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PROFESSIONAL STANDARDS BILL
The Hon. K.O. FOLEY (Deputy Premier) obtained leave and introduced a bill for an act to provide for the limitation of liability of members of occupational associations in certain circumstances; to facilitate improvement in the standards of services provided by those members; and for other purposes. Read a first time.
The Hon. K.O. FOLEY: I move:
That this bill be now read a second time.
I seek leave to have the second reading explanation inserted in Hansard without my reading it.
Leave granted.
professional standards bill 2003 This Bill is part of the third stage of the Government's legislative response to the insurance crisis. Over the last 12 months and longer, the Government has been approached by professional and occupational groups worried about steep increases in the cost of professional indemnity insurance. The Government has been told that as a result of these cost increases, risky but important professional services may either become prohibitively expensive to insure or be withdrawn from sale. The Government was concerned at this because of the consequences for the public if professional services become uninsurable or unavailable. It therefore invited comment on the possibility of professional standards legislation, such as that in force in New South Wales, first in a discussion paper published in February and later in a consultation letter sent out in October, 2003. Both consultations resulted in support.
The Government has meanwhile also taken part in national discussions that have resulted in agreement by all jurisdictions to enact consistent professional standards legislation modelled on the New South Wales Professional Standards Act. Accordingly, this Bill comes before the House. It is based on the New South Wales Act, though some modifications have been made.
In summary, the Bill would enable an occupational or trade group (not limited to a profession in the strict sense) to apply to register a professional standards scheme. A registered scheme would apply to all the members of the professional association, or to particular classes of members specified in the scheme. It would have a life of up to five years, subject to extension. In essence, a scheme would require those to whom it applies to adopt specified risk management practices and adhere to a complaints and disciplinary regime, so as to improve professional standards and reduce the likelihood of claims. In return, the scheme would cap the professional liability of the practitioners covered at a figure not less than the minimum cap fixed by law, in this case $500 000. The scheme would then require practitioners who wanted the benefit of the cap to maintain insurance cover or business assets, or a combination of these, sufficient to meet claims up to the cap.
The Bill contemplates the establishing of a Professional Standards Council. The Council is to consider proposed schemes and decide whether they should receive approval. The Bill sets out, by clause 11, the matters to be considered by the Council. They include the claims history of the members of the association, the cost and availability of insurance to those people, the effect of the scheme on people who may be affected by it, for example, consumers, and the comments and submissions made by the public after consultation on the scheme. Having regard to these and other matters, the Council would decide whether to approve the scheme.
Schemes can be approved for any profession, occupation or trade for liability for breach of a duty of care resulting in economic loss. The Bill would not, however, allow the limitation of liability for injury (even if the injury caused economic loss). This means that health professionals, carers or other practitioners whose chief liability risk is injury would not be able to limit that liability. The same approach has been taken in other jurisdictions.
If the Council approves a scheme, it must then be considered by the Minister, who may authorise the scheme by publication in the Gazette. Once this occurs, the scheme will take effect on a date set in the Gazette notice or, if no date is set, two months from the date of publication of the notice.
The scheme can, however, be disallowed by Parliament in the same way as subordinate legislation. It can also be the subject of a legal challenge, before it starts, by an affected person, on the ground that there has been a failure to comply with the Act.
A person covered by an approved scheme would have to disclose this in all advertising materials distributed and all business letters sent to clients, as well as on any website maintained by the business. Failure to do so will be a criminal offence. This is intended to ensure that consumers can make an informed choice about whether they wish to deal with a professional whose liability is capped.
The Bill does not, however, permit a professional and client to contract out of a scheme. If a professional is covered by a scheme, that scheme will apply to all the work done by the professional and falling within the scope of the scheme. I point out, however, that unlike the approach taken in interstate models, this will not affect a cause of action arising out of a contract made before the commencement of the Act, unless the parties otherwise agree.
The Bill is intended to strike a balance between maintaining adequate consumer protection against harm and keeping risky but vital professional services available to consumers. Note that, if a client sues a professional in negligence, in the absence of professional standards legislation, a consumer may not have any recourse because the professional may not have adequate insurance or assets to meet such a claim. The proposed legislation therefore increases protection to such consumers, by ensuring that a claim can be met, at least in part. It should also help to raise the standards of practitioners so that they are more alert to risks and better able to avoid them. It is about prevention at least as much as cure.
The Government has consulted widely on the measure, which appears to have support from stakeholders. Several commentators have argued that it should be accompanied by a complementary measure, proportionate liability. The Government has indicated its intention to introduce legislation for proportionate liability in economic loss and property damage claims, which I expect will be the subject of a future Bill.
