Whether indemnity remained in force after expiry of agreement – evidence of performance of arrangement
A contract for indemnity will not remain in force between parties following the expiration date unless the contract has been extended by express agreement or by the parties' conduct. The party seeking to rely on the indemnity bears the onus of proving that the performance of the contract continued on the same terms for the relevant period.
David Frewin (plaintiff) commenced proceedings for a worker's compensation claim against Adecco Industrial Pty Limited (first defendant), Holcim (Australia) Pty Ltd (second defendant) and CSR Ltd (third defendant). The second and third defendants filed a cross-claim against Adecco Australia Pty Ltd (Adecco), the parent company of the first defendant, claiming an indemnity pursuant to an agreement between the third defendant and Adecco, whereby Adecco would supply labour to the third defendant. The plaintiff's claim was settled and the only matter for determination was the cross-claim.
Justice Adamson held that the agreement had expired prior to the plaintiff's injury and therefore Adecco was not bound to indemnify the third defendant with respect to the personal injury claim.
The agreement gave the third defendant the right to extend the term of the Agreement 'for a maximum of two years'. It was common ground that there was no express extension after 31 July 2002. The third defendant argued that the parties agreed, by their conduct, to extend the Agreement pending further agreement.
Her Honour held that the third defendant bore the onus of proving that the performance of the arrangement between the parties continued in the same way from 31 July 2002 until March 2003 when the plaintiff ceased his employment. The evidence relied upon by the third defendant did not extend beyond October 2002. Her Honour was not prepared to draw the inference that the situation continued after that date, or that the evidence relied upon (that Adecco continued to supply labour and was paid for that labour) supported an inference that an indemnity in the same terms continued to bind the parties for any period after 31 July 2002.