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This is a Bill, not an Act. For current law, see the Acts databases.
New South Wales
Legal Profession Amendment
(Professional Indemnity Insurance)
Bill 2001
Contents
Page
1 Name of Act 2
2 Commencement 2
3 Amendment of Legal Profession Act 1987 No 109 2
Schedule 1 Amendments 3
I certify that this PUBLIC BILL, which originated in the LEGISLATIVE ASSEMBLY, has
finally passed the LEGISLATIVE COUNCIL and the LEGISLATIVE ASSEMBLY of NEW
SOUTH WALES.
Clerk of the Legislative Assembly.
Legislative Assembly,
Sydney, , 2001
New South Wales
Legal Profession Amendment
(Professional Indemnity Insurance)
Bill 2001
Act No , 2001
An Act to amend the Legal Profession Act 1987 to make further provision in
connection with solicitors' professional indemnity insurance and the use of the
Solicitors' Mutual Indemnity Fund; and for other purposes.
I have examined this Bill, and find it to correspond in all respects with the Bill as
finally passed by both Houses.
Chairman of Committees of the Legislative Assembly.
Clause 1 Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
The Legislature of New South Wales enacts:
1 Name of Act
This Act is the Legal Profession Amendment (Professional Indemnity
Insurance) Act 2001.
2 Commencement
This Act commences, or is taken to have commenced, on 30 June
2001.
3 Amendment of Legal Profession Act 1987 No 109
The Legal Profession Act 1987 is amended as set out in Schedule 1.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
Schedule 1 Amendments
(Section 3)
[1] Section 31 Non-payment of contributions and levies by solicitors in
respect of Indemnity Fund or Fidelity Fund
Insert ", 46A" after "46" in section 31 (c).
[2] Section 36 Duration of practising certificates
Insert "or for such other period as may be specified by the regulations" after
"12 months" in section 36 (1).
[3] Section 36 (5)
Omit the subsection. Insert instead:
(5) The regulations may contain savings and transitional provisions
consequent on a change in the relevant date. In particular, the
regulations may:
(a) specify the period for which practising certificates in
force when the change is made are to remain in force,
and
(b) specify the period for which practising certificates that
take effect on the new relevant date are to remain in
force, and
(c) modify the application of section 45 in respect of
contributions payable in respect of any such certificates.
(6) Schedule 2A has effect.
[4] Section 39 Definitions
Insert in alphabetical order:
HIH group member means:
(a) HIH Casualty and General Insurance Limited, FAI
General Insurance Company Limited or CIC Insurance
Limited, or
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
(b) any corporation that is, with respect to one of the
corporations referred to in paragraph (a), a related body
corporate (within the meaning of the Corporations
Law).
insured person means a person who is insured under an
approved insurance policy.
[5] Section 41 Solicitor to be insured and to make contributions
Omit "section 45 or 46" from section 41 (1) (b).
Insert instead "section 45, 46 or 46A".
[6] Section 41 (1), note
Insert after section 41 (1):
Note. See Schedule 2A, which qualifies the above arrangements, but
only in relation to 20012002.
[7] Section 44 Payments from the Indemnity Fund
Insert after section 44 (1):
(1A) The company is required to pay from the Indemnity Fund the
costs of an investigation of the Indemnity Fund, as referred to
in section 47AA, in accordance with a direction given by the
Attorney General under that section.
[8] Sections 44A and 44B
Insert after section 44:
44A Payments relating to HIH group insurance policies
(1) Payments must be made by the company from the Indemnity
Fund for the purpose of indemnifying any person who is
insured under an approved insurance policy that was issued or
renewed by an HIH group member, to the extent of the
indemnity provided by the approved insurance policy.
Note. HIH Casualty and General Insurance Limited (HIH) was the insurer
under the approved insurance policy for the period from 1 July 1998 to
1 July 2001. HIH, together with other HIH group members, were also
insurers under approved policies that pre-date that period. A provisional
liquidator was appointed in respect of the HIH and other HIH group
members on 15 March 2001.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
(2) On the making of such a payment from the Indemnity Fund, the
company is subrogated to the rights and remedies of the
insured person under the approved insurance policy, in
connection with the subject matter of the payment, subject to
the terms of any agreement entered into under this section.
(3) Subsection (2) extends, but is not limited to, a right or remedy
against any of the following:
(a) an HIH group member,
(b) any insurer or re-insurer of an HIH group member,
(c) any person who, under any Act or other law, is liable for
a failure of an HIH group member to satisfy its
obligations under or in connection with an approved
insurance policy.
