This Act lets professional bodies (with the Professional Standards Council and Minister) create time‑limited schemes that cap civil money damages for work‑related mistakes, in return for mandatory risk‑management, insurance and client disclosure requirements. The Council approves, monitors and can review schemes.
Who this affects and why it matters: scheme members get reduced exposure to large awards; claimants and insurers may receive less or face shifted costs; associations bear compliance burdens. Judicial review and public consultation are available as legal safeguards.
The Professional Standards Act 1994 (NSW) establishes a statutory framework under which occupational associations may limit the civil liability of their members for acts or omissions occurring in the course of their occupation. Section 3 sets out four core objects: (a) creation of limitation schemes, (b) improvement of occupational standards, (c) consumer protection, and (d) constitution of the Professional Standards Council to supervise schemes and assist with standards and consumer protection.
Part 2 is the operational heart of the statute. Division 1 (ss 7–16C) prescribes the making, amendment, revocation and termination of schemes. An occupational association (defined in s 4 as a body corporate representing members of an occupational group with membership limited principally to that group) may prepare a scheme itself or ask the Council to do so (s 7(1)–(2)). Before approval the Council must publish a newspaper notice explaining the scheme’s nature, where it may be inspected, and inviting submissions for at least 21 days (s 8(1)). The Council is then obliged to consider every submission, the position of affected persons, claim history, risk-management strategies, insurance cost and availability, and the association’s insurance standards (s 10(1)). Public hearings are discretionary (s 11).
Once approved, the scheme is submitted to the Minister for gazettal (s 12). Sections 40 and 41 of the Interpretation Act 1987 apply, so the scheme is treated as a statutory rule subject to disallowance (s 13(2)). A scheme commences on the date specified or, if none, two months after gazettal (s 14(1)), subject to any Supreme Court stay under s 15. A person reasonably likely to be affected may challenge the scheme for non-compliance; the Court may declare it void, stay commencement, give directions or make any other order (s 15(3)). Interstate schemes may only be challenged on the basis that they fail to comply with the law of the preparing jurisdiction, not on Division 2 grounds (s 15(4)).
Current sections
Direct links to the current provisions in Professional Standards Act 1994.
This Act commences on a day or days to be appointed by proclamation.
3
Objects of this Act
3 Objects of this Act
3 Objects of this Act
The objects of this Act are as follows:
(a) to enable the creation of schemes to limit the civil liability of professionals and others,
(b) to facilitate the improvement of occupational standards of professionals and others,
(c) to protect the consumers of the services provided by professionals and others,
(d) to constitute the Professional Standards Council to supervise the preparation and application of schemes and to assist in the improvement of occupational standards and protection of consumers.
4
Definitions
4 Definitions
4 Definitions
(1) In this Act:
another jurisdiction means any State or Territory, other than this jurisdiction.
appropriate Council, in relation to another jurisdiction, means the authority that, under the corresponding law of that jurisdiction, has functions that are substantially the same as the Council’s functions under this Act.
business assets means the property of a person that is used in the performance of the person’s occupation and that is able to be taken in proceedings to enforce a judgment of a court.
corresponding law means a law of another jurisdiction that corresponds to this Act, and includes a law of another jurisdiction that is declared by the regulations to be a corresponding law of that jurisdiction for the purposes of this Act.
costs includes fees, charges, disbursements and expenses.
Council means the Professional Standards Council constituted by this Act.
court includes an arbitrator.
damages means:
(a) damages awarded in respect of a claim or counter-claim or claim by way of set-off, and
(b) costs in or in relation to the proceedings ordered to be paid in connection with such an award (other than costs incurred in enforcing a judgment or incurred on an appeal made by a defendant), and
(c) any interest payable on the amount of those damages or costs.
exercise of a function includes, where the function is a duty, the performance of the duty.
function includes a power, authority and duty.
interstate scheme means a scheme:
(a) that has been prepared under the corresponding law of another jurisdiction, and
(b) that operates, or indicates an intention to operate, as a scheme of this jurisdiction.
judgment includes:
(a) a judgment given by consent, and
(b) an award of an arbitrator.
occupational association means a body corporate:
(a) which represents the interests of persons who are members of the same occupational group or related occupational groups, and
(b) the membership of which is limited principally to members of that occupational group or those occupational groups.
occupational group includes a professional group and a trade group.
occupational liability means civil liability arising (in tort, contract or otherwise) directly or vicariously from anything done or omitted by a member of an occupational association acting in the performance of his or her occupation.
scheme means a scheme for limiting the occupational liability of members of an occupational association, and includes an interstate scheme.
this jurisdiction means New South Wales.
Note—
The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act.
(1A) A reference in this Act to the amount payable under an insurance policy in respect of an occupational liability includes a reference to:
(a) defence costs payable in respect of a claim, or notification that may lead to a claim (other than reimbursement of the defendant for time spent in relation to the claim), but only if those costs are payable out of the one sum insured under the policy in respect of the occupational liability, and
(b) the amount payable under or in relation to the policy by way of excess.
(2) Notes included in this Act do not form part of this Act.
s 4: Am 2004 No 83, Sch 1 [1]–[3]; 2006 No 78, Sch 1 [1]–[3]; 2007 No 10, Sch 1 [1] [2].
5
Occupational liability to which Act does not apply
5 Occupational liability to which Act does not apply
5 Occupational liability to which Act does not apply
(1) This Act does not apply to liability for damages arising from any of the following:
(a) the death of or personal injury to a person,
(b) (Repealed)
(c) a breach of trust,
(d) fraud or dishonesty.
(2) This Act does not apply to liability which may be the subject of proceedings under Part 13 or 14 of the Real Property Act 1900.
(3) Subsection (1) (a) does not operate to exclude from the operation of this Act liability for damages arising out of any negligence or other fault of an Australian legal practitioner in acting for a client in a personal injury claim.
s 5: Am 2000 No 28, sec 4; 2004 No 83, Sch 1 [4] [5]; 2008 No 62, Sch 3.5.
6
Act binds the Crown
6 Act binds the Crown
6 Act binds the Crown
This Act binds the Crown not only in right of New South Wales but also, so far as the legislative power of Parliament permits, the Crown in all its other capacities.
Part 2
Limitation of liability
Part 2 Limitation of liability
Part 2 Limitation of liability
Division 1
Making, amendment and revocation of schemes
Division 1 Making, amendment and revocation of schemes
Division 1 Making, amendment and revocation of schemes
7
Preparation and approval of schemes
7 Preparation and approval of schemes
7 Preparation and approval of schemes
(1) An occupational association may prepare a scheme.
(2) The Council may, on the application of an occupational association, prepare a scheme.
(3) The Council may, on the application of an occupational association, approve a scheme prepared under this section.
(4) A scheme prepared under this section may indicate an intention to operate as a scheme of this jurisdiction only, or of both this jurisdiction and another jurisdiction.
s 7: Am 2007 No 10, Sch 1 [3].
8
Public notification of schemes
8 Public notification of schemes
8 Public notification of schemes
(1) Before approving a scheme, the Council must publish a notice in a daily newspaper circulating throughout New South Wales:
(a) explaining the nature and significance of the scheme, and
(b) advising where a copy of the scheme may be obtained or inspected, and
(c) inviting comments and submissions within a specified time, but not less than 21 days after publication of the notice.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction, the Council must also publish a similar notice in the other jurisdiction in accordance with the requirements of the corresponding law of that jurisdiction that relate to the approval of a scheme prepared in that jurisdiction.
s 8: Am 2007 No 10, Sch 1 [4].
9
Making of comments and submissions concerning schemes
9 Making of comments and submissions concerning schemes
9 Making of comments and submissions concerning schemes
(1) Any person may make a comment or submission to the Council concerning a scheme of which notice has been published under section 8.
(2) A comment or submission must be made within the period specified for that purpose in the notice or within such further time as the Council may allow.
10
Consideration of comments, submissions and other matters
10 Consideration of comments, submissions and other matters
10 Consideration of comments, submissions and other matters
(1) Before approving a scheme, the Council must consider the following:
(a) all comments and submissions made to it in accordance with section 9,
(b) the position of persons who may be affected by limiting the occupational liability of members of the occupational association concerned,
(c) the nature and level of claims relating to occupational liability made against members of the occupational association concerned,
(d) the risk management strategies of the occupational association concerned,
(e) the means by which those strategies are intended to be implemented,
(f) the cost and availability of insurance against occupational liability for members of the occupational association concerned,
(g) the standards (referred to in section 27) determined by the occupational association concerned in relation to insurance policies.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction:
(a) the Council must also consider any matter that the appropriate Council for the other jurisdiction would have to consider under the provisions of the corresponding law of that jurisdiction that relate to the approval of a scheme prepared in that jurisdiction, and
(b) the matters to be considered by the Council, whether under subsection (1) or paragraph (a), are to be considered in the context of each of the jurisdictions concerned.
s 10: Am 2007 No 10, Sch 1 [5].
11
Public hearings
11 Public hearings
11 Public hearings
(1) The Council may conduct a public hearing concerning a scheme if the Council thinks it appropriate.
(2) A public hearing may be conducted in such manner as the Council determines.
