Northern Territory Second Reading Speeches

[Index] [Search] [Bill] [Help]

PROFESSIONAL STANDARDS AMENDMENT BILL 2006

Mr STIRLING (Justice and Attorney-General): Madam Speaker, I move that the bill be now read a second time. The purpose of the bill is to amend the Professional Standards Act 2004.

The Professional Standards Act 2004 was enacted as part of the national tort law reforms with the specific objective of improving professional service standards and limiting the occupational liability of professionals and members of occupations in certain circumstances. The groups affected include lawyers, medical professionals, real estate agents, conveyancers, engineers, accountants, surveyors and auditors.

With schemes that are approved under the act, members of professional associations have the benefit of having their liability capped in the event of a claim brought against them in connection with the performance of their professional occupation. The Northern Territory act is based on the Victorian Professional Standards Act 2003. In turn, that act was based on the 1994 New South Wales act. Legislation dealing with professional standards schemes is now in place in each Australian state, the Northern Territory and the Australian Capital Territory.

The effect of professional standards schemes is also recognised by Commonwealth law so that liability is limited under Commonwealth legislation such as the Trade Practices Act. Typically, persons seeking professional indemnity coverage seek to protect themselves from the costs and expenses in fighting claims against them. They do this either by obtaining insurance that covers them for their liability up to a certain dollar figure plus defence costs; or by obtaining coverage for a total amount that includes all defence costs. The second approach has the effect of limiting the amount that is covered for defence costs. This costs-inclusive insurance is generally cheaper than costs-exclusive insurance.

Most professional indemnity insurance is costs-inclusive because, apart from cost, it is also much easier to obtain. However, in late 2005, professional associations seeking to register schemes in Victoria and New South Wales raised concerns that the wording in the legislation does not permit schemes to be approved on a costs-inclusive basis. This matter was referred to the Standing Committee of Attorneys-General. In April 2006, that committee approved the development of model legislation to remove the anomaly.

The Standing Committee of Attorneys-General recognised that the Professional Standards Council should have the option to approve schemes that were either costs-inclusive or costs-plus insurance.

The national Committee of Parliamentary Counsel produced a model national bill, versions of which have been introduced in New South Wales and Victoria. The amendments contained in this bill seek to correct a drafting anomaly by enabling professionals who are members of capped liability schemes to hold either costs-inclusive or costs-in-addition insurance cover.

The legal profession will be one immediate beneficiary from this legislation. Northern Territory legal practitioners are currently required to hold costs-inclusive cover. However, other professional service providers also generally hold costs-inclusive cover due to the wider availability of this type of policy in the current insurance market.

The amending bill will also ensure that consumers of professional services will not be disadvantaged. The professional’s maximum liability to the consumer will remain up to the amount of the cap as determined under the act, regardless of whether the relevant professional holds a costs-inclusive or costs-in-addition insurance policy.

Madam Speaker, I commend the bill to honourable members and table a copy of the explanatory statement.

Debate adjourned.

 

[Index] [Search] [Bill] [Help]