Does your business entail dangerous recreational risks? Do you operate bungy jumping, camel or horse rides or go-karts? Or do you own swimming pools, gyms, sport arenas or golf courses?

Your shopping centre might have a jumping castle in it during busy school holidays. Or your resort may offer jet-ski lessons. While there are many people who would simply pick themselves up after injuring themselves in a recreational activity simply because they recognise there is a risk when they partake in such activities, there are still many who make claims and you may be held liable for their injuries.

Even if you are successful in court, you could end up paying a lot in legal and expert fees to defend your case.

Several years ago there were sweeping legal tort reforms around Australia to make people take more personal responsibility for their injuries in circumstances where risk was obvious. Thus if someone engaged in a “dangerous recreational activity” then sued you, you had a defence and were not liable. To many in the leisure industry this came as a long due change.

However, what constitutes a dangerous recreational activity? There have been two recent cases in the NSW Court of Appeal which has shown that it is still risky to take these types of claims to court because of the difference of opinions.

The first case is Falvo vs Australian Oztag Sports Association & Anor [2006] NSWCA 17. It's a good decision in that it found for the defendants (the Oztag Association and the Warringah Council), however, it decided Oztag was not a "dangerous recreational activity" because it was considered a non-contact sport:

– The Plaintiff suffered a knee injury when playing Oztag.

– He unsuccessfully sued the council and the Oztag association saying that they were negligent because of the wear and tear of the field which had been filled up in places with sand. – The trial judge said Oztag was a dangerous recreational activity.

– The Appeal Court upheld the decision but said that Oztag was not a dangerous recreational activity mainly as it was considered a non-contact sport. – The plaintiff's appeal still failed because he could prove causation – his fall was caused by him attempting to change direction when running at pace, not by the condition of the field.

– Also, the condition of the field was obvious.

The second case involved the activity of kangaroo hunting, Fallas vs Mourlas [2006] NSWCA 32:

– Mr Mourlas and his friend Mr Fallas were out kangaroo hunting at night with two other friends. Mr Mourlas’ role was to stay in the vehicle holding a spotlight to look out for kangaroos. – Mr Fallas tried to enter the vehicle but Mr Mourlas asked him not to in fear that his gun was loaded. Mr Fallas repeatedly assured him it was not. He climbed in, the gun was loaded and he accidentally shot Mr Mourlas’ leg.

– Mr Mourlas sued Mr Fallas and was awarded AUS$98,467. Mr Fallas appealed on the basis that they had been engaged in a dangerous recreational activity and thus he had no duty of care to Mr Mourlas as the risk that materialised was obvious. – The CA agreed with Mr Fallas that it was a dangerous recreational activity. However, the court did not agree that he was not liable on the basis that he had shown gross negligance for reassuring his friend that the gun was not loaded.

– In this case it was a majority decision of two against one other judge, and there was a vast difference of opinions between the judges in arriving at their conclusion.

So what can you do to better protect your company and improve your risk exposure should a claim be taken. We recommend:

1. Recording all incidents so that you can ascertain how regularly patrons are injured. If it is not frequent – then you are in a better position. If it is frequent and a trend develops, then perhaps you may have to scrutinise why and decide whether there is anything that can be done to reduce injuries i.e. fix & service equipment.

2. If you have equipment and machines, make sure there is a regular maintenance and/or servicing program to check that they are operating correctly and thus there is no fault of the manufacturer. It has gone through a maintenance check and the incline, speed, stopping mechanism, display & program functions were working well.

3. If there are industry regulations relating to the activity – make sure you comply.

4. Make sure you have properly trained staff to give instructions.

5. Waiver forms, warning signs and induction programs are all very helpful to argue that the adult participant was fully aware and thus the risks were obvious (especially in NSW) however you should not hang your hat on them.

6. Report the incident to your claim manager as soon as possible, particularly if the injuries are serious, so that they can get hold of the injured person before lawyers do, and also start gathering information to assess liability rather than waiting for you to be sued and then being unable to locate witnesses or information to help your case.

This article was produced by Proclaim. It is intended to provide general information in summary form on claims management issues. The contents do not constitute legal advice and should not be relied upon as such.

Marianne Lim is the Sydney based Liability Manager of Proclaim – the leading public liability claims management company in Australia. Amongst other industries, it provides public liability incident and claim management services to the leisure industry: sporting venues, aquatic centres, event cleaners, ride operators and amusement parks. Proclaim reduces clients’ claims costs and risk profiles whilst keeping customers and business partners happy. In addition to self insured companies it also provides service to underwriters, predominantly in the general liability, professional liability and property classes. See www.proclaim.com.au