The present Bill is consistent, though not identical, with measures taken in New South Wales and Western Australia, and with a Bill now before the Victorian Parliament. Similar measures can be expected to be introduced into other Australian Parliaments after the discussions of Insurance Ministers nationally. Complementary amendments to the Commonwealth Trade Practices Act, the Corporations Act and the ASIC Act are also expected in view of commitment given by the Federal Government to support State and Territory professional standards legislation. This will remove the principal impediments to the effectiveness of professional standards legislation.
I point out that it is the intention of Ministers that the legislation in progress around Australia should be complementary and should result in a national scheme relying on a single Professional Standards Council giving advice to all Ministers. Discussions are continuing and it is possible that some amendments to the measure could be required at a later stage to achieve these ends.
As a result of the measures being taken by States and Territories and by the Commonwealth, it is hoped that professionals across Australia will be encouraged to adopt schemes that will improve the quality and safety of their service to clients, while protecting the professional from exposure to catastrophic liability risks in the course of professional practice. The measure should, therefore, offer benefits both to professionals and to their clients.
I commend the Bill to Members.
Explanation of Clauses
Part 1Preliminary
1Short title
This clause is formal.
2Commencement
This clause provides for the commencement of the Act by proclamation.
3Objects of Act
This clause specifies that the objects of the Act are to
× enable the creation of schemes to limit the civil liability of professionals and members of occupational associations and groups; and
× facilitate the improvement of occupational standards of such persons; and
× protect the consumers that receive their services; and
× establish the Professional Standards Council (the Council) to supervise the preparation and approval of schemes and to assist in the improvement of occupational standards and protection of consumers.
4Interpretation
This clause contains definitions for the purpose of the Act. Some key definitions are as follows
occupational association is defined as a body corporate that represents the interests of persons who are members of the same occupational group and membership of which is limited principally to members of that occupational group;
occupational group includes a professional group and a trade group;
occupational liability is defined as civil liability that arises directly or vicariously, in tort, contract or otherwise, from any act or omission by a member of an occupational association performing his or her occupation;
scheme is defined as a scheme for limiting the occupational liability of members of an occupational association.
5Application of Act
This clause provides that the Act will apply to actions under the law of torts, for breach of a contractual duty of care, or under statute. The Act will not apply for damages arising from
(a) the death of, or personal injury to, a person; or
(b)the acts or omissions of a legal practitioner in acting for a client in a personal injury claim; or
(c)an intentional tort; or
(d) a breach of trust; or
(e) fraud or dishonesty.
The Act does not apply to liability that may be the subject of proceedings under part 18 of the Real Property Act 1886.
The Act will not affect contractual arrangements entered into before the commencement of this Act (unless the parties make provision for the application of the Act after its commencement).
6Relationship of this Act to other laws
This clause provides that to the extent of any inconsistency, Parts 3, 4 and 5 are to take effect subject to the provisions of other Acts. Otherwise, the Act is to have effect despite any other law to the contrary.
7Act binds Crown
This clause provides that the Act binds the Crown. The Crown is not liable to be prosecuted for an offence under this Act.
Part 2Limitation of liability
Division 1Making, amendment and revocation of schemes
8Preparation and approval of schemes
This clause provides that the Council may approve a scheme, upon application by an occupational association, to limit the occupational liability of its members. An application may be prepared by the Council (upon the request of the association) or by the occupational association itself.
9Public notification of schemes
This clause requires the Council, before approving a scheme, to publish a notice in a daily newspaper circulating throughout the State. This notice must explain the nature and significance of the scheme, advise where a copy of the scheme may be obtained or inspected and invite comments and submissions not less than 28 days after publication of the notice.
10Making of comments and submissions concerning schemes
This clause allows any person to make a comment or submission concerning a scheme following publication of the notice. Any comment or submission must be made within the period specified for that purpose in the notice or such further time allowed by the Council.
11Consideration of comments, submissions and other matters
This clause lists matters the Council must consider before approving a scheme. These matters include all comments and submissions made under clause 10, the position of persons who may be affected by a scheme, the nature and level of claims made against members of the occupational association relating to occupational liability, risk management strategies of the occupational association concerned, the means by which those strategies are intended to be implemented, the cost and availability of insurance against occupational liability, the requisite insurance standards referred to in clause 29 and provisions relating to complaints and disciplinary measures. The Council may consider other relevant matters.
12Public hearings
This clause enables the Council to conduct public hearings concerning a scheme. The public hearing may be conducted if the Council considers it appropriate and in a manner determined by the Council.
