So if an organisation has signed a lease containing a hold harmless clause they have picked up the liability of the council if something goes wrong and the council is deemed liable, and yet they have no insurance cover in place to respond to that liability. 

I can confidently predict that many organisations will have already signed leases containing one of the clauses that I have outlined above, and I feel it is likely that they have signed such leases without even realizing what the clause contained therein really means and what repercussions can ensue.  The prime message I am trying to convey with this article is DO NOT SIGN ANY CONTRACT (LEASE OR OTHERWISE) WITHOUT FULLY UNDERSTANDING WHAT EACH CLAUSE MEANS AND HOW IT CAN AFFECT YOUR ORGANISATION.

The logical next question is, “what do I do if my council insists on having one of the clauses such as outlined above in our lease document?”  Sadly, I do not have an answer to that question.  All I can suggest is that you debate the matter with your council and try and convince them that such clauses are, in the writer’s opinion, unjust.

Let’s look at how negligence cases operate.  It is up to the court to determine which of the defendant parties, if any, have been negligent and award damages accordingly.  In the hypothetical situation of a case where both the council (as the owner of the facility) and a sporting organisation (as the tenant of the facility) are included as defendants in an action the court will determine if any negligence is involved, and if so which parties have been negligent.  If the council hasn’t breached its duty of care it won’t be found negligent, if the organisation hasn’t breached its duty of care it won’t be found negligent; if either have breached their duty of care they will be found negligent, with the potential for them both having to contribute to the settlement of the court award.

I would have thought that to be reasonable.  However as per some councils proposed legal wordings the tenant (or his insurer) is being asked to accept total liability for facility use.  Perhaps if we were referring to a private property owner who was seeking an indemnity when graciously allowing an organisation to use his/her property for nil or little financial reward that would be understandable.  But councils are community organisations, funded by the community with one of their very important roles being to provide the community with recreational facilities.  By insisting on including clauses such as those outlined above in their lease agreements they are putting the sporting organisation, generally a not for profit volunteer organisation who is trying to help the community, in an untenable situation.

Certainly I agree that a council should require a tenant of its facilities to have public liability insurance.  After all, if there is a situation where both the landlord and the tenant are jointly held liable in an injury negligence case and one of the parties is not able to meet its share of the damages awarded, then the other party has to meet the damages awarded against both parties in full.  I believe most will agree then that justification exists for compulsory public liability insurance for tenants. 

I can also understand and support a council including a clause in their lease agreement confirming that should the tenant be deemed wholly liable for damages awarded in a negligence case (i.e. absolutely no negligence on the part of the council) then the tenant organisation is responsible for meeting the damages without any possibility for liability to extend to the council.  However I cannot support the inclusion of clauses such as those outlined above that in effect require the tenant organisation or its insurer to be responsible for the liability incurred by a council as a result of its own negligence.