Smith v Visy Pulp and Paper Pty Ltd [2026] NSWSC 685
Key Takeaways
- A broadly drafted indemnity clause will not necessarily protect a party from liability arising from its own negligence.
- Courts require clear and unambiguous language before interpreting an indemnity as extending to the indemnified party’s own negligent conduct.
- If an indemnity is intended to cover a contracting party’s own negligence, the contract should state this expressly.
Background & Overview
The Supreme Court of NSW recently handed down its decision in Smith v Visy Pulp and Paper Pty Ltd [2026] NSWSC 685. The case concerned an occupier’s unsuccessful attempt to rely on a contractual indemnity following a workplace injury at a paper mill.
The worker was employed by maintenance contractor DME Engineering Services (the employer), which provided mechanical maintenance services at Visy’s Tumut paper mill. Visy occupied and operated the site.
Two years before the accident, the employer replaced a flexible plastic pipe with a rigid steel elbow that projected into a walkway. No risk assessment was carried out after the modification.
During a scheduled shutdown, the worker took an unfamiliar route and struck his head on the steel pipe elbow, which projected into the only available access path. He suffered serious neck injuries requiring surgery, together with psychological injuries, and has been unable to return to work. He commenced proceedings against both his employer and Visy.
The Court’s decision
The Court found that both defendants had failed to provide a safe workplace.
The employer had failed to identify and remove the hazard, while Visy remained responsible for risks of harm arising from the condition of its premises.
The worker was found to be 20% contributorily negligent for failing to keep a proper lookout. The remaining liability was apportioned equally between the employer and Visy.
The indemnity claim
Visy sought to recover its liability from the employer under a contractual indemnity in the maintenance services agreement. The clause provided that:
“[The employer] indemnifies and agrees to keep [the occupier] indemnified against any loss, claim, demand, action or proceedings … in respect of personal injury … caused by or resulting from, directly or indirectly, any act or omission of [the employer]…”
The clause did not limit the indemnity ‘to the extent of’ Visy’s negligence.
Visy argued that the clause required the employer to indemnify it because the worker’s injuries had resulted from the employer’s acts or omissions.
The Court rejected this argument. Although the employer had installed the pipe, Visy’s liability arose from its own breach of duty to maintain safe premises. The employer’s work merely created the circumstances in which that breach occurred, but it was not the legal cause of Visy’s liability.
Applying the principles in Erect Safe Scaffolding (Aust) Pty Ltd v Sutton (2008) 72 NSWLR 1, the Court held that an indemnity will not be interpreted as protecting a party against its own negligence unless the contract expresses that intention in clear and unambiguous terms.
Why this matters
This decision is a timely reminder that the effectiveness of an indemnity clause depends on the language used to draft it. The practical lesson for businesses and contract drafters is that broad indemnity wording may not be sufficient where liability arises from the indemnified party’s own negligence.
If a principal expects to be indemnified for its own negligent acts or omissions, the contract should state this expressly. Courts will not infer that intention from general indemnity language.
Businesses should therefore review their indemnity provisions carefully to ensure they clearly reflect the intended allocation of risk between the contracting parties.
Further information
This article was written by Senior Associate Louis van Bergen and Principal Lawyer Mark Birbeck. Please contact Mark if you have any questions or would like more information.
Disclaimer: This information is current as of August 2026. This article does not constitute legal advice and does not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of this article.
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