Gear hire services – the legal issues

The laws concerning hiring gear are designed to regulate commercial activities; if your club is operating the service in the true nature of a voluntary organisation for the benefit of its members, then the club is generally exempt from those laws.

This page is intended to complement the resource on Gear hire – the practicalities.  This resource was compiled with the assistance of FMC’s executive and staff. It is intended only to assist clubs with their own interpretation of the relevant laws. It is not a legal opinion, and each club remains responsible to determine for itself the legal obligations it has.

The bottom line up front

The laws concerning hiring gear are designed to regulate commercial activities; if your club is operating the service in the true nature of a voluntary organisation for the benefit of its members, then the club is generally exempt from those laws.

Your club will be exempt provided:

  • You are a bona fide volunteer association, aiming to provide a service for the good of its members;
  • Any hire fees charged are only enough to support the service, not raise funds or profit for the club and,
  • The club hires the gear directly to the hirer, and does not have any agreements with companies or agents who hire gear out on the club’s behalf.

If you don’t meet all those provisions, then the service is to some degree in the nature of a commercial activity, and your club will have legal obligations, which are discussed in detail below.

Accident Compensation Act 2001

As we all know, New Zealand’s unique Accident Compensation Act gives universal, no-fault compensation for injury for anyone in New Zealand. A hirer cannot sue a club if they are injured using hired gear.

Contract and Commercial Law Act 2017

Hiring out gear for a fee regardless of amount means that the club has a legal contract with the hirer. This means the club (and the hirer) both have the obligation to follow the agreements made as part of the hiring process.  

 

What does this mean in practice?

That you must do what you said you would do, and you can’t do things that were not agreed upon prior to the hire. Your club should publish a clear gear policy (which then becomes part of the contract, whether verbal or written on a hire form) and stick to it.

For example, you can’t hold onto a person’s deposit if they are a day late in returning the gear unless you both agreed to that prior to hiring the gear. If you are hiring to the public, then you’d be wise to ensure the ‘terms of the contract’ are written down and signed for by the hirer; this is essentially the ‘hire form’ which they’d fill out for any type of hire.

If someone did complain and attempt legal action based on this Act, then they would be able to seek compensation that put them back in the position they were before the contract was entered into: which amounts to refunding their hire fee.

 

Health and Safety at Work Act 2015

The ‘Health and Safety’ boogey-man has a lot to answer for, but the reality is that there are very few considerations for gear hire services provided by clubs under this law.

The key thing to realise is that this law is about Health and Safety at Work.  Section 17 of the act specifically states that the act does not apply to a volunteer organisation (whether incorporated or not), provided the organisation doesn’t “employ any person to carry out work”.  

So if you’re a normal club that operates solely on a voluntary basis, then there’s nothing in the Health and Safety at Work Act 2015 that you need to worry about when running a gear hire service.

However if your club has entered into an agreement with a local shop, and that shop processes any hire fees or charges your club a commission, then your club is employing the shop to do work. The club then becomes a Person Conducting Business or Undertaking (PCBU) and the provisions of the Act apply.

Specifically, Section 42 describes the duties of a “supplier” (your club) which supplies “plant” (rental gear) which could be used in a workplace (ie the outdoor store, or on a guided/commercial course or trip).

The club would have an obligation under the Act to the outdoor store to “so far as is reasonably practicable” ensure the gear is without risk to the Health and Safety of the staff (and other customers in the shop) who handle/store/hire out the gear. And the shop would have duties to anyone who would use the equipment in a workplace (professional course or trip).

To meet that obligation, the club would have to;

  • Carry out (or ensure the shop carries out) the inspections/maintenance of the gear to keep it in proper operating condition,
  • Allow the staff to see the records of those inspections
  • Ensure the staff at the shop have sufficient information about the hazards of the gear and how to keep safe.

 

In addition, if the gear is being used in a workplace (professional/guided trip), the shop would have to;

  • Make available the above information to the hirer
  • Give adequate information about the purpose of the gear, and limitations for its use. (referring them to the manufacturers website is a simple way of achieving this)

 

When could this be an issue at the shop?

Eg. a staff member who didn’t realise crampons were sharp mangles a finger on one when handling it, or mangling his/her finger due to the crampons not having a storage bag/cover.

 

What about guided trips?

If someone is hiring crampons to go on a guided ascent of a peak, then they are using that gear in a workplace (the mountain guides’ workplace). That then means that the shop (a PCBU) has these obligations under section 42 of the Act.

 

How could the club protect itself?  

By ensuring any agreement with the outdoor store includes information about safely handling the gear and that sharp stuff has covers, having a gear maintenance schedule where you record the inspections and make the records available to the store.

The club wouldn’t have a liability if the gear was hired for commercial guided trips, but if that happened, it means the shop has a duty. So for the benefit of the club-shop relationship, it’d be wise to check the shop understands its obligations under section 42.

 

Consumer Guarantees Act 1993

The CGA is designed to protect the rights of consumers and includes gear hire.