12
Submission of approved schemes for Gazettal
12 Submission of approved schemes for Gazettal
12 Submission of approved schemes for Gazettal
(1) The Council may submit a scheme approved by it to the Minister.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction, the Council may also submit the scheme to the Minister administering the corresponding law of the other jurisdiction.
s 12: Am 2007 No 10, Sch 1 [6].
13
Gazettal, tabling and disallowance of schemes
13 Gazettal, tabling and disallowance of schemes
13 Gazettal, tabling and disallowance of schemes
(1) The Minister may authorise the publication in the Gazette of a scheme submitted to the Minister by the Council or, in the case of an interstate scheme, by the appropriate Council for the jurisdiction in which the scheme was prepared.
(2) Sections 40 and 41 of the Interpretation Act 1987 apply to a scheme published in the Gazette under this section in the same way as they apply to a statutory rule.
(3) In this section, a reference to an interstate scheme includes a reference to an instrument amending an interstate scheme.
Note—
Subsection (3) applies subsections (1) and (2) to instruments that amend an interstate scheme. Those subsections already apply, by virtue of section 16A (5), to instruments that amend a scheme that is not an interstate scheme.
s 13: Am 2007 No 10, Sch 1 [7] [8]; 2009 No 56, Sch 4.53.
14
Commencement of schemes
14 Commencement of schemes
14 Commencement of schemes
(1) A scheme published in the Gazette with the authorisation of the Minister commences:
(a) on such day subsequent to the date of its publication as may be specified in the scheme, or
(b) if no such day is specified—2 months after the date of its publication.
(2) This section is subject to any order made by the Supreme Court under section 15 and any order made by the Supreme Court of another jurisdiction under the corresponding law of that jurisdiction.
(3) In this section, a reference to a scheme includes, in the case of an interstate scheme, a reference to an instrument amending that scheme.
s 14: Subst 1998 No 10, Sch 1 [1]. Am 2007 No 10, Sch 1 [9].
15
Challenges to schemes
15 Challenges to schemes
15 Challenges to schemes
(1) A person who is or is reasonably likely to be affected by a scheme published as referred to in section 13 (including a person who is or is reasonably likely to be affected by a scheme that operates as a scheme of another jurisdiction) may apply to the Supreme Court for an order that the scheme is void for want of compliance with this Act.
(2) The Court may, on the making of the application or at any time before the scheme commences, order that the commencement of the scheme is stayed until further order of the Court.
(3) The Court, in relation to an application, may:
(a) make an order that a scheme is void for want of compliance with this Act, or
(b) decline to make such an order, or
(c) give directions as to the things that are required to be done in order that a scheme, the commencement of which is stayed under this section, may commence, or
(d) make any other order it thinks fit.
(4) The Court may not make an order that an interstate scheme is void for want of compliance with this Act on the ground that the scheme fails to comply with Division 2, but may do so on the ground that the scheme fails to comply with the provisions of the corresponding law of the jurisdiction in which it was prepared that relate to the contents of schemes prepared in that jurisdiction.
(5) This section does not prevent a scheme from being challenged or called into question otherwise than under this section.
(6) In this section, a reference to a scheme includes, in the case of an interstate scheme, a reference to an instrument amending that scheme.
s 15: Am 2007 No 10, Sch 1 [10] [11].
16
Review of schemes
16 Review of schemes
16 Review of schemes
(1) The Minister may direct the Council to review the operation of a scheme.
(2) The Council must comply with any such direction but may on its own initiative at any time (whether before or after the scheme ceases to have effect) review the operation of a scheme.
(3) A review may, but need not, be conducted in order to decide:
(a) in the case of a scheme prepared under this Act, whether the scheme should be amended or revoked or whether a new scheme should be made, or
(b) in the case of an interstate scheme, whether the operation of the scheme should be terminated in relation to this jurisdiction.
s 16: Subst 1998 No 10, Sch 1 [2]. Am 2007 No 10, Sch 1 [12].
16A
Amendment and revocation of schemes approved by Council
16A Amendment and revocation of schemes approved by Council
16A Amendment and revocation of schemes approved by Council
(1) An occupational association may prepare an instrument amending or revoking a scheme that relates to its members.
(2) The Council may, on the application of an occupational association, prepare or approve an instrument amending or revoking a scheme that relates to the members of the association.
(3) The Minister may direct the Council to prepare an instrument amending or revoking a scheme.
(4) The Council must comply with any such direction but may on its own initiative, at any time while the scheme remains in force, prepare an instrument amending or revoking a scheme.
(5) The provisions of sections 7–15 extend, with any necessary modifications, to the amendment of a scheme by an instrument under this section.
(6) The provisions of sections 7–14 (other than section 12 (2)) extend, with any necessary modifications, to the revocation of a scheme by an instrument under this section.
(7) This section does not apply to an interstate scheme.
Note—
An instrument that amends a scheme operating in another jurisdiction may be submitted to the Minister administering the corresponding law of that jurisdiction under section 12 with a view to its being published under that law. An instrument made under the corresponding law of another jurisdiction that amends an interstate scheme may be submitted to the Minister administering this Act with a view to its being published under section 13.
s 16A: Ins 1998 No 10, Sch 1 [2]. Am 2007 No 10, Sch 1 [13] [14].
16B
Notification of revocation of schemes
16B Notification of revocation of schemes
16B Notification of revocation of schemes
(1) On publication in the Gazette of an instrument revoking a scheme (other than an interstate scheme) that operates as a scheme of another jurisdiction, the Minister must cause notice of that fact to be given to the Minister administering the corresponding law of that jurisdiction.
(2) On receipt of notice that an interstate scheme has been revoked under the corresponding law of the jurisdiction in which it was prepared, the Minister must cause a statement to that effect to be published in the Gazette.
Note—
Under section 32 (1B), an interstate scheme will cease to have effect in this jurisdiction when it ceases to have effect in the other jurisdiction.
s 16B: Ins 2007 No 10, Sch 1 [15].
16C
Termination of operation of interstate schemes in this jurisdiction
16C Termination of operation of interstate schemes in this jurisdiction
16C Termination of operation of interstate schemes in this jurisdiction
(1) The Council may, on the application of an occupational association, prepare an instrument terminating, in relation to this jurisdiction, the operation of an interstate scheme that relates to members of the association.
(2) The Minister may direct the Council to prepare an instrument terminating the operation of an interstate scheme in relation to this jurisdiction.
(3) The Council must comply with any such direction, but may on its own initiative, at any time while an interstate scheme remains in force, prepare an instrument terminating the operation of the scheme in relation to this jurisdiction.
(4) The provisions of sections 8–13 (other than section 12 (2)) extend, with any necessary modifications, to the termination of the operation of an interstate scheme under an instrument under this section.
(5) The operation of an interstate scheme in respect of which an instrument under this section is published under section 13 (as applied by subsection (4)) is terminated, in relation to this jurisdiction, as from:
(a) such day subsequent to the date of its publication as may be specified in the instrument, or
(b) if no such day is specified—2 months after the date of its publication.
s 16C: Ins 2007 No 10, Sch 1 [15].
Division 2
Contents of schemes
Division 2 Contents of schemes
Division 2 Contents of schemes
17
Persons to whom scheme applies
17 Persons to whom scheme applies
17 Persons to whom scheme applies
(1) A scheme may provide that it applies to all persons within an occupational association or to a specified class or classes of persons within an occupational association.
(2) A scheme may provide that the occupational association concerned may, on application by a person, exempt the person from the scheme.
(3) A scheme ceases to apply to a person exempted from the scheme as referred to in subsection (2) on and from the date on which the exemption is granted or on and from a later date specified in the exemption.
(4) Subsection (2) does not apply to a person to whom a scheme applies by virtue of section 18, 19 or 20.
s 17: Am 1999 No 56, Sch 1 [1].
18
Officers or partners of persons to whom scheme applies
18 Officers or partners of persons to whom scheme applies
18 Officers or partners of persons to whom scheme applies
(1) If a scheme applies to a body corporate, the scheme also applies to each officer of the body corporate.
(2) If a scheme applies to a person, the scheme also applies to each partner of the person.
(3) However, if an officer of a body corporate or a partner of a person is entitled to be a member of the same occupational association as the body corporate or person, but is not a member, the scheme does not apply to that officer or partner.
(4) In this section:
officer:
(a) in relation to a body corporate that is a corporation within the meaning of the Corporations Act 2001 of the Commonwealth, has the same meaning as in that Act, and
(b) in relation to a body corporate that is not a corporation within the meaning of that Act, means any person (by whatever name called) who is concerned in or takes part in the management of the body corporate.
s 18: Subst 2004 No 83, Sch 1 [6].
19
Employees of persons to whom a scheme applies
19 Employees of persons to whom a scheme applies
19 Employees of persons to whom a scheme applies
(1) If a scheme applies to a person, the scheme also applies to each employee of the person.
(2) However, if an employee of a person is entitled to be a member of the same occupational association as the person but is not a member, the scheme does not apply to the employee.
20
Other persons to whom a scheme applies
20 Other persons to whom a scheme applies
20 Other persons to whom a scheme applies
If persons are prescribed by the regulations for the purposes of section 29 (4) as being associated with persons to whom a scheme applies, the scheme also applies to the prescribed persons.
