Northern Territory Explanatory Statements

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PROFESSIONAL STANDARDS AMENDMENT BILL 2006

5



2006

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

MINISTER FOR JUSTICE AND ATTORNEY-GENERAL

Professional Standards Amendment Bill 2006
SERIAL NO. 83

EXPLANATORY STATEMENT


GENERAL OUTLINE

The Professional Standard Act (“the Act”) provides for the approval of schemes for limiting the liability of members of professional and skilled occupations covered by such schemes. One basis on which there may be such a limitation on liability is that the members of the association are covered by insurance as approved as part of a scheme.

This Bill amends the Act so that it is clear insurance approved for the purposes of the Act may include “costs inclusive provisions”. That is, the insurance policy may be worded so that the total covered includes amounts payable including costs incurred in defending a claim.

NOTES ON CLAUSES

Clause 1. Short Title.

This is a formal clause which provides for the citation of the Bill. The Bill when passed may be cited as the Professional Standards Amendment Act 2006.

Clause 2. Commencement.

This clause provides that the Act will commence operation on the day determined by the Administrator and published in the Northern Territory Government Gazette.

Clause 3. Act amended

This clause provides that the Act being amended is the Professional Standards Act.

Clause 4. Amendment of section 4 (Definitions)

Clause 4(1) changes the heading of section 4 of the Act by replacing the current heading of ‘Definitions’ with ‘Interpretation’ in accordance with current Northern Territory drafting practices.

Clause 4(2) makes an amendment to current section 4 that is consequential to the inclusion of new section 4 (2) as inserted by clause 4(5) of this Bill.

Clause 4(3) omits the definition of “damages” consequential to clause 4(5) which inserts a new definition of “damages”.

Clause 4(4) inserts a definition of “costs” and a new definition of “damages”.

The word “costs” is defined as including fees, charges, disbursements and expenses. It is used in new section 4(2) (see clause 4(5) of this Bill).

A new definition of “costs” is inserted into the Professional Standards Act which is relevant to the concept of “damages”. Costs were not previously defined because there was no reference to them. However, the new definition of damages does refer to “costs”. Costs for the purposes of the Act are as defined but are limited because of section 4(2) (a). Section 4(2) (a) provides that it is only defence costs which are payable under an insurance policy in regard to an actual or notified claim, i.e. Defence costs relating to possible claims as well as actual claims but costs do not include reimbursement for time lost by the professional in dealing with the claim.

A new definition of “damages” is also included. The new definition of “damages” substitutes the existing definition of “damages”. For the purposes of the Act damages is intended to include any amount awarded by way of set-off and any interest which accrues on the damages as ordered.
Clause 4(5) inserts new section 4(2). This provides that references in the Act (see sections 22, 23 and 24) to amounts payable under an occupational liability insurance policy include references to certain defence costs and any amount payable by way of an excess.

Clause 5. Repeal and substitution of section 22

Clause 5 repeals section 22 and replaces it with new section 22.

22. Limitation of liability by insurance arrangements

Under current section 22, an insurance policy is only effective to limit liability if the amount insured is not less than the amount specified in the scheme. In determining this amount no regard can be taken of the amount covering defence costs of the kind referred to in new section 4(2). This means that “costs inclusive” insurance policies cannot be approved for the purposes of schemes under the Act.

New section 22, read with the definition of “amount payable” in new section 4(2), has the effect that the insurance policies that cover defence costs may be approved for the purposes of section 22.

New section 22 also varies from old section 22 as a consequence of the omission of certain words that are redundant in light of new section 29(4) of the Act (see clause 9 of this Bill).

Clause 6. Amendment of Section 23 (Limitation of liability by reference to amount of business assets)

Clause 6(1) amends section 23 of the Act by replacing “proceeding relating” for “cause of action relating”. This amendment is consequential to the use of different terminology in new section 22.

Clause 6(2) amends section 23(a) by omitting words made redundant by the amendments to sections 22 and 29.

Clause 6(3) amends section 23(b) of the Act by omitting and replacing paragraph (ii). This amendment is consequential to the use of different terminology in new sections 22 and 29.

Clause 6(4) makes a grammatical correction to section 23 of the Act.

Clause 7. Amendment of section 24 (Limitation of liability by multiple of charges)

Clause 7(1) amends section 24 of the Act consequential to use of the term “proceeding relating” in new section 22.

Clause 7(2) amends section 24(1)(a) of the Act by omitting and replacing paragraph (ii). This is consequential on the changes regarding the use of the term “proceeding relating” instead of the term “cause of action”.

Clause 7(3) amends section 24(1)(c) of the Act by omitting and replacing paragraph (ii). This is consequential on the changes regarding the use of the term “proceeding relating” instead of the term “cause of action”.

Clause 7(4) makes a grammatical correction to section 24 of the Act.

Clause 8. New section 27A

Clause 8 inserts new section 27A into the Act.

27A. Liability in damages not reduced to below relevant limit

This clause makes it clear that a member of a scheme under the Act is liable to successful claimants for the full amount of the liability (up to an amount set under section 22) despite the fact that the amount covered by insurance is less than that amount by virtue of the payment of defence costs.


Clause 9. Amendment of section 29 (Limit of occupational liability by schemes)

Clause 9 amends sections 29(2) and 29(4) of the Act by substituting the words “the time of the relevant act or omission” with “at the time at which the act or omission giving rise to the cause of action concerned occurred”. This amendment achieves consistency with the wording in the proposed amendments to sections 22, 23, and 24 of the Act.

Clause 10. New Part

Clause 10 inserts a new Part 8 (containing new sections 61 and 62) into the Act dealing with transitional issues arising from the amendments made by this Bill.
PART 8 – TRANSITIONAL MATTERS FOR PROFESSIONAL STANDARDS AMENDMENT ACT 2006

61. Definitions

This new section defines “amendments”, “relevant insurance policy” and “validated” for the purposes of new section 62.

62. Validation of schemes etc

New section 62 provides that the validity of schemes made prior to the commencement of this Bill is to be determined as if the amendments to the Act proposed by this Bill had been in place at the time of the making of the scheme.

 

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