Contractual indemnities appear in many services
agreements, including subcontracting, labour hire and wet plant
hire agreements. Indemnity clauses shift liability from one party
to another by requiring one party to indemnify the
A particularly common type of indemnity occurs where one party
agrees to indemnify another party for all liability for a claim for
personal injuries arising out of the performance of the contract,
regardless of which party caused the injury. If a party is caught
on the wrong side of such an indemnity, it can be very costly.
Recent amendments to the Workers' Compensation and
Rehabilitation Act 2003 (Qld) mean that, in certain
circumstances, a contractual indemnity will now be void. And it
could be void without the parties realising!
The Workers' Compensation and Rehabilitation (National
Injury Insurance Scheme) Amendment Act 2016 (Qld) was intended
to reverse the effect of the landmark decision of Byrne v
People Resourcing (Qld) Pty Ltd  QSC 269. However, the
end result actually goes further.
From 31 August 2016 onwards, an indemnity clause in respect of
liability for personal injuries will be void if:
a worker makes a common law claim against their employer;
the employer agreed to indemnify another party for legal
liability that the employer would not otherwise have had; and
WorkCover Queensland seeks contribution against that other
If an indemnity clause is void, the party wishing to rely upon
it can no longer enforce it against WorkCover Queensland or the
By way of an example:
John Smith is a delivery driver employed by ABC Transport. In
the course of his employment, John attends a site owned and
operated by XYZ Construction. While there, John is injured when a
XYZ Construction employee, who is helping load his vehicle, drops a
heavy drill on his foot.
John sues both ABC Transport and XYZ Construction. WorkCover
Queensland (the workers' compensation insurer of ABC Transport)
seeks contribution from XYZ Construction.
XYZ Construction attempts to escape liability by relying upon
an indemnity clause in its services agreement with ABC Transport.
However, it is unable to do so as the WCRA amendments make the
indemnity clause void.
To make things more complicated, the amendments will be
partially retrospective – they apply to all claims in which
there has been no settlement or trial (including part-heard trials)
as at 31 August 2016.
What does this mean for you? Rather than hoping to take comfort
from an indemnity, you should ensure your business has appropriate
insurance cover to avoid footing the bill for a claim for personal
If you are party to an agreement containing indemnity clauses,
or if you are thinking about entering into an agreement that
includes indemnity clauses, you should seek legal advice and also
contact your insurance broker to ensure that your existing
insurance policies will respond to any liability you have under the
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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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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
This article examines common coverage issues and considerations for granting indemnity for criminal fines and penalties.
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