20A
Extension of liability limitation to other persons to whom scheme applies
20A Extension of liability limitation to other persons to whom scheme applies
20A Extension of liability limitation to other persons to whom scheme applies
(1) A limitation that applies under this Act to the occupational liability of a person as a member of an occupational association in respect of a cause of action (the principal cause of action) also applies, in respect of the principal cause of action and any related cause of action, to the liability of any other person to whom the scheme concerned applies as a partner, officer, employee or associate of the member (whether or not the other person’s liability is an occupational liability).
Note—
Sections 18–20 provide for a scheme to apply to a partner, officer, employee or associate of a member of an occupational association to whom the scheme applies.
(2) A related cause of action is a cause of action in respect of civil liability of the other person arising (in tort, contract or otherwise) directly or vicariously from anything done or omitted by that person that caused or contributed to the loss or damage with which the principal cause of action is concerned and that resulted from the same or substantially the same event as that from which the principal cause of action arose.
(3) A reference in this section to a person who is a partner, officer, employee or associate of a member of an occupational association is a reference to a person who was such a partner, officer, employee or associate at the time of the event that gave rise to the principal cause of action.
(4) A reference in this section to a limitation on liability that applies to a person as a member of an occupational association includes a reference to a limitation on liability that would apply to the person if a cause of action relating to the liability were brought against the person.
(5) In this section:
associate of a person means someone who is associated with the person pursuant to the regulations under section 29 (4) (b).
officer:
(a) in relation to a body corporate that is a corporation within the meaning of the Corporations Act 2001 of the Commonwealth, has the same meaning as in that Act, and
(b) in relation to a body corporate that is not a corporation within the meaning of that Act, means any person (by whatever name called) who is concerned in or takes part in the management of the body corporate.
s 20A: Ins 2004 No 83, Sch 1 [7].
21
Limitation of liability by insurance arrangements
21 Limitation of liability by insurance arrangements
21 Limitation of liability by insurance arrangements
A scheme may provide that if a person to whom the scheme applies and against whom a proceeding relating to occupational liability is brought is able to satisfy the court that:
(a) the person has the benefit of an insurance policy insuring the person against the occupational liability to which the cause of action relates, and
(b) the amount payable under the policy in respect of that occupational liability is not less than the amount of the monetary ceiling specified in the scheme in relation to the class of person and the kind of work to which the cause of action relates,
the person is not liable in damages in relation to that cause of action above the amount of that monetary ceiling.
s 21: Am 1998 No 10, Sch 1 [3] [4]; 2004 No 83, Sch 1 [8] [9]. Subst 2006 No 78, Sch 1 [4].
22
Limitation of liability by reference to amount of business assets
22 Limitation of liability by reference to amount of business assets
22 Limitation of liability by reference to amount of business assets
A scheme may provide that if a person to whom the scheme applies and against whom a proceeding relating to occupational liability is brought is able to satisfy the court:
(a) that the person has business assets the net current market value of which is not less than the amount of the monetary ceiling specified in the scheme in relation to the class of person and the kind of work to which the cause of action relates, or
(b) that:
(i) the person has business assets and the benefit of an insurance policy that insures the person against that occupational liability, and
(ii) the net current market value of the business assets and the amount payable under the policy in respect of that occupational liability, if combined, would total an amount that is not less than the amount of the monetary ceiling specified in the scheme in relation to the class of person and the kind of work to which the cause of action relates,
the person is not liable in damages in relation to that cause of action above the amount of the monetary ceiling so specified.
s 22: Am 1998 No 10, Sch 1 [3] [4]. Subst 2004 No 83, Sch 1 [10]. Am 2006 No 78, Sch 1 [5] [6].
23
Limitation of liability by multiple of charges
23 Limitation of liability by multiple of charges
23 Limitation of liability by multiple of charges
(1) A scheme may provide that if a person to whom the scheme applies and against whom a proceeding relating to occupational liability is brought is able to satisfy the court:
(a) that the person has the benefit of an insurance policy:
(i) insuring the person against that occupational liability, and
(ii) under which the amount payable in respect of that occupational liability is not less than an amount (the limitation amount), being a reasonable charge for the services provided by the person or which the person failed to provide and to which the cause of action relates, multiplied by the multiple specified in the scheme in relation to the class of person and the kind of work to which the cause of action relates, or
(b) that person has business assets the net current market value of which is not less than the limitation amount, or
(c) that:
(i) the person has business assets and the benefit of an insurance policy insuring the person against that occupational liability, and
(ii) the net current market value of the assets and the amount payable under the policy in respect of that occupational liability, if combined, would total an amount that is not less than the limitation amount,
the person is not liable in damages in relation to that cause of action above the limitation amount or, if the scheme specifies a minimum cap determined by the Council for the purposes of the scheme that is higher than the limitation amount, above the amount of the minimum cap so specified.
(2) In determining the amount of a reasonable charge for the purposes of such a provision, a court is to have regard to any amount actually charged and to:
(a) the amount that would ordinarily be charged in accordance with a scale of charges accepted by the occupational association of which the person is a member, or
(b) if there is no such scale, the amount that a competent person of the same qualifications and experience as the person would be likely to charge in the same circumstances.
(3) This section does not limit an amount of damages to which a person is liable if the amount is less than the amount specified for the purpose in the scheme in relation to the class of person and the kind of work concerned.
s 23: Am 1998 No 10, Sch 1 [3] [4]. Subst 2004 No 83, Sch 1 [10]. Am 2006 No 78, Sch 1 [7] [8].
24
Specification of limits of liability and multiples
24 Specification of limits of liability and multiples
24 Specification of limits of liability and multiples
(1) A scheme may:
(a) specify the same maximum amount of liability in relation to all cases to which the scheme applies or different maximum amounts of liability for different cases or classes of case or for the same case or class of case for different purposes, and
(b) confer a discretionary authority on an occupational association, on application by a person to whom the scheme applies, to specify in relation to the person a higher maximum amount of liability than would otherwise apply under the scheme in relation to the person either in all cases or in any specified case or class of case.
(2) A scheme may specify a multiple, monetary ceiling or minimum cap by way of a formula that is to be applied to calculate the multiple, ceiling or cap.
s 24: Subst 2004 No 83, Sch 1 [11].
25
Combination of provisions under sections 21, 22 and 23
25 Combination of provisions under sections 21, 22 and 23
25 Combination of provisions under sections 21, 22 and 23
If, in a scheme, provisions of the kind referred to in section 23 and provisions of the kind referred to in section 21 or 22 (or both) apply to a person at the same time in respect of the same kind of work, the scheme must provide that the damages which may be awarded against the person are to be determined in accordance with section 23 but must not exceed the amount of the monetary ceiling specified in relation to the class of person and the kind of work in the provisions of the kind referred to in section 21 or 22.
s 25: Am 2004 No 83, Sch 1 [12] [13].
26
Liability that cannot be limited by a scheme
26 Liability that cannot be limited by a scheme
26 Liability that cannot be limited by a scheme
(1) A scheme can only affect the liability for damages arising from a single cause of action to the extent to which the liability results in damages exceeding such amount (but not less than $500,000) as is determined for the purposes of the scheme by the Council and specified in the scheme.
(2) In making a determination, the Council must have regard to:
(a) the number and amounts of claims made against persons within the occupational association concerned, and
(b) the need to adequately protect consumers.
(3) A Council determination:
(a) takes effect when an amendment providing for its specification in the scheme takes effect, and
(b) applies only to a cause of action that arises after the determination takes effect.
s 26: Am 1998 No 10, Sch 1 [5] [6].
26A
Liability in damages not reduced to below relevant limit
26A Liability in damages not reduced to below relevant limit
26A Liability in damages not reduced to below relevant limit
The liability in damages of a person to whom a scheme applies is not reduced below the relevant limitation imposed by a scheme in force under this Act because the amount available to be paid to the claimant under the insurance policy required for the purposes of this Act in respect of that liability is less than the relevant limitation.
Note—
Section 4 (1A) permits a defence costs inclusive policy for the purposes of this Act, which may reduce the amount available to be paid to a client in respect of occupational liability covered by the policy. Section 26A makes it clear that this does not reduce the cap on the liability of the scheme participant to the client, and accordingly the scheme participant will continue to be liable to the client for the amount of any difference between the amount payable to the client under the policy and the amount of the cap.
s 26A: Ins 2006 No 78, Sch 1 [9].
27
Insurance to be of requisite standard
27 Insurance to be of requisite standard
27 Insurance to be of requisite standard
For the purposes of a scheme, an insurance policy must be a policy, or a policy of a kind, which complies with standards determined by the occupational association whose members may be insured under such a policy, or a policy of such a kind.
Division 3
Effect of schemes
Division 3 Effect of schemes
Division 3 Effect of schemes
28
Limit of occupational liability by schemes
28 Limit of occupational liability by schemes
28 Limit of occupational liability by schemes
(1) To the extent provided by this Act and the provisions of the scheme, a scheme limits the occupational liability, in respect of a cause of action founded on an act or omission occurring during the period when the scheme is in force, of any person to whom the scheme applied at the time when the act or omission occurred.
(2) The applicable limitation of liability is the limitation specified by the scheme as in force at the time at which the act or omission giving rise to the cause of action concerned occurred.
