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Through Legal Eyes
Australian Perspective
F
The keys to the clubhouse,
but at what cost?
Many leases contain indemnity and insurance clauses
which can be intrinsically linked.
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Indemnity clauses are express terms in the lease by which
the club commits to compensate the lessor for loss arising
out of the agreement and occupation/use of the premises
(to varying degrees depending upon the wording of the
clause).
Insurance clauses oblige clubs to ensure that the lessor is
a named insured, or has its interests noted on the club’s
policy of insurance.
The pitfalls for clubs
In theory, an indemnity clause should only attempt to
balance the benefit that the lessor provides to the club by
making its facilities available with the risk of it being sued
for activities beyond its control.
For this issue,
Touchline
asked its panel of
legal experts to comment on the contracts that
some sporting clubs and associations need to
sign to use third party venues.
Many sporting organisations (clubs) lease
premises (including playing fields, courts
and pools) from organisations such as local
authorities (the lessor). Many club officers
don’t fully understand the ramifications of
entering into a lease before putting pen to
paper. In the rush to obtain the keys to the
clubhouse, little thought is often given to what
indemnity and insurance obligations clubs are
signing up to, and how all of this might affect
their insurance cover.
Australia: Read carefully and
keep your broker in the loop
However, many lessors go further than separating the risks
arising intrinsically from the use of the facility and the sport
being played and seek to obtain an indemnity from the club
for all claims arising from use of the facility, and activities
incidental to that use, regardless of who is at fault.
The law does step in to prevent the unfair operation of
these clauses. The contra proferentem rule provides that
any ambiguity in an indemnity clause will be construed by a
court against the party seeking to rely on the indemnity (in
this case, the lessor).
2
Therefore, where a clause does not
expressly provide that a club agrees to indemnify a lessor
for the lessor’s negligence, the club would have a good
argument that the clause is ambiguous and that it is not
obliged to indemnify the organisation beyond the position
at common law. The High Court of Australia has indicated
a reluctance to require one party to fully indemnify another
for the negligence of that other party unless the
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