Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

The hiring agency sought a full indemnity in respect of its exposure from the building contractor, under the terms of the ‘ wet hire ’ agreement, which provided:

‘The [building contractor] shall fully and completely indemnify the [hire agency] in respect of all claims by any person or party whatsoever for injury to any person or persons and/or property caused by or in connection with or arising out of the use of the plant and in respect of all costs and charges in connection therewith whether arising under statute or common law.’

The hiring agency argued that the indemnity operated in its favour and encompassed all claims for negligence, including its own negligence.

The building contractor relied on Ellington v Heinrich Constructions Pty Ltd 158 to argue that the clause should not be construed to oblige it to indemnify the hiring agency against the consequences of the agency’s own negligence.

In construing the indemnity clause, Applegarth J observed:

ƒ An indemnity clause must be construed strictly, and any doubt as to the construction should be resolved in favour of the indemnifier. Doubt may arise not only from the uncertain meaning of a particular expression but also the apparent width of its application. ƒ The authorities that require ambiguity to be resolved in favour of the indemnifier do not require that ambiguity be detected where the natural and ordinary meaning of the language, taken in its contractual context, requires no such conclusion. In the absence of a statutory authority, a court has no mandate to rewrite a provision to avoid what it retrospectively perceives as commercial unfairness or lack of balance. ƒ Effect should be given to the ordinary meaning of the language used (in the absence of technical expressions or terms of art) to provide certainty as to where responsibility may lie, against which insurance may be obtained. The fact that the contract requires a party to take out insurance against the indemnified liability may be taken into account in concluding that the indemnity applies to that liability, whether or not insurance is taken out. The absence of a provision for insurance against the liability may also be considered. However, the fact that the indemnifier is not required by the contract to take out insurance and chooses not to take out insurance should not affect the construction of an indemnity that unambiguously allocates responsibility for the liability against the indemnifier. ƒ The outcomes of other cases involving different contractual arrangements and different clauses do not dictate the outcome of this case. However, the principles of construction established in those cases should be followed. ƒ One line of authority construes indemnities on the assumption that it is inherently improbable that a party would contract to absolve the other party against claims based on the other party’s own negligence. The competing view is that a principal purpose for obtaining such an indemnity is, at the very least, to protect a party against liability for its own fault. 159 Ultimately, Applegarth J held that the apparent breadth of the indemnity, in extending the indemnity to claims for personal injuries ‘ caused by or in connection with or arising out of the use of the plant ’, including claims in respect of the hiring agency’s own negligence, arose from the ordinary language of the clause. In circumstances where the hiring agency forfeited control over the operator, and the building contractor assumed that control, the clause was to be construed according to its ordinary meaning to extend the claims for liability for personal injury in circumstances where the hiring agency was vicariously liable for the negligence of its employee. The hiring agency was thereby entitled to an indemnity against the plaintiff’s claim and in respect of costs. 160

158 [2004] QCA 475. 159 Samways v WorkCover Queensland & Ors [2010] QSC 127 [66]–[70]. 160 Ibid [74].

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