(3) A limitation of liability that, in accordance with this section, applies in respect of an act or omission continues to apply to every cause of action founded on it, irrespective of when the cause arises or proceedings are instituted in respect of it, and even if the scheme has been amended or has, in accordance with section 32, ceased to be in force.
(4) A person to whom a scheme applies cannot choose not to be subject to the scheme, except in accordance with provisions included in the scheme under section 17 (2).
s 28: Subst 1998 No 10, Sch 1 [7]. Am 1999 No 56, Sch 1 [2]–[4]; 2006 No 78, Sch 1 [10].
29
Limitation of amount of damages
29 Limitation of amount of damages
29 Limitation of amount of damages
(1) Limitation imposed on single claims A limitation imposed by a scheme in force under this Act of an amount of damages is a limitation of the amount of damages that may be awarded for a single claim and is not a limitation of the amount of damages that may be awarded for all claims arising out of a single event.
(2) No splitting of plaintiffs Claims by a number of persons who have a joint interest in a cause of action are to be treated as a single claim for the purposes of this Act despite the fact that they may also have several interests.
(3) No splitting of defendants Two or more claims by the same person arising out of a single event against persons to whom a scheme in force under this Act applies and who are associated are to be treated as a single claim for the purposes of this Act.
(4) Associated defendants Persons are associated if they are:
(a) partners, employees of the same employer or in the relationship of employer and employee, or
(a1) officers of the same body corporate or in the relationship of body corporate and officer of the body corporate (with officer having the same meaning as in section 18), or
(b) persons who are prescribed by the regulations for the purposes of this subsection.
s 29: Am 2004 No 83, Sch 1 [14].
30
Effect of scheme on other parties to proceedings
30 Effect of scheme on other parties to proceedings
30 Effect of scheme on other parties to proceedings
A scheme does not limit the liability of a person who is a party to proceedings if the scheme does not apply to the person.
31
Proceedings to which a scheme applies
31 Proceedings to which a scheme applies
31 Proceedings to which a scheme applies
A scheme in force under this Act applies to proceedings relating to an act or omission that occurred after the commencement of the scheme.
32
Duration of scheme
32 Duration of scheme
32 Duration of scheme
(1) A scheme must specify the period (not exceeding 5 years) for which it is to remain in force after its commencement.
(1A) Subject to subsection (2), a scheme (other than an interstate scheme) remains in force until:
(a) the period specified under subsection (1) ends, or
(b) the scheme is revoked, or
(c) the scheme’s operation ceases because of the operation of another Act, or
(d) the scheme is declared void, either by an order made by the Supreme Court under section 15 or by an order made by the Supreme Court of another jurisdiction under the corresponding law of that jurisdiction, or
(2) The Minister may, by notice published in the Gazette, extend the period for which a scheme is in force. The notice must be published on or before the day when the original period ends.
(3) Only one extension may be effected under subsection (2) in respect of any particular scheme, and the maximum period of such an extension is 12 months.
s 32: Subst 1998 No 10, Sch 1 [8]. Am 2007 No 10, Sch 1 [16].
33
Notification of limitation of liability
33 Notification of limitation of liability
33 Notification of limitation of liability
(1) If a person’s occupational liability is limited in accordance with this Part, all documents given by the person to a client or prospective client that promote or advertise the person or person’s occupation, including official correspondence ordinarily used by the person in the performance of the person’s occupation and similar documents, must carry a statement to that effect.
(2) A person who contravenes this section is guilty of an offence.
Maximum penalty: 50 penalty units.
(3) The regulations may prescribe a form of statement for the purposes of this section.
(4) A person does not commit an offence against this section if the statement carried on the person’s documents is in the prescribed form.
(5) In this section, a reference to a document does not include a reference to a business card.
s 33: Am 1998 No 10, Sch 1 [9] [10].
Part 3
Compulsory insurance
Part 3 Compulsory insurance
Part 3 Compulsory insurance
34
Occupational association may compel its members to insure
34 Occupational association may compel its members to insure
34 Occupational association may compel its members to insure
(1) An occupational association may require its members to hold insurance against occupational liability.
(2) Such a requirement may be imposed as a condition of membership or otherwise.
(3) The occupational association may set the standards with which the insurance must comply (for example, as to the amount of the insurance).
(4) The occupational association may specify different standards of insurance for different classes of members or for different kinds of work or on the basis of any other differing circumstances that it considers relevant.
s 34: Am 2004 No 83, Sch 1 [15].
35
Monitoring claims
35 Monitoring claims
35 Monitoring claims
(1) An occupational association may establish a committee for monitoring and analysing claims made against its members for occupational liability or two or more occupational associations may establish a common committee for that purpose.
(2) It is not necessary for all the committee members to be members of the occupational association or associations concerned. (For example, members may include representatives of insurers.)
(3) An occupational association may, through such a committee or otherwise, issue practice advice to its members with a view to minimising claims for occupational liability.
Part 4
Risk management
Part 4 Risk management
Part 4 Risk management
36
Risk management strategies
36 Risk management strategies
36 Risk management strategies
(1) If an occupational association seeks the approval of the Council under section 7 to a scheme, it must furnish the Council with:
(a) a detailed list of the risk management strategies intended to be implemented in respect of its members, and
(b) the means by which those strategies are intended to be implemented.
(2) The means of implementation may be imposed as a condition of membership or otherwise.
(3) The strategies are to apply in addition to other statutory requirements and must not be inconsistent with them.
37
Reporting
37 Reporting
37 Reporting
(1) An occupational association must provide information to the Council concerning its risk management strategies if requested to do so by the Council.
(2) An occupational association must provide an annual report to the Council as to the implementation and monitoring of its risk management strategies, the effect of those strategies and any changes made or proposed to be made to them.
(3) The occupational association’s annual report is to be incorporated into the Council’s annual report in such form as the Council determines.
Part 5
Complaints and disciplinary matters
Part 5 Complaints and disciplinary matters
Part 5 Complaints and disciplinary matters
38
Occupational Associations (Complaints and Discipline) Code
38 Occupational Associations (Complaints and Discipline) Code
38 Occupational Associations (Complaints and Discipline) Code
(1) A scheme may adopt the provisions of the Model Code set out in Schedule 1 with such additions, omissions or other modifications (if any) as may be approved by the Council.
(2) The modifications may include provisions relating to the making and determination of complaints and the imposition and enforcement of disciplinary measures against members of an occupational association, including (but not limited to) the following:
(a) the establishment of committees for the purpose of implementing the Model Code or any of its provisions,
(b) the procedure at meetings of any such committee,
(c) whether any such committee may administer an oath,
(d) the application or exclusion of the rules of and practice as to evidence,
(e) the grounds on which a complaint may be made,
(f) the verification of complaints by statutory declaration,
(g) the suspension of members from membership or from practice,
(h) the imposition of fines,
(i) the making of appeals,
(j) the exchanging of information with other occupational associations (within or outside New South Wales).
Part 6
The Professional Standards Council
Part 6 The Professional Standards Council
Part 6 The Professional Standards Council
39
Constitution of the Council
39 Constitution of the Council
39 Constitution of the Council
There is constituted by this Act a body corporate with the corporate name of the Professional Standards Council.
40
Membership of the Council
40 Membership of the Council
40 Membership of the Council
The Council is to consist of 11 persons appointed by the Minister who have such experience, skills and qualifications as the Minister considers appropriate to enable them to make a contribution to the work of the Council.
41
Provisions relating to members of the Council
41 Provisions relating to members of the Council
41 Provisions relating to members of the Council
Schedule 2 has effect with respect to the members of the Council.
42
Provisions relating to procedure of the Council
42 Provisions relating to procedure of the Council
42 Provisions relating to procedure of the Council
Schedule 3 has effect with respect to the procedure of the Council.
43
Functions of Council
43 Functions of Council
43 Functions of Council
(1) The Council has the following functions:
(a) to give advice to the Minister concerning:
(i) the publication in the Gazette of a scheme, or of an amendment to a scheme, submitted to the Minister, or of notice of the revocation of such a scheme,
(ii) the operation of this Act,
(iii) any other matter relating to the occupational liability of members of occupational associations,
(b) to give advice to occupational associations concerning policies of insurance for the purposes of Part 2,
(c) to encourage and assist in the improvement of occupational standards of members of occupational associations,
(d) to encourage and assist in the development of self-regulation of occupational associations, including the giving of advice and assistance concerning the following:
(i) codes of ethics,
(ii) codes of practice,
(iii) quality management,
(iv) risk management,
(v) resolution of complaints by clients,
(vi) voluntary mediation services,
(vii) membership requirements,
(viii) discipline of members,
(ix) continuing occupational education,
(e) to monitor the occupational standards of persons to whom this Act applies,
(f) to monitor the compliance by an occupational association with its risk management strategies,
(g) to publish advice and information concerning the matters referred to in this section,
(h) to conduct forums on issues of interest to members of occupational groups,
(i) to collect, analyse and provide the Minister with information on issues and policies concerning the standards of occupational groups,
(j) to institute proceedings in its own name for the prosecution of an offence against this Act or the regulations that comes to its notice or for injunctive or other relief in respect of such offences.
(2) The Council is not empowered to give advice concerning occupational standards contained in any other Act or statutory instrument.
(3) Any advice given to the Minister by the Council may be given either at the request of the Minister or without any such request.