13Submission of schemes to Minister
This clause provides for the Council to submit schemes it has approved to the responsible Minister.
14Gazettal, tabling and disallowance of schemes
This clause enables the Minister, after carrying out the consultation required by clause 13, to authorise the publication of a scheme submitted by the Council in the Gazette. A scheme will then be tabled in Parliament and may be disallowed as if the scheme were a regulation.
15Commencement of schemes
This clause provides that a scheme will commence on a date specified by the Minister or, if no date is specified, after the expiration of 2 months after Gazettal, unless the scheme is subject to any order of the Supreme Court (the court) under clause 16.
16Challenges to schemes
This clause enables a person who is, or is reasonably likely to be, affected by a scheme to challenge its validity in the court on the ground that it does not comply with the Act. An application for an order is to be made before the scheme commences. The court may stay the commencement of the scheme until it makes a further order. The court can make an order to void a scheme, decline to make an order, give directions to ensure the scheme may commence or make any other order that it sees fit.
17Review of schemes
This clause provides that the Council, on direction of the Minister or on its own initiative, may at any time review the operation of a scheme. The Council must comply with a direction given by the Minister. A review may be conducted to determine whether a scheme should be amended or revoked or whether a new scheme should be made. The Council may also review the operation of a scheme if an occupational association proposes altering the standards applying to an insurance policy that would, in the Council's opinion, be less stringent than standards previously approved by the Council.
18Amendment and revocation of schemes
This clause allows an occupational association, the Council (on application of an occupation association), or the Minister upon a direction to the Council, to prepare an amendment or revocation of a scheme that relates to its members. The Council is required to approve such an amendment or revocation of a scheme. Further, clause 18 makes the provisions of clauses 8 to 16 apply to the amendment and revocation of schemes.
Division 2Contents of schemes
19Persons to whom scheme applies
This clause provides that a scheme can apply to all persons within an occupational association or to a specified class or classes of persons within that association. An occupational association may exempt a person from the scheme on application by that person.
20Officers or partners of persons to whom a scheme applies
This clause specifies that where a scheme applies to a person or a body corporate, the scheme will apply to each partner of the person or each officer of the body corporate. However, the scheme will not apply to a partner of that person or officer of the body corporate, if the partner or officer is entitled to be a member of the same occupational association as the person, but is not a member of that occupational association.
21Employees of persons to whom a scheme applies
This clause specifies that a scheme will apply to each employee of a person to whom the scheme applies, unless the employee is entitled to be a member of the same occupational association as the person, and the employee is not a member.
22Other persons to whom a scheme applies
This clause extends the application of a scheme to persons who are prescribed by regulations, for the purposes of clause 31, to be associated with persons to whom a scheme applies.
23Limitation of liability by insurance arrangements
This clause provides that a person to whom the scheme applies will not be liable for damages above the amount of the monetary ceiling specified in the scheme as part of a proceeding relating to occupational liability. However, the person must be able to satisfy the court that the person has the benefit of an insurance policy
(a)that insures the person against that occupational liability; and
(b)under which the amount payable in respect of occupational liability (including any amount payable by way of excess) is not less than the amount of the monetary ceiling specified in the scheme, relating to the class of person and kind of work, at the time the act or omission giving rise to the cause of action occurred.
24Limitation of liability by reference to amount of business assets
This clause provides that a person to whom the scheme applies will not be liable for damages above the amount of the monetary ceiling specified in the scheme as part of a proceeding relating to occupational liability. However, the person must be able to satisfy the court that
(a) the person
(i)has business assets; and the net current value of these business assets is not less than the amount of the monetary ceiling specified in the scheme at the time the act or omission giving rise to the cause of the action occurred; or
(ii)has business assets and the benefit of an insurance policy that insures the person against that occupational liability (including any amount payable by way of the excess); and
(b)if combined, the value of these business assets and the amount payable under the insurance policy, is not less than the amount of the monetary ceiling specified in the scheme, relating to the class of person and kind of work, at the time the act or omission giving rise to the cause of action occurred.
25Limitation of liability by multiple of charges
This clause provides that a person to whom the scheme applies will not be liable in damages above the "limitation amount" specified in the scheme as part of a proceeding relating to occupational liability. A scheme may also specify a minimum cap that may be higher than the "limitation amount"; in such instances, damages will be limited to the amount specified by the scheme as the minimum cap. However, the person must be able to satisfy the court that
(a) the person
(i)has the benefit of an insurance policy
×that insures the person against that occupational liability; and
×under which the amount payable in respect of occupational liability (including the amount payable by way of excess), relating to the cause of action, is not less than the "limitation amount" at the time the act or omission giving rise to the cause of the action occurred; or
(ii)has business assets and the net current value of these business assets is not less than the "limitation amount"; or
(iii)has business assets and the benefit of an insurance policy that insures the person against that occupational liability; and
(b)if combined, the value of these business assets and the amount payable under the insurance policy in respect of occupational liability (including the amount payable by way of excess), is not less than the "limitation amount".