(4) The company may exercise its rights and remedies under this
section in its own name or in the name of an insured person.
(5) If the company exercises its rights and remedies under this
section in the name of an insured person, the company is to
indemnify the insured person against any liability incurred by
the insured person as a result of the exercise of those rights and
remedies.
(6) The Law Society and the company may enter into an agreement
with an HIH group member (including a provisional liquidator
or liquidator of an HIH group member), or with any insured
person, in connection with the payment of amounts from the
Indemnity Fund under this section.
(7) In particular, any such agreement may provide for the
following:
(a) the assignment or subrogation to the company of the
rights and remedies of an HIH group member or the
insured person (or both) under or in connection with the
approved insurance policy,
(b) the recovery by the company from an HIH group
member of any amount paid from the Indemnity Fund
under this section.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
(8) Any payment made from the Indemnity Fund under this
section, and any agreement entered into with an insured person
under this section, does not prevent the recovery by the
company from an HIH group member of any amount that
would have been recoverable by the insured person under or in
connection with the approved insurance policy had the payment
not been made or the agreement not been entered into.
(9) Any amount recovered by the company as a result of the
exercise of its functions under this section (including its
functions under a subrogation or agreement referred to in this
section) is to be paid into the Indemnity Fund. This does not
apply to any amount that is payable to another person:
(a) under any other Act or law, or
(b) under any agreement referred to in this section, or
(c) under the regulations.
(10) Payments may be made from the Indemnity Fund for the
purpose of meeting any reasonable costs and expenses incurred
by the company in exercising its functions under this section,
including its functions under a subrogation or agreement
referred to in this section.
44B Payments relating to other defaulting insurers
(1) Payments may be made by the company from the Indemnity
Fund for the purpose of indemnifying any person who is
insured under an approved insurance policy that was issued or
renewed by a defaulting insurer, in accordance with
arrangements approved from time to time by the Attorney
General.
(2) The Law Society and the company may enter into an agreement
with a defaulting insurer (including a provisional liquidator or
liquidator of a defaulting insurer), or with any insured person,
in connection with the payment of amounts from the Indemnity
Fund under this section.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
(3) In particular, any such agreement may provide for the
following:
(a) the assignment or subrogation to the company of the
rights and remedies of a defaulting insurer or the insured
person (or both) under or in connection with the
approved insurance policy,
(b) the recovery by the company from a defaulting insurer
of any amount paid from the Indemnity Fund under this
section.
(4) Any payment made from the Indemnity Fund under this
section, and any agreement entered into with an insured person
under this section, does not prevent the recovery by the
company from a defaulting insurer of any amount that would
have been recoverable by the insured person under or in
connection with the approved insurance policy had the payment
not been made or the agreement not been entered into.
(5) Any amount recovered by the company as a result of the
exercise of its functions under this section (including its
functions under an agreement referred to in this section) is to be
paid into the Indemnity Fund. This does not apply to any
amount that is payable to another person:
(a) under any other Act or law, or
(b) under any agreement referred to in this section, or
(c) under the regulations.
(6) Payments may be made from the Indemnity Fund for the
purpose of meeting any reasonable costs and expenses incurred
by the company in exercising its functions under this section,
including its functions under an agreement referred to in this
section.
(7) For the purposes of this section, an insurer under an approved
insurance policy is a defaulting insurer if the company is
satisfied that:
(a) the insurer is unwilling or unable to meet any claims or
other liabilities under the approved insurance policy, or
(b) a liquidator or provisional liquidator has been appointed
in respect of the insurer, or
(c) the insurer has been dissolved.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
[9] Section 45 Contributions
Insert "An insurable solicitor is also liable to pay to the Indemnity Fund
such further amounts in respect of the annual contribution as may be
determined by the company and approved by the Law Society Council."
after "Council." in section 45 (1).
[10] Section 45 (2)
Omit section 45 (2). Insert instead:
(2) The company may make a different determination under
subsection (1) for a particular solicitor or class of solicitors.
[11] Section 45 (3)
Omit "1 July". Insert instead "the relevant date".
[12] Section 45 (3)
Insert "total" before "amount".
[13] Section 45 (6)
Insert after section 45 (5):
(6) In this section, the relevant date means 1 July or another
relevant date specified by the regulations under section 36.