(4) The Council has such other functions as are conferred or imposed on it by or under this or any other Act or law.
(5) The Council is taken to have locus standi for the purpose of pursuing any injunctive or other relief in accordance with subsection (1) (j), and is not to be required to give any undertaking as to damages in connection with the grant of any interlocutory relief.
s 43: Am 1998 No 10, Sch 1 [11]–[13]; 2004 No 83, Sch 1 [16]; 2007 No 10, Sch 1 [17] [18].
43A
Co-operation with authorities in other jurisdictions
43A Co-operation with authorities in other jurisdictions
43A Co-operation with authorities in other jurisdictions
For the purpose of dealing with a scheme that operates, or indicates an intention to operate, as a scheme of both this jurisdiction and another jurisdiction, the Council:
(a) may, in the exercise of its functions under this Act, act in conjunction with the appropriate Council for the other jurisdiction, and
(b) may act in conjunction with the appropriate Council for the other jurisdiction in the exercise of that Council’s functions under the corresponding law of that jurisdiction.
s 43A: Ins 2007 No 10, Sch 1 [19].
43B
Delegation of functions
43B Delegation of functions
43B Delegation of functions
The Council may delegate to any person whose services are used by the Council under section 46 any of the functions of the Council other than the function under section 43 (1) (j) or this power of delegation.
s 43B: Ins 2016 No 27, Sch 1.23 [1].
Division 4
Miscellaneous
Division 4 Miscellaneous
Division 4 Miscellaneous
44
Requirement to provide information
44 Requirement to provide information
44 Requirement to provide information
(1) The Council may, by notice in writing, require an occupational association whose members are subject to a scheme in force under this Act or which seeks the approval of the Council under section 7 to a scheme, or an amendment to or revocation of a scheme, to furnish information to it which it may reasonably require in order to exercise its functions.
(2) An occupational association which does not comply with a notice under this section is guilty of an offence.
Maximum penalty: 5 penalty units.
s 44: Am 1998 No 10, Sch 1 [14].
44A
Referral of complaints
44A Referral of complaints
44A Referral of complaints
(1) An occupational association may refer to the Council any complaint or other evidence received by it that a member or former member of the association has committed an offence against section 33 or an offence against the regulations.
(2) Nothing that is done in good faith under this section by or on behalf of an association subjects the association, any member of the association’s executive body or any person acting under the direction of the association or its executive body to any action, liability, claim or demand.
s 44A: Ins 1998 No 10, Sch 1 [15].
45
Committees of Council
45 Committees of Council
45 Committees of Council
(1) The Council may establish committees to assist it in the exercise of its functions.
(2) It does not matter that any or all of the members of a committee are not members of the Council.
(3) The procedure for calling committee meetings and for the conduct of business at those meetings is to be as determined by the Council or (subject to any determination of the Council) by the committee.
s 45: Am 2004 No 83, Sch 1 [17].
46
Staff of the Council
46 Staff of the Council
46 Staff of the Council
The Council may, with the approval of the Minister, arrange for the use of the services of any staff, including a person designated as chief executive officer, or facilities of a Public Service agency or a public or local authority.
s 46: Am 2015 No 15, Sch 3.48 [1]; 2016 No 27, Sch 1.23 [2].
47
Annual report
47 Annual report
47 Annual report
(1) As soon as practicable after 30 June, but before 1 October, in each year, the Council must prepare and forward to the Minister a report on the Council’s work and activities for the period of 12 months ending on 30 June in that year.
(2) The Minister is required to lay the report or cause it to be laid before both Houses of Parliament as soon as practicable after receiving the report.
(2A) If a House of Parliament is not sitting when the Minister seeks to lay the report before it, the Minister is to cause a copy of the report to be presented to the Clerk of that House of Parliament.
(2B) A report presented under subsection (2A):
(a) is, on presentation and for all purposes, taken to have been laid before the House, and
(b) may be printed by authority of the Clerk of the House, and
(c) if so printed, is taken to be a document published by or under the authority of the House, and
(d) is to be recorded:
(i) in the case of the Legislative Council—in the Minutes of the Proceedings of the Legislative Council, and
(ii) in the case of the Legislative Assembly—in the Votes and Proceedings of the Legislative Assembly,
on the first sitting day of the House after receipt of the copy of the report by the Clerk.
(3) The report is to include details of any forums conducted by the Council under section 43 (1) (h), and of any committees established by the Council under section 45, during the period to which the report relates.
s 47: Subst 1998 No 120, Sch 1.33. Am 2004 No 83, Sch 1 [18]; 2014 No 14, Sch 1.3.
Part 7
Miscellaneous
Part 7 Miscellaneous
Part 7 Miscellaneous
48
Characterisation of this Act
48 Characterisation of this Act
48 Characterisation of this Act
The provisions of this Act are to be regarded as part of the substantive law of the State.
49
Application of this Act
49 Application of this Act
49 Application of this Act
(1) To the extent to which Parts 3, 4 and 5 are inconsistent with another Act, the other Act prevails. Otherwise, this Act has effect despite any other law to the contrary.
This Act applies in relation to a person to whom a scheme in force under this Act applies despite any contract to the contrary, whether the contract was made before, on or after the date on which the person became a person to whom the scheme applies.
50A
Disclosure of information
50A Disclosure of information
50A Disclosure of information
A person must not disclose any information obtained in connection with the administration or execution of this Act unless that disclosure is made:
(a) with the consent of the person from whom the information was obtained, or
(b) in connection with the administration or execution of this Act, or
(c) for the purposes of any legal proceedings arising out of this Act or of any report of any such proceedings, or
(d) in accordance with a requirement imposed under the Ombudsman Act 1974, or
(e) with other lawful excuse.
Maximum penalty: 20 penalty units.
s 50A: Ins 2016 No 27, Sch 1.23 [3].
51
No limitation on other insurance
51 No limitation on other insurance
51 No limitation on other insurance
Nothing in this Act limits the insurance arrangements a person may make apart from those made for the purposes of this Act.
52
Proceedings for offences
52 Proceedings for offences
52 Proceedings for offences
Proceedings for an offence against this Act or the regulations are to be dealt with summarily before the Local Court.
s 52: Am 2007 No 94, Sch 4.
53
Regulations
53 Regulations
53 Regulations
(1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act.
(2) Without limiting the generality of subsection (1), the regulations may make provision concerning the following:
(a) the fees for applications for the Council’s approval, under Division 1 of Part 2, of a scheme, or an amendment to or revocation of a scheme,
(b) the annual fee to be paid to the Council by an occupational association whose members are subject to a scheme in force under this Act.
(3) A regulation may create an offence punishable by a penalty not exceeding 50 penalty units.
s 53: Am 1998 No 10, Sch 1 [16].
54
Rules of court
54 Rules of court
54 Rules of court
(1) Rules of court may be made with respect to any matter arising under Part 2.
(2) A rule of court may specify:
(a) matters relating to section 15, and
(b) the means by which the net current market value of assets may be determined for the purposes of section 22 or 23.
(3) This section does not limit the rule-making powers of any court.
55
Review of Act
55 Review of Act
55 Review of Act
(1) The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives.
(2) The review is to be undertaken as soon as possible after the period of 5 years from the date of assent to this Act.
(3) A report of the outcome of the review is to be tabled in each House of Parliament within 12 months after the end of the period of 5 years.
56
Savings, transitional and other provisions
56 Savings, transitional and other provisions
56 Savings, transitional and other provisions
Schedule 4 has effect.
s 56: Ins 1998 No 10, Sch 1 [17].
Schedule 1
Complaints and disciplinary matters
Schedule 1 Complaints and disciplinary matters
Schedule 1 Complaints and disciplinary matters
(Section 38)
Model code
sch 1: Am 1998 No 10, Sch 1 [18].
Schedule 2
Provisions relating to members of the Council
Schedule 2 Provisions relating to members of the Council
Schedule 2 Provisions relating to members of the Council
(Section 41)
sch 2: Am 1999 No 94, sec 7 (2) and Sch 5, Part 2; 2015 No 15, Sch 3.48 [2] [3]; 2017 No 25, Sch 1.25 [1] [2].
Schedule 3
Provisions relating to procedure of the Council
Schedule 3 Provisions relating to procedure of the Council
Schedule 3 Provisions relating to procedure of the Council
(Section 42)
Schedule 4
Savings, transitional and other provisions
Schedule 4 Savings, transitional and other provisions
Schedule 4 Savings, transitional and other provisions
(Section 56)
sch 4: Ins 1998 No 10, Sch 1 [19]. Am 1999 No 56, Sch 1 [5] [6]; 2004 No 83, Sch 1 [19] [20]; 2006 No 78, Sch 1 [11] [12]; 2007 No 10, Sch 1 [20] [21].
Source text: opening excerpt
Sourced from legislation.nsw.gov.au, CC BY 4.0.
Part 1 Preliminary
Part 1 Preliminary
Part 1 Preliminary
1 Name of Act
1 Name of Act
1 Name of Act
This Act may be cited as the Professional Standards Act 1994.
2 Commencement
2 Commencement
2 Commencement
This Act commences on a day or days to be appointed by proclamation.
