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Through Legal Eyes
F
within the insuring clause because they are not the result
of an “occurrence” (typically defined to be an unexpected
or unintended result) as the club intended to enter into the
agreement with those contingent liabilities.
Solutions
Club officers must read and satisfy themselves that they
fully understand the lease before signing it.
Clubs should always advise their brokers of the existence
of any lease.
Many clubs lack bargaining power when negotiating with
lessors. However, in the likely event that the lessor insists
on an indemnity clause in the lease, the club should in
turn insist that the clause covers the club’s negligence only.
At the very least, clubs should ensure that the exclusion
clause does not specifically refer to the lessor’s negligence
If there is an insurance clause in the lease, clubs must
inform their broker. It may be that, including a lessor as an
insured or noting its interest does not attract any significant
increase in the premium. But any increase is a small price
to pay to avoid a potentially large uninsured exposure.
Peter Murdoch is a Partner at the firm Barry & Nilsson
Lawyers in Brisbane. His co-author Nathan Rehbock is a
Solicitor at the firm.
1 Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114
2 Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424
3 Ibid
4 There is a long line of authority post-Andar that does not settle on a
consistent approach to interpreting indemnities such as this.
5 A similar factual scenario occurred in Williams v Latrobe Council [2007]
TASSC 2. However, in that case there was no indemnity clause and the
local authority was held 85% liable for the alleged incident and the two
football clubs 15% liable.
words of the indemnity specifically require it to do so.
3
However the law remains in a relative state of flux.
4
Where an indemnity clause is clearly drafted to cover a
lessor’s negligence, this could result in a club taking on
extra liability than it would otherwise have had at common
law. Take, for example a football player who is injured
tripping on a sprinkler head placed by the lessor in a park
in circumstances where the lessor (not the club) maintains
the park. At common law the football club might face some
liability exposure for allowing the game to go ahead, but in
the absence of a clearly worded indemnity clause the lessor
would wear the majority of liability for creating and failing to
remove the hazard.
5
The existence of the indemnity clause
means that the club is contractually assuming liability that
it would not otherwise have.
If a club fails to take out insurance in the name of the
lessor pursuant to an insurance clause, then this leaves
the club vulnerable to a claim by the lessor for breach of
contract. That is a purely contractual claim and bears no
relation to any common law liability.
Insurance ramifications
Most liability insurance policies contain exclusions for
liability assumed under an agreement or contract, except
to the extent that the liability would have been implied by
common law. Therefore signing up to indemnity clauses
that extend a club’s liability beyond its common law
exposure could leave clubs out in the cold for any extra
liability assumed under that clause.
Similarly, breach of contract claims for failing to take out
insurance in the name of the lessor are typically excluded
for the same reason.
There are then arguments that such claims do not fall
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