[14] Section 46A
Insert after section 46:
46A Special contributions and levies: HIH liabilities
(1) The company may, for the purposes of ensuring that the
Indemnity Fund, or any part of the Indemnity Fund, is sufficient
to meet the purposes for which it may be used under
section 44A:
(a) require any insurable solicitor who is or was insured
under an approved insurance policy issued or renewed
by an HIH group member to pay a special annual
contribution to the Indemnity Fund, or
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
(b) require any solicitor or former solicitor who is or was
insured under an approved insurance policy issued or
renewed by an HIH group member to pay a special levy
to the Indemnity Fund.
(2) Any such special annual contribution or levy is to be of an
amount determined by the company and approved by the Law
Society Council.
(3) The company may make a different determination under
subsection (2) in relation to particular classes of solicitors or
former solicitors.
(4) The special annual contribution or levy is to be paid within the
time and in the manner specified by the company by notice in
writing to the solicitor or former solicitor concerned.
(5) A special annual contribution or levy that is payable under this
section:
(a) is to be paid to the company on account of the
Indemnity Fund, and
(b) is recoverable by the company as a debt in a court of
competent jurisdiction, and
(c) if payable by an insurable solicitor, is payable in
addition to any contribution or levy that is payable
under section 45 or 46.
[15] Section 47 Failure to pay contribution or levy
Omit "this Division". Insert instead "section 45, 46 or 46A".
[16] Sections 47AA and 47AB
Insert after section 47:
47AA Investigation of Indemnity Fund
(1) The Attorney General may at any time appoint an appropriately
qualified person to conduct an investigation in relation to the
Indemnity Fund, including in relation to any of the following:
(a) the state and sufficiency of the Indemnity Fund,
(b) the adequacy of the amount or rate of any contributions
or levies paid or payable under this Division,
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
(c) the management of the Indemnity Fund by the company,
and the adequacy of the investment strategies being
adopted by the company,
(d) such other matters relating to the Indemnity Fund as the
Attorney General determines.
(2) The company is to provide all reasonable assistance to the
person appointed to conduct the investigation.
(3) The person appointed to conduct the investigation is to report
to the Attorney General on the result of the investigation.
(4) The Attorney General may, by notice in writing served on the
company, require the company to pay from the Indemnity Fund
the costs of the investigation.
(5) For the purposes of subsection (4), the costs of the
investigation means:
(a) the reasonable costs and expenses incurred in
connection with the investigation by the person
appointed to conduct the investigation, and
(b) the reasonable cost of any remuneration paid to that
person in connection with the investigation.
47AB Powers of investigators
(1) For the purpose of conducting an investigation under
section 47AA, an investigator may, by notice in writing served
on any person, require the person to provide to the investigator
such information or records relating to the Indemnity Fund or
the company's management of the Indemnity Fund as the
investigator specifies in the notice.
(2) The notice must specify the manner in which information or
records are required to be provided and a reasonable time by
which the information or records are required to be provided.
(3) A person who, without reasonable excuse, neglects or fails to
comply with a requirement made of the person under this
section is guilty of an offence.
Maximum penalty: 100 penalty units.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
(4) A person who provides any information in purported
compliance with a requirement made under this section,
knowing that it is false or misleading in a material particular, is
guilty of an offence.
Maximum penalty: 100 penalty units.
(5) In this section:
investigator means a person appointed by the Attorney General
under section 47AA to conduct an investigation in relation to
the Indemnity Fund.
[17] Section 48 Application of Division to other persons
Insert ", 46A" after "sections 41".
[18] Schedule 2A
Insert after Schedule 2:
Schedule 2A Extension of practising certificates in
20012002
(Section 36 (6))
1 Application
(1) This Schedule has effect if a regulation is made under
section 36 (4) (b) that specifies another date (other than 1 July)
as the common date for the duration of any practising
certificates held by insurable solicitors immediately before 1
July 2001.
(2) This Schedule applies only if the date so specified is a date
within the period from 1 July 2001 to immediately before
1 July 2002.
(3) For avoidance of doubt, this Schedule applies even if more
than one regulation is made under section 36 (4) (b) in relation
to the duration of the practising certificates referred to in
subclause (1).
