” are wide enough in their ordinary meaning to pick up liability under statute.’ 165

Similarly, in Lane Cove Council v Michael Davies & Associates , the New South Wales Supreme Court was called on to consider the terms of a retainer between an architect and a local council, which contained a temporal limitation in the following terms: ‘MDA’s liability in respect of the services whether under the law of contract, in tort or otherwise shall cease after the expiration of one year from the date of the invoice of the final amount claimed pursuant to clause 1, 2 and 3, the date of Practical Completion or the date of termination of the architectural services whichever is the earlier.’ 166

The Court held, following a similar finding in Kell and Rigby , 167 that the ordinary meaning of the words ‘ under the law of contract, in tort or otherwise ’ includes liability under a statute. 168

The Court, in both instances, found no reason to consider the temporal limits (two years and one year, respectively) were other than reasonable. Although the periods were substantially shorter than the ordinary six-year limitation that would have applied, they were seen as the objective intention of the two contracting parties. Some uncertainty, however, surrounds whether monetary and contractual limitation clauses can be used to limit liability for misleading and deceptive conduct, often alleged against professionals. It is well accepted that a party cannot contract out of liability for misleading and deceptive conduct. However, in Lane Cove Council, the Court formed the view that a contractual limitation (as opposed to an exclusion) did not amount to contracting out of liability; such clauses simply reflect the parties’ intentions to impose temporal and monetary limits on the damages awarded under competition and consumer legislation. 169 His Honour in Kell and Rigby also noted that no party had submitted that the temporal limitation conflicted with or should be read down by reference to the six-year limitation period in the TPA. 170

More recently in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd , 171 Riordan J drew a different conclusion from the Court in Kell and Rigby and Lane Cove Council, finding that:

‘… the contractual limitation of the period in which an action may be brought is contrary to the public policy of the Act. To permit claims under the ACL to be defeated by provisions, such as cl 46 in the Subcontracts, would be inconsistent with ‘the public policy of protection of people in trade and commerce from being misled.’ 172

165 Ibid [20]. 166 [2012] NSWSC 727 [70].

167 Owners SP 62930 v Kell and Rigby Pty Ltd [2009] NSWSC 1342 [28]. 168 Lane Cove Council v Michael Davies & Associates [2012] NSWSC 727 [72]. 169 Ibid [73]. 170 Owners SP 62930 v Kell and Rigby Pty Ltd [2009] NSWSC 1342 [30]. 171 [2018] VSC 246. 172 Ibid [137].

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