Operation of the limitation of liability scheme

Professional standards legislation and Institute Scheme

Professional standards legislation (PSL) is now in force in all Australian jurisdictions.

This legislation has enabled the Professional Standards Council (PSC) to approve Institute schemes in each mainland state and territory which limit the civil liability of members in exchange for a commitment that they will hold professional indemnity cover of a certain standard and the Institute will work to improve professional standards of members.

For convenience these state schemes will be referred to collectively as the Institute scheme.

How does the scheme work?

To date the scheme has not been tested in the courts. However, if a claim is made against you and/or your practice and the matter goes to court, any damages awarded against you and/or the practice should be limited to the thresholds set out in the Institute scheme as long as the court is satisfied that certain conditions have been met.

If the limitation of liability scheme has been included as a defence, the court will determine whether:

• The claim relates to occupational liability
• The defendants are participating members of the Institute Scheme
• The service was provided when a scheme was in place
• The defendant has the benefit of PI cover which meets the thresholds required by the scheme
• Disclosure of the limitation of liability has been provided on business stationery in Victoria, Queensland and the NT

Article last updated 28 October 2010