Law

Contractual Obligations when Hauling in WA – Are HVNL clauses enforceable?

By 11 June, 2019 No Comments

The Heavy Vehicle National Law (HVNL) was implemented to promote safety and efficiency in the trucking industry (for more information see our previous article). Although the HVNL has not commenced in Western Australia (WA), the legislation applies equally to WA vehicles when they cross into jurisdictions where the HVNL has been adopted.[1] The legislation does not apply to WA-based companies conducting trips within WA.

Recently there have been situations where larger companies, based in states which have adopted the HVNL, have entered into sub-contracts with WA-based operators for intra-state trips. Changes to the ‘Chain of Responsibility’ (CoR) requirements under the HVNL have meant that larger companies are requiring these smaller operators to comply with HVNL-based regulations.

Obligations of Companies under the HVNL

Central to the HVNL is the concept of CoR which establishes that, where an on-road offence occurs, other ‘parties in the chain of responsibility’ can be found liable. Legislative amendments adopted in October 2018 created a duty for parties in the CoR to ensure, so far as reasonably practicable, the safety of the party’s transport activities relating to the vehicle.[2] For executives of heavy vehicle supply chain companies this includes an obligation to exercise due diligence to ensure other parties in the CoR comply with their requirements under the law.

NHVR statutory compliance executive director, Ray Hassall, described this as requiring ‘a comprehensive appraisal of business systems and activities to establish methodology or evaluate performance of safe goods transportation’.[3] Penalties for breach of duty by corporations include fines ranging from $500,000 to $3 million.[4] Larger companies are therefore requiring more information from their sub-contractors about regulatory compliance in order to ensure that they are exercising due diligence and meeting their obligations in the CoR.

Requirements for Sub-Contractors

The amount of information required to satisfy obligations under the HVNL puts a lot of pressure in terms of both time and cost on smaller operators. WA companies have no legal obligation to comply with regulations under the HVNL, however an obligation to do so may be imposed by contract. The commercial reality of the situation is that larger companies have the market power to be able to impose such contractual terms on smaller operators, even when they are based in WA.

Where compliance with regulations from the HVNL is provided as a warranty in a contract it may be argued that breach of such a term may lead to uncapped liabilities for smaller operators which has flow on effects for insured and potentially uninsured risks. Where the precise obligations are set out in a purely WA intrastate agreement it would be interesting to see how a Court would determine the enforceability of such clauses. Such a determination might consider the public policy grounds of enforcing only the WA road safety regime. This comment is made in light of recent discussions in relation to the advantages and disadvantages of the WA road transport laws, and the NTC’s review of the HVNL.

For more information or if you would like to discuss how to protect your transport business when contracting please contact Alistair Sullivan or Aaron McDonald.

[1] Heavy Vehicle National Law and Regulations (National Heavy Vehicle Regulator, 2019). Available at: https://www.nhvr.gov.au/law-policies/heavy-vehicle-national-law-and-regulations.

[2] National Heavy Vehicle Law s26C.

[3] Rob McKay, ‘NHVR Lifts Lid on COR Enforcement Effort’ Australasian Transport News (13 May 2019) Available at: https://www.fullyloaded.com.au/industry-news/1905/nhvr-lifts-lid-on-cor-enforcement-effort.

[4] National Heavy Vehicle Law s26F-H.

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