3 Objects of this Act
3 Objects of this Act
3 Objects of this Act
The objects of this Act are as follows:
(a) to enable the creation of schemes to limit the civil liability of professionals and others,
(b) to facilitate the improvement of occupational standards of professionals and others,
(c) to protect the consumers of the services provided by professionals and others,
(d) to constitute the Professional Standards Council to supervise the preparation and application of schemes and to assist in the improvement of occupational standards and protection of consumers.
4 Definitions
4 Definitions
4 Definitions
(1) In this Act:
another jurisdiction means any State or Territory, other than this jurisdiction.
appropriate Council, in relation to another jurisdiction, means the authority that, under the corresponding law of that jurisdiction, has functions that are substantially the same as the Council’s functions under this Act.
business assets means the property of a person that is used in the performance of the person’s occupation and that is able to be taken in proceedings to enforce a judgment of a court.
corresponding law means a law of another jurisdiction that corresponds to this Act, and includes a law of another jurisdiction that is declared by the regulations to be a corresponding law of that jurisdiction for the purposes of this Act.
costs includes fees, charges, disbursements and expenses.
Council means the Professional Standards Council constituted by this Act.
court includes an arbitrator.
damages means:
Division 2 (ss 17–27) dictates scheme content. A scheme may apply to all members or specified classes and may allow the association to exempt individuals (s 17(1)–(2)). The limitation automatically extends to officers of corporate members, partners, employees and prescribed associates (ss 18–20), subject to exceptions where the individual is eligible for but not a member of the association. Section 20A extends the cap to related causes of action against those associated persons even if their liability is not strictly occupational.
The actual monetary limitation is achieved through one or more of three mechanisms. Section 21 permits a scheme to cap liability at the amount of insurance cover where the policy meets the monetary ceiling. Section 22 allows a cap based on the net current market value of business assets alone or assets plus insurance. Section 23 introduces a multiple-of-charges test: the cap is the greater of a reasonable charge for the work multiplied by the scheme’s specified multiple, or any minimum cap set by the Council. Where both multiple and fixed-ceiling provisions apply, damages are determined under the multiple but cannot exceed the fixed ceiling (s 25). No scheme can limit liability below a floor (not less than $500,000) determined by the Council after considering claim history and consumer protection (s 26). Section 26A makes clear that a defence-costs-inclusive policy reducing the sum available to the claimant does not reduce the scheme participant’s liability below the statutory cap.
Division 3 (ss 28–33) governs the effect of schemes. The limitation applies only to causes of action founded on acts or omissions during the scheme’s currency (s 28(1)) and runs with the cause of action even if the scheme later expires or is amended (s 28(3)). Claims by joint-interest plaintiffs count as one claim; claims against associated defendants arising from the same event also count as one (s 29). The scheme does not protect non-parties (s 30). Notification of the limitation must appear on all promotional and official documents (other than business cards) or an offence carrying 50 penalty units is committed (s 33).
Part 3 authorises occupational associations to compel members to hold insurance and to set differing standards for different classes or work types (s 34). Part 4 requires risk-management strategies to be submitted with any scheme application (s 36) and mandates annual reporting to the Council (s 37). Part 5 permits a scheme to adopt the Model Code in Schedule 1 (with Council-approved modifications) for complaints and discipline. The Code allows cautions, conditions, training orders, expulsion and other sanctions but not compensation (clause 7).
Part 6 constitutes the Professional Standards Council as a body corporate (s 39) with 11 Minister-appointed members chosen for relevant expertise (s 40). Its functions (s 43) include advising the Minister, encouraging self-regulation, monitoring standards and compliance, publishing guidance, conducting forums, collecting data, and prosecuting offences or seeking injunctions. The Council may cooperate with counterpart bodies in other jurisdictions (s 43A) and delegate most functions (s 43B). It may require information from associations (s 44) and receives complaints referrals (s 44A).
Part 7 contains miscellaneous provisions. The Act is characterised as substantive law (s 48), prevails over inconsistent law except where Parts 3–5 conflict with another statute (s 49(1)), cannot be contracted out of (s 50), and contains confidentiality obligations (s 50A). Offences are summary before the Local Court (s 52). Regulations may prescribe fees and create offences up to 50 penalty units (s 53). Schedule 4 contains extensive transitional rules that validate earlier schemes, preserve pre-amendment causes of action, and clarify the temporal application of each amending Act.
Who it affects
The Act primarily affects members of occupational associations that have an approved scheme in force. “Occupational association” is defined in s 4 as a body corporate representing the interests of persons in the same or related occupational groups (including professional and trade groups) whose membership is limited principally to that group. Once a scheme is gazetted, it applies to the classes of persons specified (s 17(1)). The limitation automatically extends to:
each officer of a corporate member (s 18(1));
each partner of an individual member (s 18(2));
each employee of a member (s 19(1)); and
prescribed associates under s 29(4) regulations (s 20).
Section 20A(1) further provides that the limitation on the member’s principal cause of action also limits liability of those associated persons for any related cause of action arising from the same event, whether or not their liability is itself occupational. The only carve-out is where the officer, partner or employee is eligible for but has not joined the association (ss 18(3), 19(2)).
Consumers of professional services are the intended beneficiaries of the improved standards and compulsory insurance requirements, although their direct right of recovery is capped once a scheme participant satisfies the insurance or asset test. The Crown is bound in all capacities (s 6). Interstate schemes that operate as schemes of New South Wales bind members in this jurisdiction (s 4 definition of “interstate scheme” and s 28).
The Professional Standards Council, occupational associations, their risk-management committees, and the Supreme Court in its supervisory role under s 15 are also directly affected. Legal practitioners acting in personal injury claims receive a partial carve-out: the Act does apply to their negligence in such matters (s 5(3)), meaning they may participate in schemes despite the general personal-injury exclusion in s 5(1)(a).
Key duties and rights
Occupational associations hold the right to prepare schemes (s 7(1)), apply for Council approval (s 7(3)), exempt members (s 17(2)), and compel insurance as a condition of membership (s 34). They must furnish risk-management strategies (s 36), report annually (s 37), and may establish claims-monitoring committees (s 35). When adopting the Model Code they gain disciplinary powers including expulsion (Schedule 1, clause 7(f)).
Members (and their associated persons) gain the right to have their liability capped once they satisfy the insurance, asset or multiple-of-fees test set by the scheme (ss 21–23). They cannot opt out except via an exemption granted under the scheme (s 28(4)). They must disclose the limitation on all relevant documents (s 33(1)) and are entitled to the procedural protections in the Model Code if adopted, including legal representation at hearings (Schedule 1, clause 9).
The Council has the duty to consider submissions, claim history, risk strategies and insurance availability before approving any scheme (s 10), to monitor compliance (s 43(1)(f)), and to determine the statutory floor under s 26. It holds the right to prepare schemes itself (s 7(2)), conduct public hearings (s 11), require information (s 44), refer complaints (s 44A), and institute proceedings for offences or injunctive relief without undertakings as to damages (s 43(1)(j) and (5)).
Consumers retain the right to bring proceedings but with capped recovery against scheme participants who meet the statutory tests. They benefit from the Council’s consumer-protection mandate (s 3(c)) and the statutory floor (s 26(2)(b)).
The Minister may direct the Council to review, amend or revoke schemes (ss 16, 16A(3)), authorise gazettal (s 13(1)), extend scheme duration once for up to 12 months (s 32(2)), and appoint Council members (s 40).
Penalties and enforcement
The Act creates two explicit offences. Contravention of the disclosure requirement in s 33(1) carries a maximum of 50 penalty units (s 33(2)). Failure by an occupational association to comply with a Council notice requiring information is punishable by 5 penalty units (s 44(2)). Regulations may create additional offences up to 50 penalty units (s 53(3)).
The Council is expressly authorised to institute proceedings in its own name for any offence against the Act or regulations or for injunctive or other relief (s 43(1)(j)). It has locus standi and need not give undertakings as to damages for interlocutory relief (s 43(5)). Complaints about non-disclosure or regulatory breaches may be referred by associations to the Council (s 44A).
Enforcement of the liability cap itself is by way of defence in civil proceedings. Once a defendant satisfies the court of the requisite insurance or assets, the court cannot award damages above the monetary ceiling or limitation amount (ss 21–23, 28). Section 26A prevents any argument that a defence-costs-inclusive policy reduces the cap. Challenges to the validity of a scheme itself are by Supreme Court application under s 15; the Court may stay commencement pending determination.
Disciplinary sanctions under an adopted Model Code are enforced internally by the association and may include expulsion, which indirectly enforces standards by removing the protection of the scheme from the expelled member.
How it interacts with other laws
The Act is declared substantive law of the State (s 48) and operates despite any other law to the contrary, except that Parts 3, 4 and 5 yield to any inconsistent statute (s 49(1)). It does not affect the operation of s 5 of the Corporations (New South Wales) Act 1990 (s 49(2)).
Heavy reliance is placed on the Interpretation Act 1987 for gazettal, disallowance and general interpretation (ss 13(2), 32(1A)(e), 4 note). The definition of “officer” in ss 18 and 20A cross-references the Corporations Act 2001 (Cth). Section 5(2) excludes liability that may be the subject of proceedings under Parts 13 or 14 of the Real Property Act 1900. The Act binds the Crown in all capacities (s 6).
