SCOPE OF INDEMNITY UNDER IMPLIED CONDITION 36 GUIDANCE NOTE

Driver agreement

A driver agreement is an agreement between a taxi driver and a permit holder (operator) that clarifies certain working conditions for the driver, and other arrangements for the taxi. It should include information such as what portion of the fare box the driver will keep (which must be at least 55%), insurance arrangements and leave entitlements.

A driver agreement includes conditions that all taxi drivers are entitled to—these are known as ‘implied conditions’¹. The implied conditions automatically apply to all driver agreements and cannot be changed. This guidance note relates specifically to implied condition 3.6, and explains how the TSC thinks that condition should operate.

Implied condition 3.6 – operator must indemnify driver for vehicle damage

Like the other implied conditions, implied condition 3.6 is part of every driver agreement. That condition says:

Subject to condition 7.4(b), the Operator must indemnify the Driver for vehicle damage (including damage to the Taxi-cab) arising out of the use of the Operator’s Taxi-cab, and for costs including legal costs associated with such vehicle damage.

This implied condition was included because sometimes, genuine accidents happen. It was included to protect drivers against financial costs where there is an accident arising out of driving the taxi and it would be unfair that the driver has to compensate the third party (such as where the driver was not at fault). The indemnity provision is not intended to be absolute: if vehicle damage arose out of the driver using the taxi while the driver was drunk, under the influence of drugs, wasn’t driving lawfully or set out to cause that damage, then the intention is that the indemnity wouldn’t operate, consistent with how the TSC understands indemnities work more generally.

DISCLAIMER: The information contained in this document is intended only to provide guidance on these matters. It is not intended to be comprehensive. It does not constitute, nor should it be treated as, legal advice or opinions. The TSC accepts no liability for any loss suffered as a result of reliance on this guidance note. The TSC recommends that the parties seek independent professional advice if they have concerns about whether the indemnity will apply in a particular situation. The information in this document is current as at the date of this document.

1 Conditions determined by the Taxi Services Commission under section 162L(1) of the Transport (Compliance and Miscellaneous) Act 1983

2