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The test for liability for occupational safety and health issues, is whether you took reasonable steps to prevent the possible injuries. If you have your own audit and checklists, and a clean record that indicates that you have your part of the protection well under control. If this other group uses the premises, I would have thought that they must take their own steps to ensure that the arena is safe for their purposes. This means if they want to fence off portions of the arena, then they have to do so themselves. If the arena is safe for your purposes, but they have perhaps unrealistic standards, then as I see it, it is up to them to make any modifications
I think they must be over thinking the potential issues. Your suggestion may justify saying, that even though your licence restricts liability, they want something more, and therefore since you dont want to be at risk, you will cancel their licence, as they want to make you liable even though the licence says otherwise. This may make them be more sensible
There were changes last year, which did increase the burden on you
This could be a reason to cancel, and I quote from the site
PCBU and the primary duty of care
Under HSWA, a business or undertaking (PCBU) must look after the health and safety of its workers and any other workers it influences or directs. The business or undertaking is also responsible for the health and safety of other people at risk from its work including customers, visitors, or the general public. This is called the 'primary duty of care'.
Who or what is a PCBU?
A PCBU is a person conducting a business or undertaking. It's a a broad concept used throughout HSWA to describe all types of modern working arrangements which we commonly refer to as businesses.
What is the primary duty of care?
A business or undertaking must ensure, so far as is reasonably practicable, the health and safety of its workers and any other workers who are influenced or directed by the business. This is called the primary duty of care.
Duties for specific businesses
There are responsibilities that apply some to business under certain situations. They expand on and are in addition to the primary responsibilities.
That may stop them in their tracks and perhaps get them talking sense (possibly!)
If you take reasonable steps, but also require them to take their own measures for protection, and if they did not take appropriate steps they are still liable. It would be hard to make you liable where you made it clear the burden was on them to protect their users.
You may want to mention that, but you have possibly left it too late to use that as a primary breach. perhaps something to mention that the relationship has been affected by this, so the current issue about health and safety has meant that trust has gone, so the new issue means you now want to cancel altogether
That explains your position, although i guess this may end up in an argument, possibly in court if they dont accept what you say
That does seem reasonable. Perhaps its not surprising their numbers are down
It shouldnt take more than a few weeks to do this. I would suggest a month would be reasonable