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
2 Definitions
(1) In this Schedule:
extension period means the period from 1 July 2001 to
immediately before the relevant date.
indemnity agreement means an agreement entered into under
clause 4.
next practising period means the period during which
practising certificates that take effect on the relevant date will
remain in force.
professional liability claim means a claim against a solicitor or
former solicitor:
(a) relating to any civil liability that arises in connection
with:
(i) the solicitor's practice or former solicitor's
practice or former practice, or
(ii) the solicitor's or former solicitor's
administration of any trust or deceased estate of
which the solicitor or former solicitor is or was
a trustee or executor, or
(b) of a kind that is generally covered by a policy of
indemnity insurance referred to in section 41.
relevant date means any date specified in a regulation made
under section 36 (4) (b) as the common date for the duration of
any practising certificates held by insurable solicitors
immediately before 1 July 2001.
(2) Other expressions used in this Schedule have the same
meanings as they have in Division 2 of Part 3.
3 Practising certificate may be issued in 20012002 only if
indemnity arrangements are in place
(1) The Law Society Council must not issue a practising certificate
to an insurable solicitor that will be in force during the next
practising period or any part of that period unless subclause (2)
or (3) applies.
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
(2) The Law Society Council may issue the practising certificate if
it is satisfied that:
(a) there is or will be in force with respect to the solicitor
an approved insurance policy, and
(b) the indemnity insurance provided by the policy extends
to professional liability claims made against the solicitor
during the extension period (unless the solicitor was not
an insurable solicitor during the extension period).
(3) The Law Society Council may issue the practising certificate if:
(a) it is satisfied that there is, or will be, in force with
respect to the solicitor an approved insurance policy,
and
(b) an indemnity agreement has been entered into, and the
indemnity agreement provides for the use of the
Indemnity Fund for the purposes of indemnifying
solicitors or former solicitors against any professional
liability claims made during the extension period.
(4) This clause applies despite section 41 (1) (a).
(5) This clause ceases to have effect on 1 July 2002.
4 Indemnity agreement
(1) The Law Society and the company may enter into an
agreement with the Attorney General relating to the use of the
Indemnity Fund for the purposes of indemnifying solicitors or
former solicitors against professional liability claims made
during the extension period.
(2) Payments are to be made by the company from the Indemnity
Fund, for the purpose of indemnifying solicitors or former
solicitors against any professional liability claims made during
the extension period, in accordance with the terms of that
agreement.
(3) Without limiting subclause (1), the terms of the agreement
must include requirements relating to the contributions or levies
to be paid by insurable solicitors to the Indemnity Fund, for the
purpose of ensuring that:
(a) the Indemnity Fund is sufficient to meet the purposes
for which it may be used under this Schedule, and
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Schedule 1 Amendments
(b) the use of the Indemnity Fund for those purposes does
not affect the sufficiency of the Indemnity Fund to meet
the other purposes for which it may be used or is
required to be used under Division 2 of Part 3.
(4) The company is required to determine the annual contribution
payable by insurable solicitors under section 45 for the next
practising period in accordance with any terms of the
agreement that relate to contributions to be paid to the
Indemnity Fund by insurable solicitors. The approval of the
Law Society Council is not required if that determination is
made in accordance with the terms of the agreement (despite
section 45).
(5) The company is required to impose a levy on insurable
solicitors under section 46 in accordance with any terms of the
agreement that relate to levies to be paid to the Indemnity Fund
by insurable solicitors.
(6) In such a case, the company is also required to determine the
levy, and the time and manner of its payment, in accordance
with the terms of the agreement.
(7) Nothing in this clause limits the other purposes for which the
Indemnity Fund may be used under Division 2 of Part 3.
[19] Schedule 8 Savings, transitional and other provisions
Insert at the end of clause 1A (1):
Legal Profession Amendment (Professional Indemnity
Insurance) Act 2001
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Legal Profession Amendment (Professional Indemnity Insurance) Bill 2001
Amendments Schedule 1
[20] Schedule 8
Insert at the end of Schedule 8 (with appropriate Part and clause
numbering):
Part Provisions consequent on enactment of Legal
Profession Amendment (Professional Indemnity
Insurance) Act 2001
Amendments to section 36
A reference in section 36 (5), as substituted by the Legal
Profession Amendment (Professional Indemnity Insurance)
Act 2001, to a change in the relevant date includes a change in
the relevant date that was made before the substitution of that
subsection.
Indemnity arrangements for 20012002
An indemnity agreement referred to in Schedule 2A may be
entered into on or after the commencement of that Schedule
and may have effect in relation to the whole of the extension
period (within the meaning of that Schedule), even if entered
into after the commencement of the extension period.
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