However, Section 41 (Exceptions) states that:

“Nothing in this Act shall give any person a right of redress against a charitable organisation in any case where goods or services are supplied by the charitable organisation for the principal purpose of benefiting the person to whom the supply is made.

Being a ‘charitable organisation’ does not mean your club has to be a registered charity; it just means that it has to be justified as pursuing a charitable purpose. The good news is that most volunteer outdoor clubs would qualify. (If you want to find out more, we explored this definition in Wilderlife in our resource on Club Transport, and there is more guidance on the charities services website. )

Ensuring the services is “for the principal purpose of benefiting the person to whom the supply is made” would mean that you could only charge a hire fee to cover the costs of maintaining the service.

So normal tramping clubs charging a nominal fee are exempt, and you don’t need to read any further in this section. However, if your club charges fees that are designed for general fundraising or you are operating a service through a shop, you have obligations under the Act.

The main obligations are that the hired gear;

  • Be of acceptable quality.
  • Be fit for a particular purpose that the hirer asked about

 

Acceptable quality

The relevant parts of Section 7 say goods are of acceptable quality if they are fit for the purpose they are usually hired for (see below), free from defects and are safe and durable. They can still be of acceptable quality if there is a defect, provided the person hiring the gear is told in writing about the defect.

 

Fitness for a particular purpose

In Section 8 it explains that gear must be ‘reasonably fit’ for the purpose that the supplier says they are and any purpose the person hiring the gear makes known, either expressly or by implication.

It also explains that the burden for determining fitness for purpose usually rests on the skill or judgement of the supplier. This means that the gear officer or shop staff member has to understand the gear, how it is used, what it is suitable for and what the hirer plans to do with the gear.

In the particular example of crampons, the various crampon/boot compatibility issues mean that ‘fit for purpose’ would include being compatible to the boot. TTC’s policy of ensuring people bring boots for fitting when hiring crampons is a wise one. Just the same way that you’d need to ensure a boot fitted a foot when hiring out one.

 

So what would we have to do in practice?

If someone came in and said they were going to climb a mountain, the crampons hired would need to be ones that are good enough to do the job. It’s important to have enough of a discussion about the intended purpose to make sure they will in fact do the job. If the mountain they wanted to climb required glacier travel and front-point ice climbing, and your club hired them instep crampons, then the gear would fail the ‘fit for purpose’ test.

A straightforward test to figure out if you’re going to supply the right gear for that person, is to ask yourself, would other experienced people in other clubs come to the same conclusion as us?

If the person then goes and wears those crampons walking over rocks all day and they eventually break, then the hirer would have no right of redress against you – they have used the gear in a way that is not advised for, and in a way they have not told you about.

Another person could come in and say “I want some crampons to walk over rocks all day”, and even though it’s not a ‘normal’ purpose, if you hire them a set of crampons, they need to be able to climb over rocks all day or else they fail the ‘fit for purpose’ test.

Practically, you should include a statement on the hire form to ensure the obligations under the act are covered, something like;

I have explained the nature of my trip and my intended use of the gear I wish to hire. I agree that the gear provided is fit for those purposes, is of acceptable quality, (including any defects that have been listed on this form).

 

Using a shop, agent or dealer

Section 45 states that if your club authorises a shop to hire the gear on your behalf, any ‘representations’ (promises, judgements, advice etc) the shop makes are as good as coming from the club itself.

That means that the club has to be able to trust the judgement and skill of the staff in ensuring they ask the right questions about the hirer’s intended purpose for the gear, otherwise the hirer could take a redress against the club.

 

What is the worst that could happen?

If the gear failed or did not meet the needs of the person who hired it, they could take civil legal action for a redress under the Act. The club could be then liable for replacing the item with a functional one, refunding the hire cost, or compensation for consequential loss.

Any compensation for consequential loss must put the hirer back in the position they would have been in if the gear hadn’t failed or been unfit for purpose. A court or tribunal would need to determine if the loss or damage was “reasonably foreseeable as liable to result” from the unacceptable quality or un-fitness for purpose before deciding whether or not compensation could be claimed.

There are a few examples of tribunal decisions about such consequential loss claims online. We were unable to find any tribunal decisions of claims against clubs for gear hire, so we can’t give any better examples or guidance on how the courts would view such a claim.

We did find some anecdotal evidence regarding a claim by a customer who hired crampons directly from an outdoor shop:

http://www.stuff.co.nz/national/9501281/Would-be-climber-alarmed-hired-crampons-fell-apart

We understand that the result of the claim was that the shop was ordered to refund the cost of hireage, but the claim for compensation for consequential loss was not approved by the courts/tribunal. Although the direct financial cost to the shop was minimal, the amount of time and stress involved in the process was considerable, and the shop no longer hires out crampons or ice axes.

This resource was compiled with the assistance of FMC’s executive and staff. It is intended only to assist clubs with their own interpretation of the relevant laws. It is not a legal opinion, and each club remains responsible to determine for itself the legal obligations it has.

Last updated: 20 September 2018

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