The "limitation amount" means the reasonable charge for the services that the person provided or failed to provide, to which the action relates, multiplied by the multiple specified in the scheme that relates to the class of person and kind of work.
In determining the amount of a reasonable charge, a court must have regard to
(a)the ordinary scale of charges accepted by the occupational association; or
(b)if there is no such scale, the amount that a competent person of the same qualifications and experience would be likely to charge in the same circumstances.
This clause does not operate to limit the liability of a person, for an amount of damages less than the amount specified for that purpose in the scheme.
26Specification of different limits of liability
This clause enables a maximum liability to apply to all cases to which the scheme applies or different amounts for different cases, classes or purposes. An occupational authority is also granted a discretionary authority to specify a higher maximum liability than would otherwise apply.
27Combination of provisions under sections 23, 24 and 25
This clause provides that where clause 25 and clause 23 and/or clause 24 apply, at the same time, to a person in relation to the same occupation, the scheme must specify that damages will be determined under clause 25. However, any damages awarded must not exceed the monetary ceiling specified in the scheme in accordance with clause 23 or 24.
28Amount below which liability cannot be limited
A limitation on liability for damages, arising from a single claim, must not be less than $500 000.
In determining the liability amount, the Council must have regard to the number and amount of claims made against persons within the occupational association and the need to provide adequate consumer protection.
29Insurance to be of requisite standard
This clause requires an insurance policy to be of a kind which complies with standards determined by the occupational association concerned. An occupational association may submit to the Council for approval revised standards applicable to an insurance policy while a scheme remains in force. The Council retains discretion to approve or refuse a proposal submitted to it by an occupational association. Where the Council refuses to approve a proposal, the standards remain as previously determined by the occupational association.
Division 3Effect of schemes
30Limit of occupational liability by schemes
This clause provides that a scheme limits the occupational liability of a person to whom a scheme applies from the date of its commencement, for an act or omission, for the period in which the scheme remains in force.
A person to whom a scheme applies cannot choose not to be subject to the scheme, except in accordance with clause 19.
31Limitation of amount of damages
This clause provides that the limitation of liability is a limitation of the amount of damages which may be awarded for a single claim. It is not a limitation of the amount of damages which may be awarded for all claims arising out of a single event. However, claims by persons who have a joint interest and claims by the same person arising out of a single event against associated persons (such as body corporate officers, partners, co-employees and persons in an employer/employee relationship) are to be treated as a single claim.
32Effect of scheme on other parties to proceedings
This clause provides that the scheme does not apply to limit the liability of a party to proceedings if the scheme does not apply to that person.
33Proceedings to which a scheme applies
This clause provides that a scheme in force under the Act will apply only to liability that arises after the scheme's commencement.
34Duration of scheme
This provides that an application of a scheme is to cease after a period determined by the Council of not more than 5 years, in most cases, so that schemes are regularly reviewed by the Council. The Council may revoke or extend a scheme, by notice, for a period not greater than 12 months.
35Notification of limitation of liability
This clause requires a person whose civil liability is limited under Part 2 to disclose that fact on all documents given by the person to a client or prospective client that promote or advertise the person or the person's occupation, including official correspondence ordinarily used by the person in the performance of the person's occupation, and similar documents. The disclosure will also be required on any website established by the person to promote his or her business. Further, a member of a scheme is required to provide a copy of the scheme to a client or prospective client where a request is made. Such documents do not include a business card.
Part 3Compulsory insurance
36Occupational association may compel its members to insure
This clause enables an occupational association to compel its members to hold insurance against occupational liability and may specify different insurance arrangements for different categories of members.
37Monitoring claims
This clause enables an occupational association to establish committees to monitor and analyse claims against its members. Occupational associations may establish a common committee. Committee members need not be members of the occupational association concerned.
An occupational association (or such committee) can provide to its members, practical advice to minimise claims for occupational liability.
Part 4Risk management
38Risk management strategies
This clause requires an occupational association that seeks Council approval to a scheme to provide, as part its application, information on proposed risk management strategies and detail the means by which those strategies intend to be implemented in respect of its members.
39Reporting
This clause requires an occupational association to report annually (and more frequently if requested by the Council) as to the implementation, monitoring and changes to its risk management strategies. The occupational association's annual report must report findings or conclusions of a committee established by it.