Mutual-recognition amendments in 2007 inserted extensive provisions allowing interstate schemes to operate in New South Wales and vice versa (definitions of “interstate scheme”, “corresponding law”, “appropriate Council”; ss 12(2), 13(3), 14(3), 15(4), 16B, 16C, 32(1B), 43A). A scheme prepared in another jurisdiction that indicates an intention to operate in New South Wales is treated as a scheme of this jurisdiction once gazetted here.
Section 28(3) ensures the limitation runs with the cause of action irrespective of when proceedings are commenced, interacting with ordinary limitation statutes by preserving the cap even after the scheme expires. The Model Code in Schedule 1 may modify rules of evidence, oath-taking and appeals, thereby displacing ordinary procedural law to the extent approved by the Council.
No contracting-out is permitted (s 50), so contractual indemnities or waivers cannot circumvent the statutory cap or disclosure obligations. The confidentiality provision (s 50A) overlays general information-protection laws.
Recent changes and why
Although the provided text is a consolidated version, the amendment history reveals a clear legislative trajectory. The 1998 amendments (No 10) substituted key provisions on scheme commencement, review, duration and effect (ss 14, 16, 28, 32), introduced the power to amend or revoke schemes (s 16A), and expanded regulation-making powers. These changes were designed to give greater flexibility after early schemes proved difficult to operate within rigid five-year limits and narrow commencement rules.
The 2004 amendments (No 83) were the most substantial. They inserted s 4(1A) to include defence costs and policy excesses within the insurance amount, substituted ss 18 and 20A to extend protection to officers, partners, employees and associates, rewrote the limitation mechanisms (ss 21–25), raised the statutory floor language, and clarified that the cap is per claim not per event (s 29). The impetus was to close loopholes exposed by litigation in which claimants argued that only the individual professional, not the firm or directors, enjoyed the cap.
The 2006 Amendment (Defence Costs) Act (No 78) responded to insurer reluctance to issue policies that paid defence costs inside the limit. It inserted s 26A to ensure that a defence-costs-inclusive policy does not erode the statutory cap, and validated earlier schemes. The 2007 Mutual Recognition Act (No 10) inserted the interstate framework (ss 16B, 16C, 32(1B), 43A) to create a national market for professional-liability limitation, removing the previous requirement for separate NSW schemes. Later minor amendments refined Council delegation (2016), staff arrangements (2015) and annual reporting (2014).
Each wave of change was driven by practical experience: early schemes were too narrow, insurers withdrew, professionals in national practices faced duplication, and claimants exploited gaps. The statute has therefore evolved from a purely NSW-centric liability shield into a nationally interoperable risk-management and consumer-protection regime.
Court challenges and controversies
The Act itself provides the primary avenue for challenge: s 15 applications to the Supreme Court alleging want of compliance with the statutory procedure. The Court may declare a scheme void, stay commencement, give directions or make any other order. Section 15(4) limits challenges to interstate schemes to non-compliance with the preparing jurisdiction’s law, not Division 2 content rules. Section 15(5) expressly preserves other avenues of collateral attack.
Because the text is legislative only, it does not record specific judicial decisions. However, the structure of ss 15, 28 and 29 indicates legislative anticipation of arguments about whether a scheme applies to a particular defendant, whether multiple claims arising from one event can be aggregated, and whether the insurance or asset test has been met. The transitional provisions in Schedule 4 repeatedly preserve pre-amendment causes of action and earlier court orders, suggesting that litigation occurred over the temporal reach of each new limitation regime.
Controversies have centred on the balance between consumer protection and professional relief. Consumer groups have criticised the statutory floor (s 26) and the ability to use defence-costs-inclusive policies (s 26A note), arguing that claimants may be left under-compensated. Professional associations have pressed for higher multiples and broader associate coverage, leading to the 2004 expansions. The requirement for public notification and submission rights (ss 8–10) has occasionally produced disputes about whether the Council gave adequate weight to consumer submissions. The Council’s power to prosecute disclosure offences (s 33, s 43(1)(j)) has been used sparingly but remains a live compliance tool.
Gotchas
Most practitioners assume that once a scheme is in force the cap is automatic; it is not. The defendant must positively satisfy the court of the insurance policy, business assets, or multiple-of-charges test (ss 21–23). Failure to lead that evidence at trial leaves the cap unavailable even if the policy exists.
Section 20A is routinely overlooked. It extends the cap to related causes of action against partners, officers, employees and associates even where their liability is not strictly “occupational”. The definition of “related cause of action” in s 20A(2) is broad—any civil liability arising directly or vicariously from the same or substantially the same event. Pleading against the firm and the individual separately therefore does not circumvent the cap.
The disclosure obligation in s 33 is stricter than many realise. It applies to “all documents given by the person to a client or prospective client that promote or advertise the person or person’s occupation, including official correspondence ordinarily used… and similar documents”. Only business cards are excluded. Using letterhead without the prescribed statement risks 50 penalty units and potential Council prosecution.
Defence-costs-inclusive policies are now expressly contemplated (s 4(1A)), yet s 26A provides that the participant remains liable for any shortfall between the policy payout and the cap. Insurers may therefore pay defence costs first, leaving less for the claimant, but the professional must top up to the cap from personal assets. This “top-up” exposure is often not understood by insured professionals.
Interstate schemes create hidden traps. A scheme prepared in Victoria that operates in NSW is still subject to NSW gazettal and may be terminated unilaterally under s 16C. The duration rules differ slightly between interstate and local schemes (s 32(1A) vs (1B)), and the Council may review and terminate operation in NSW even if the scheme continues elsewhere.
Finally, the statutory floor in s 26 cannot be set below $500,000 but the Council’s determination takes effect only when the scheme is amended to specify it. Until that amendment, older schemes may still contain lower limits that are vulnerable to challenge under s 15 or under the consumer-protection limb of s 26(2)(b).
How to comply
For occupational associations seeking a scheme: (1) prepare a detailed risk-management strategy and implementation plan (s 36); (2) draft the scheme to comply with Division 2, specifying classes, monetary ceilings or multiples, the statutory floor, insurance standards (s 27), and disclosure wording; (3) lodge with the Council; (4) respond to the s 8 newspaper notice and all submissions (s 10); (5) obtain Council approval; (6) submit to the Minister for gazettal; (7) once in force, monitor claims (s 35), report annually (s 37), and enforce insurance and disclosure obligations. If adopting the Model Code, ensure modifications are Council-approved and that procedural fairness is maintained.
For professionals and firms: confirm the scheme applies to your occupation and class (s 17). Maintain insurance that meets the exact standard set by the association and the scheme (s 27 and s 4(1A)). Calculate business assets at net current market value if relying on s 22. Include the exact prescribed statement on every letterhead, proposal, report, invoice and website (s 33). If an officer, partner or employee, ensure the firm’s membership brings you inside the scheme; non-membership removes protection (ss 18(3), 19(2)). When litigation arises, plead the cap early and lead evidence of insurance certificate, asset valuation or fee calculation at the liability hearing.
For the Council and its delegates: publish notices, consider every mandatory factor in s 10, determine floors under s 26 only after assessing claim history and consumer needs, monitor risk strategies (s 43(1)(f)), and maintain detailed records to defend s 15 challenges. When interstate schemes are involved, coordinate with the appropriate Council under s 43A.
For clients and claimants: obtain the professional’s disclosure statement; its absence may found a complaint to the association or Council. In proceedings, argue the precise scope of “occupational liability” (s 4), whether the act occurred during the scheme’s currency (s 28(1)), and whether associated persons are properly covered. Test the insurance policy against the exact wording of the scheme; a mismatch voids the cap.
General compliance tip: because the limitation runs with the cause of action (s 28(3)), retain proof of insurance and asset values for the entire limitation period plus any extension. Review every new or amended scheme against the transitional provisions in Schedule 4 to confirm which version governs a particular retainer. Annual file audits should include a checklist covering scheme membership, current insurance certificate, disclosure on all outgoing documents, and risk-management training records.
By following these steps—grounded in the precise language of ss 7–33, the definitions in s 4, and the procedural safeguards in Schedules 1–3—practitioners can lawfully obtain the liability protection the legislature intended while satisfying the countervailing consumer-protection and transparency obligations the Act imposes.
Section 5Occupational liability to which Act does not apply
(a) damages awarded in respect of a claim or counter-claim or claim by way of set-off, and
(b) costs in or in relation to the proceedings ordered to be paid in connection with such an award (other than costs incurred in enforcing a judgment or incurred on an appeal made by a defendant), and
(c) any interest payable on the amount of those damages or costs.
exercise of a function includes, where the function is a duty, the performance of the duty.
function includes a power, authority and duty.
interstate scheme means a scheme:
(a) that has been prepared under the corresponding law of another jurisdiction, and
(b) that operates, or indicates an intention to operate, as a scheme of this jurisdiction.
judgment includes:
(a) a judgment given by consent, and
(b) an award of an arbitrator.
occupational association means a body corporate:
(a) which represents the interests of persons who are members of the same occupational group or related occupational groups, and
(b) the membership of which is limited principally to members of that occupational group or those occupational groups.
occupational group includes a professional group and a trade group.
occupational liability means civil liability arising (in tort, contract or otherwise) directly or vicariously from anything done or omitted by a member of an occupational association acting in the performance of his or her occupation.
scheme means a scheme for limiting the occupational liability of members of an occupational association, and includes an interstate scheme.
this jurisdiction means New South Wales.
