What liability is capped - Occupational liability

A key element of the legislation is that only occupational liability (i.e. civil liability for the act or omission of a member acting in the performance of his/her occupation) can be limited.

What does this mean for me?

To address the risk that you could be exposed to unlimited liability, you should implement policies and procedures to ensure that engagement responsibility will always remain with a member. These may include documenting review processes and reviewing policies delegating authority for communication with clients.

Activities covered by the scheme

In the event of a claim, the court will decide whether the service provided was 'in the performance of his or her occupation' as a member of the Institute. In deciding whether a service meets this definition, the court is likely to consider evidence of services which are generally provided by the accounting profession. The court might also consider the definition of 'public accountancy services' in article 2(f) of the Institute's Supplemental Royal Charter. This definition currently refers to accounting, auditing, management consulting, taxation, financial management, insolvency, forensic accounting, risk management and corporate advisory services.

What does this mean for me? You should be aware that if you are providing services outside or at the margins of those defined as ‘public accountancy services’ or those generally provided by the accounting profession, your liability may not be limited under the Institute scheme.

What liability is excluded

PSL limits ‘occupational liability’ and excludes certain liability from capping. All jurisdictions exclude liability for death or personal injury to a person, breach of trust and fraud or dishonesty. SA and Tasmania legislation excludes liability for an intentional tort.

Claims under Trade Practices Act can be capped

Under the Treasury Legislation Amendment (Professional Standards) Act 2004, the same caps that apply under the Institute’s state approved schemes will apply to liability arising from a breach of the Trade Practices Act 1974(Cth) because of the Commonwealth prescription of these schemes:

NSW Scheme - prescribed 25 October 2007 to 8 October 2012
WA Scheme - prescribed 25 October 2007 to 8 October 2012
SA Scheme - prescribed from 12 June 2008 to 19 February 2013
NT Scheme - prescribed from 12 June 2008 to 7 January 2013
Qld Scheme - prescribed from 12 June 2008 to 31 January 2013
ACT Scheme - prescribed from 12 June 2008 to 31 January 2013
Vic Scheme - prescribed from 12 June 2008 to 2 March 2013

Liability arising in another mainland Australian jurisdiction

Damages may be capped for a claim relating to a service provided outside your state or territory. PSL is state based legislation, intended to limit the occupational liability of a member in relation to a claim or cause of action in that state, or jurisdiction. However, with the approval of the recent Institute schemes, members nationally are now participating members in each state scheme. This will extend the benefit of the cap on liability to members where they are providing services in another mainland state with a scheme in place.

Is liability capped in relation to services previously provided?

Under PSL, liability is only limited in relation to a service provided during the period when the scheme is in force regardless of whether the scheme ceased to be in force at the time when the proceedings commence.

What does this mean for me?

If a claim is made against you or your practice before the commencement of the Institute scheme in your state or territory, your liability will be unlimited.

Follow this link for the commencement date in your state or territory

There has been a scheme in place in NSW since 1997. However, the thresholds at which liability should be capped and which determine the level of PI cover required under the previous NSW schemes should be checked in the event that a claim is received.

FAQs - What liability is limited?

Article last updated 27 January 2012