Managing liability exposures under local law approval processes

By Nick Rossmann, LGM Liability Senior Risk Consultant 

Councils’ local laws regulate a wide range  of community issues from animal-keeping and advertising signage through to festivals and parking.

While they can serve a broad range of objectives, the underlying purpose of local laws is to establish and formalise a process to identify, assess and control risk, which can include harm or damage to the environment, public health and safety, public infrastructure and the reputation of the council.

Local laws can achieve this by prohibiting activities with an unacceptable level of residual risk (for example, playing golf in a public park) or by regulating activities where it is possible to control the level of residual risk to an acceptable level.

As part of the risk assessment process, it is recommended that councils consider the formation, use and review of indemnity and insurance requirements under local laws. 

It is also generally recommended that, councils endeavour to establish indemnities whereby an applicant retains responsibility for their own liabilities, effectively a restatement of the common law and referred to as a ‘proportionate indemnity’. 

Where an indemnity is given that reflects the common law, i.e., indemnifies the council for the applicant’s legal liability that could arise from negligence, then that indemnity may well reasonably be considered appropriate. This

is because it limits the possibility of incurring liability risks over which the council has limited control and would otherwise not be exposed to.

Indemnities should be supported by appropriate and sufficient insurance, as

the value of an indemnity is limited by the financial capacity of the party granting it. This is particularly important, because an indemnifier who does not have sufficient funds to satisfy an indemnity, or who does not hold adequate and appropriate public liability insurance cover, may expose council to the risk of unrecoverable losses or liabilities.

LGMS member, Moreton Bay Regional Council, is currently undertaking its largest ever review of local laws, reaching out to more than 150 not for profit and government organisations, more than 40 peak representative bodies of local business and all members of the community. They have already received more than 23,000 submissions in response to their Local Laws Review Questionnaire.

Risk Management in Action—An example from Moreton Bay Regional Council

Moreton Bay Regional Council Legal Operations Manager Rhys Dennison said, “Moreton Bay Regional Council’s current local laws review project includes a process to identify where applicants for approval should provide evidence of insurance cover for their activities.

“By including these requirements in appropriate circumstances, council not only minimises its own risks, but it also helps to protect the parties regulated under our local laws, as well as individual members of our local community.”

Currently at Council, all festivals or events open to the public—whether on public or private land—require application to, and assessment and approval by, council. All applicants must provide certain documents in support of the application, including detailed site plans, proof of liability insurance and a risk management plan assessed and verified by a suitably qualified person. These requirements apply regardless of the size, scale or nature of the event.

During the review process numerous stakeholders raised concerns that the current approval process is too onerous for smaller, lower-impact events, and requirements

and conditions of approval need to be commensurate with the size, scale, impacts and risks associated with the event.

Whilst many stakeholders acknowledge the need for all events to have some form of approval, 55 per cent said Council should require a formal application, assessment and approval process for certain events to go ahead.

Council intends to address this feedback by distinguishing between ‘low-risk’ and ‘high-risk’ events under local laws, with less onerous conditions to apply to low-risk events.

Council has already engaged a specialist independent event risk assessor to help build an Event Risk Framework, risk matrix and online risk calculator tailored to the Moreton Bay region that will help inform which events are low versus high risk. The new local laws will give effect to these tools; all of which will be made available to the public in due course. Therefore, it will make it easier for residents and groups to hold community events that will help bring the region together. Moreton Bay Regional Council hopes to be the first council in South-East Queensland to successfully distinguish between low- versus high-risk events from a regulatory perspective.

LGM Liability scheme members have access to a range of guidance materials to explore these matters in detail, including the Contracts (Indemnities and Insurance) Guide, the Road Risk Management Guide, Footpath Guide, and the Recreational Areas and Facilities Guide.