Australia: Negligent Parties Can be Indemnified

Is it possible to be indemnified for your own negligence?
Last Updated: 7 June 2011
Article by Matthew McMillan

Indemnity clauses are often the last provisions to be agreed in contractual negotiations and are usually subject to robust discussion as there is so much at stake. Indemnities may enable a party to circumvent rules of remoteness and the obligation to mitigate loss, or transfer liability to another party altogether. The ability to transfer liability may even extend to risks that seem unusual for an indemnifying party to bear, as the recent decision in Samways v WorkCover Queensland & Ors1 (Samways) illustrates.


In Samways, the Queensland Supreme Court considered whether an indemnifying party can be indemnified for liability arising from its own negligence. The court:

  • laid down the principles of the construction of indemnity clauses, and
  • confirmed that a carefully worded indemnity clause can lead to one party compensating another party for the negligence of that other party.

The plaintiff, Scott Samways, sustained an injury to his shoulder when he walked into the raised bucket of a bobcat on a building site where he was working. He was successful in his claim for damages in negligence against his employer, Tessman Concreting (10%); the principal contractor, De Luca Properties (30%); and the owner of the bobcat, Lynsha (60%).

The indemnity clause

Lynsha sought to recover from De Luca Properties the amount of any damages that Lynsha was required to pay to Mr Samways. The agreement for hire of the bobcat between Lynsha and De Luca Properties included an indemnity clause which provided:

"The Hirer [De Luca Properties] shall fully and completely indemnify the Contractor [Lynsha] 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."

Lynsha claimed that the indemnity required De Luca Properties to indemnify Lynsha against the consequences of Lynsha's own negligence.

Interpreting indemnities

The court set out the relevant principles which apply to the construction of indemnity clauses. These included:

  • An indemnity clause is to 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 from the width of its possible application.
  • Without statutory authority, a court has no mandate to rewrite a provision to avoid what it retrospectively perceives as commercial unfairness or lack of balance.
  • A clause should be construed in its contractual context which allocates risks of different kinds between parties.
  • Effect should be given to the ordinary meaning of the language used (absent use of technical expressions or terms of art) so as to provide certainty as to where responsibility may lie, against which insurance may be obtained.
  • The fact that a contract requires a party to take out insurance against an indemnified liability may be taken into account in concluding that an indemnity applies to that liability (whether or not insurance is in fact taken out). The absence of a provision for insurance against the liability may also be taken into account.

According to the court, the "commercial and contractual context" did not make it improbable that Lynsha would seek to be indemnified for damages caused by its own negligence. The court found that the clause should be construed according to its ordinary meaning and extend to claims for liability for personal injury for which Lynsha was liable. De Luca Properties was therefore required to indemnify Lynsha in respect of Mr Samways' claim.

What it means for commercial contracts

This case provides a useful summary of the principles governing the construction of indemnity clauses. The most important point to bear in mind when drafting an indemnity is that it will usually be strictly construed. Any doubt as to construction will be resolved in favour of the indemnifier.

It is unusual (and seems potentially unfair) for a party to be found liable to indemnify another party for claims based on the other party's negligence. However, if the ordinary meaning of a clause is clear, and the "commercial and contractual context" supports such a construction, then the court will give effect to such a provision.

1 [2010] QSC 127, Applegarth J

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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