40Compliance audits
This clause provides that the Council may conduct, or require the occupational association to conduct, a compliance audit of its members in respect of the association's risk management strategies at any time. The association, and its members, is required to give the Council information and/or documents that the Council reasonably requires to conduct the compliance audit. The Council is required to provide a copy of the audit report to the association. Where the association is responsible for conducting a compliance audit, it is required to provide a copy of the audit report to the Council.
Part 5Complaints and disciplinary matters
41Complaints and discipline code
This clause enables the occupational association to incorporate, as part of a scheme, the code set out in Schedule 1. The occupational association may amend the code before its approval by the Council. The code contains provisions concerning the making and determination of complaints against members of occupational associations and the taking of disciplinary measures against members.
Part 6The Professional Standards Council
Division 1Establishment of Council
42Establishment of Council
This clause establishes a body corporate to be known as the Professional Standards Council with the full legal capacity of a body corporate.
Division 2Membership and procedure of Council
43Membership of Council
This clause enables the Minister to appoint persons to the Council. Membership of the Council is to comprise of up to 11 persons having appropriate experience, skills and qualifications.
44Provisions relating to members of Council
This clause is a formal provision that gives effect to Schedule 2. That Schedule contains detailed provisions relating to the appointment, term and tenure of office and remuneration of members.
45Provisions relating to procedure of Council
This clause is a formal provision that gives effect to Schedule 3. That Schedule contains detailed provisions relating to the procedures and determinations of the Council.
Division 3Functions of Council
46Functions of Council
This clause specifies the functions of the Council. The Council is to
×advise the Minister concerning the publication in the Gazette of a scheme, or of any amendments or a notice of revocation, submitted by the Council to the Minister;
×advise the Minister on matters relating to the operation of the Act;
×advise, encourage and assist occupational associations regarding insurance policies, the improvement of occupational standards and the development of self-regulation of such occupational associations;
×monitor the occupational standards of members of occupational groups and compliance, by an occupational association, with its risk management strategies;
×collect and analyse information concerning the occupational standards of persons to whom the Act applies.
Division 4Miscellaneous
47Requirement to provide information
This clause enables the Council to require an occupational association to supply it with information needed in order to exercise its functions.
48Referral of complaints
This clause enables an occupational association to refer to the Council any complaint or other evidence of a member or former member of the association who has committed an offence under clause 35. It is also the intention of this clause to confer upon an occupational association, any person acting under its direction and the association's executive body, a partial immunity against an action, liability, claim or demand where the act is done in good faith pursuant to this clause (for example, in an action for defamation).
49Committees of Council
This clause enables the Council to establish Committees to assist it in the exercise of its functions. The Council is responsible for determining the procedures and arrangements for committee meetings and the conduct of business.
50Engagement of consultants
This clause enables the Council or a committee to engage the services of suitably qualified and experienced consultants.
51Accountability of Council
This clause requires the Council to exercise its functions in accordance with the general direction and control of the Minister and any written directions given by the Minister. The Minister may also direct the Council to provide, or provide access to, any information in its possession relating to a matter specified in the direction.
52Professional Standards Council Fund
This clause establishes the Professional Standards Council Fund. Any money appropriated by the Parliament for the purposes of the Fund, any fees paid to the Council and any other money to which the Council is lawfully entitled must be paid into the Fund. The Council may expend this Fund to carry out its functions under the Act.
Part 7Miscellaneous
53Characterisation of Act
This clause provides that this Act is to be regarded as part of the substantive law of the State, so that when the law of the State is applied in another jurisdiction, the limitation on liability provided for in the Act will also be applied.
54No contracting out of Act
This clause prevents persons to whom a scheme applies from contracting out of the provisions of the Act after the scheme applies to them.
55No limitation on other insurance
This clause provides that the Act does not limit the insurance arrangements a person may make, apart from those arrangements that are made for the purposes of the Act.
56Minister's power of delegation
This clause provides a Ministerial power of delegation.
57Regulations
This clause relates to the making of regulations for the purposes of the measure.
58Review of Act
This clause requires the Act to be reviewed within 5 years so as to ensure that the policy objectives of the Act retain their validity.
Schedule 1Model code
This schedule contains the Occupational Associations (Complaints and Discipline) Code.
Schedule 2Provisions relating to members of Council
This schedule contains provisions relating to the members of the Council.
Schedule 3Provisions relating to the procedure of the Council
This schedule contains provisions relating to the procedure of the Council.
The Hon. D.C. KOTZ secured the adjournment of the debate.