On 17 December 2018, the Federal Court in CIMB Bank Berhad v Anthony Lawrence Bourke and Alison Deborah Essex Bourke (Federal Court Civil Appeal No. 02-105-10/2017(W)) held that an exclusion clause in a loan agreement was void and unenforceable as it was an agreement in restraint of legal proceedings under section 29 of the Contracts Act 1950 (‘the Act’) and was also contrary to public policy.
Federal Court:
- agreed with the Court of Appeal’s opinion that a right cannot be disassociated from its remedy.
- Balia FCJ added that if the clause in this case was allowed, it would be an exercise in futility for the Plaintiffs to file any suit against the Defendant as they are precluded from claiming the remedies against the Defendant.
- The clause in the case negates the rights of the Plaintiffs to a suit for damages, and the kinds of damages spelt out in that clause encompasses all forms of damages under a suit for breach of contract or negligence.
- The clause in the case was an absolute restriction in that whatever the Plaintiffs are claiming has been negated and as such, section 29 of the Act ought to be invoked.
Comment:
An exclusion clause should not preclude the claimant from claiming the types of damages described in that clause. The key question to consider is whether a party would be absolutely restricted from enforcing his or her rights under a contract and whether the would preclude the purchasers from claiming any remedy whatsoever.
