Occupiers liability – managing agent, indemnity clause and contribution legislation

Laresu Pty Ltd v Clark [2010] NSWCA 180

TORTS – negligence – occupier’s liability – whether owner of commercial premises delegated to managing agent its duty of care as occupier of common property – whether managing agent an occupier of common property – plaintiff injured in fall on unlit stairs – whether breach of duty by occupier – Civil Liability Act 2002 s 5B
CONTRACT – principal and agent – obligations of managing agent of commercial premises – whether entitled to indemnity from principal
LANDLORD AND TENANT – appointment of managing agent of commercial premises – meaning of “maintenance” of premises – whether extended to setting of automatic light switch


Apart from the issue of occupier liability and the duty owed by the managing agent, of interest, is the principles applied in the interpretation of an indemnity clause  of the managing agent, it’s failure and contribution pursuant to Law Reform (Miscellaneous Provisions) Act 1946.

Notoriously, indemnity clauses are interpreted strictly, failing at the last hurdle and the impact of contribution legislation is often ignored, which covers the same field.

By contrast, I refer to my earlier posting in Samways v WorkCover Queensland & Ors [2010] QSC 127 as an example of an unambiguous clause, which was applied.

The Managing Agent’s Contractual Indemnity Claim

Tobias JA and Handley AJA concurred with MacFarlan JA:


The Managing Agent claimed that cl 15 of the Management Agency Agreement (see [20] above) entitled it to indemnity from the Owner in respect of any liability it might have to Mr Clark, including for costs, and in respect of any costs it might incur in connection with Mr Clark’s proceedings.


The decision in Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 confirms that contractual indemnities are to be construed strictly. In that case, the plurality concluded that the principles applicable to the construction of guarantees are relevant to the construction of indemnity clauses including the following statement of principle the plurality in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1986-1987) 162 CLR 549 made in connection with the construction of guarantees:

“At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law’s preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety” (at [17] citing [1987] HCA 15; (1987) 162 CLR 549 at 561).


Clause 15 is concerned with the “performance” of the powers, duties or authorities of the Managing Agent. The Managing Agent’s breach of duty in the present case constituted a failure to perform, not a performance of, its duties under the Management Agency Agreement. Bearing in mind the strict approach to construction that is appropriate in these circumstances, the conclusion follows that cl 15 is inapplicable and does not entitle the Managing Agent to the indemnity it claims.


 I add that I do not consider that the word “proper” that appears with a line through it in cl 15 assists the Managing Agent. Even if, which I think not to be the case, an inference could be drawn about the parties’ intentions from the fact that the word had been deleted (see for example as to the relevance of deleted words, MCA International BV v Northern Star Holdings Ltd (1991) 4 ACSR 719 at 724 – 725), the fact that the clause only applies where there is a relevant “performance” of the Agreement would not be affected. Thus the indemnity would still not apply to a failure to perform such as occurred here.

Apportionment of Responsibility between Owner and Managing Agent


It follows from what I have said in [73] and [86] above that breaches by both the Owner and Managing Agent of duties of care that they owed to Mr Clark caused or materially contributed to the injury suffered by Mr Clark. Accordingly Mr Clark is entitled to judgment against each of them for the full amount of his loss.


It is then necessary to consider the position as between the Owner and the Managing Agent. In its cross claim at first instance, the Owner sought contribution from the Managing Agent pursuant to the provisions of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (the “Law Reform Act”). Further, the Owner included a claim for a contribution order in its Amended Notice of Appeal. On the other hand, the Managing Agent did not seek such an order against the Owner, at first instance or on appeal. Its claim for indemnity from the Owner contained in its cross claim at first instance and in its Notice of Contention on appeal was based solely upon cl 15 of the Management Agency Agreement. I have earlier rejected the claim for indemnity made on this basis (see [89] above).


 In these circumstances, I do not consider that it is appropriate to make any order for contribution in favour of the Managing Agent under the Law Reform Act without giving the Owner the opportunity to be heard on the issue. As the amount of contribution to which the Managing Agent would be entitled from the Owner is identified in the views I express below as to the respective responsibilities of the Owner and Managing Agent and as a claim for indemnity was in fact made by the Managing Agent against the Owner, albeit on a different basis, I propose that the Managing Agent be given leave to apply within fourteen days of this judgment for an order for contribution and for appropriate amendments to its court documents.


 Section 5 of the Law Reform Act entitles a tort-feasor to recover contribution from any other tort-feasor for such amount “as may be found by the court to be just and equitable having regard to the extent of [the latter’s] responsibility for the damage” (ss 5(1) and (2)).


 I have identified earlier the manner in which the Owner and Managing Agent breached their duties of care (see [57], [73] and [85] above). In my view, the Owner bears a significant degree of responsibility for Mr Clark’s injuries. The Owner’s express instructions led to the creation of the situation that ultimately resulted in Mr Clark’s fall. Being the proprietor of the premises, and the occupier of the common property of them, the Owner was responsible for the condition of the common property, except to the extent it may have effectively delegated that responsibility. However, its delegation of management to the Managing Agent was implicitly subject to any express instructions concerning the management of the premises that the Owner might give or had given. It gave an instruction and the Managing Agent acted upon it.


The Managing Agent’s neglect in recommending a change to the lighting in the relevant area was in my view an important one. The instruction from the Owner was by 2004 an old one. It had been given before any significant operations of the Centre had occurred. Moreover the Managing Agent was the entity with the day to day management of the premises and was remunerated to undertake that role. In my view its responsibility for Mr Clark’s injuries was somewhat greater than that of the Owner.


In these circumstances, I consider that the appropriate apportionment is 40 per cent responsibility on the part of the Owner and 60 per cent on the part of the Managing Agent. Accordingly the Owner is entitled to an order for contribution from the Managing Agent in respect of 60 per cent of the Owner’s liability to Mr Clark.

Brisbane Barrister – David Cormack

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