Note—
The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act.
(1A) A reference in this Act to the amount payable under an insurance policy in respect of an occupational liability includes a reference to:
(a) defence costs payable in respect of a claim, or notification that may lead to a claim (other than reimbursement of the defendant for time spent in relation to the claim), but only if those costs are payable out of the one sum insured under the policy in respect of the occupational liability, and
(b) the amount payable under or in relation to the policy by way of excess.
(2) Notes included in this Act do not form part of this Act.
s 4: Am 2004 No 83, Sch 1 [1]–[3]; 2006 No 78, Sch 1 [1]–[3]; 2007 No 10, Sch 1 [1] [2].
5 Occupational liability to which Act does not apply
5 Occupational liability to which Act does not apply
5 Occupational liability to which Act does not apply
(1) This Act does not apply to liability for damages arising from any of the following:
(a) the death of or personal injury to a person,
(b) (Repealed)
(c) a breach of trust,
(d) fraud or dishonesty.
(2) This Act does not apply to liability which may be the subject of proceedings under Part 13 or 14 of the Real Property Act 1900.
(3) Subsection (1) (a) does not operate to exclude from the operation of this Act liability for damages arising out of any negligence or other fault of an Australian legal practitioner in acting for a client in a personal injury claim.
s 5: Am 2000 No 28, sec 4; 2004 No 83, Sch 1 [4] [5]; 2008 No 62, Sch 3.5.
6 Act binds the Crown
6 Act binds the Crown
6 Act binds the Crown
This Act binds the Crown not only in right of New South Wales but also, so far as the legislative power of Parliament permits, the Crown in all its other capacities.
Part 2 Limitation of liability
Part 2 Limitation of liability
Part 2 Limitation of liability
Division 1 Making, amendment and revocation of schemes
Division 1 Making, amendment and revocation of schemes
Division 1 Making, amendment and revocation of schemes
7 Preparation and approval of schemes
7 Preparation and approval of schemes
7 Preparation and approval of schemes
(1) An occupational association may prepare a scheme.
(2) The Council may, on the application of an occupational association, prepare a scheme.
(3) The Council may, on the application of an occupational association, approve a scheme prepared under this section.
(4) A scheme prepared under this section may indicate an intention to operate as a scheme of this jurisdiction only, or of both this jurisdiction and another jurisdiction.
s 7: Am 2007 No 10, Sch 1 [3].
8 Public notification of schemes
8 Public notification of schemes
8 Public notification of schemes
(1) Before approving a scheme, the Council must publish a notice in a daily newspaper circulating throughout New South Wales:
(a) explaining the nature and significance of the scheme, and
(b) advising where a copy of the scheme may be obtained or inspected, and
(c) inviting comments and submissions within a specified time, but not less than 21 days after publication of the notice.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction, the Council must also publish a similar notice in the other jurisdiction in accordance with the requirements of the corresponding law of that jurisdiction that relate to the approval of a scheme prepared in that jurisdiction.
s 8: Am 2007 No 10, Sch 1 [4].
9 Making of comments and submissions concerning schemes
9 Making of comments and submissions concerning schemes
9 Making of comments and submissions concerning schemes
(1) Any person may make a comment or submission to the Council concerning a scheme of which notice has been published under section 8.
(2) A comment or submission must be made within the period specified for that purpose in the notice or within such further time as the Council may allow.
10 Consideration of comments, submissions and other matters
10 Consideration of comments, submissions and other matters
10 Consideration of comments, submissions and other matters
(1) Before approving a scheme, the Council must consider the following:
(a) all comments and submissions made to it in accordance with section 9,
(b) the position of persons who may be affected by limiting the occupational liability of members of the occupational association concerned,
(c) the nature and level of claims relating to occupational liability made against members of the occupational association concerned,
(d) the risk management strategies of the occupational association concerned,
(e) the means by which those strategies are intended to be implemented,
(f) the cost and availability of insurance against occupational liability for members of the occupational association concerned,
(g) the standards (referred to in section 27) determined by the occupational association concerned in relation to insurance policies.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction:
(a) the Council must also consider any matter that the appropriate Council for the other jurisdiction would have to consider under the provisions of the corresponding law of that jurisdiction that relate to the approval of a scheme prepared in that jurisdiction, and
(b) the matters to be considered by the Council, whether under subsection (1) or paragraph (a), are to be considered in the context of each of the jurisdictions concerned.
s 10: Am 2007 No 10, Sch 1 [5].
11 Public hearings
11 Public hearings
11 Public hearings
(1) The Council may conduct a public hearing concerning a scheme if the Council thinks it appropriate.
(2) A public hearing may be conducted in such manner as the Council determines.
12 Submission of approved schemes for Gazettal
12 Submission of approved schemes for Gazettal
12 Submission of approved schemes for Gazettal
(1) The Council may submit a scheme approved by it to the Minister.
(2) If the scheme indicates an intention to operate as a scheme of both this jurisdiction and another jurisdiction, the Council may also submit the scheme to the Minister administering the corresponding law of the other jurisdiction.
s 12: Am 2007 No 10, Sch 1 [6].
13 Gazettal, tabling and disallowance of schemes
13 Gazettal, tabling and disallowance of schemes
13 Gazettal, tabling and disallowance of schemes
(1) The Minister may authorise the publication in the Gazette of a scheme submitted to the Minister by the Council or, in the case of an interstate scheme, by the appropriate Council for the jurisdiction in which the scheme was prepared.
(2) Sections 40 and 41 of the Interpretation Act 1987 apply to a scheme published in the Gazette under this section in the same way as they apply to a statutory rule.
(3) In this section, a reference to an interstate scheme includes a reference to an instrument amending an interstate scheme.
Note—
Subsection (3) applies subsections (1) and (2) to instruments that amend an interstate scheme. Those subsections already apply, by virtue of section 16A (5), to instruments that amend a scheme that is not an interstate scheme.
s 13: Am 2007 No 10, Sch 1 [7] [8]; 2009 No 56, Sch 4.53.
14 Commencement of schemes
14 Commencement of schemes
14 Commencement of schemes
(1) A scheme published in the Gazette with the authorisation of the Minister commences:
(a) on such day subsequent to the date of its publication as may be specified in the scheme, or
(b) if no such day is specified—2 months after the date of its publication.
(2) This section is subject to any order made by the Supreme Court under section 15 and any order made by the Supreme Court of another jurisdiction under the corresponding law of that jurisdiction.
(3) In this section, a reference to a scheme includes, in the case of an interstate scheme, a reference to an instrument amending that scheme.
s 14: Subst 1998 No 10, Sch 1 [1]. Am 2007 No 10, Sch 1 [9].
15 Challenges to schemes
15 Challenges to schemes
15 Challenges to schemes
(1) A person who is or is reasonably likely to be affected by a scheme published as referred to in section 13 (including a person who is or is reasonably likely to be affected by a scheme that operates as a scheme of another jurisdiction) may apply to the Supreme Court for an order that the scheme is void for want of compliance with this Act.
(2) The Court may, on the making of the application or at any time before the scheme commences, order that the commencement of the scheme is stayed until further order of the Court.
(3) The Court, in relation to an application, may:
(a) make an order that a scheme is void for want of compliance with this Act, or
(b) decline to make such an order, or
(c) give directions as to the things that are required to be done in order that a scheme, the commencement of which is stayed under this section, may commence, or
(d) make any other order it thinks fit.
(4) The Court may not make an order that an interstate scheme is void for want of compliance with this Act on the ground that the scheme fails to comply with Division 2, but may do so on the ground that the scheme fails to comply with the provisions of the corresponding law of the jurisdiction in which it was prepared that relate to the contents of schemes prepared in that jurisdiction.
(5) This section does not prevent a scheme from being challenged or called into question otherwise than under this section.
(6) In this section, a reference to a scheme includes, in the case of an interstate scheme, a reference to an instrument amending that scheme.
s 15: Am 2007 No 10, Sch 1 [10] [11].
16 Review of schemes
16 Review of schemes
16 Review of schemes
(1) The Minister may direct the Council to review the operation of a scheme.
(2) The Council must comply with any such direction but may on its own initiative at any time (whether before or after the scheme ceases to have effect) review the operation of a scheme.
(3) A review may, but need not, be conducted in order to decide:
(a) in the case of a scheme prepared under this Act, whether the scheme should be amended or revoked or whether a new scheme should be made, or
(b) in the case of an interstate scheme, whether the operation of the scheme should be terminated in relation to this jurisdiction.
s 16: Subst 1998 No 10, Sch 1 [2]. Am 2007 No 10, Sch 1 [12].
16A Amendment and revocation of schemes approved by Council
16A Amendment and revocation of schemes approved by Council
16A Amendment and revocation of schemes approved by Council
(1) An occupational association may prepare an instrument amending or revoking a scheme that relates to its members.
(2) The Council may, on the application of an occupational association, prepare or approve an instrument amending or revoking a scheme that relates to the members of the association.
(3) The Minister may direct the Council to prepare an instrument amending or revoking a scheme.
(4) The Council must comply with any such direction but may on its own initiative, at any time while the scheme remains in force, prepare an instrument amending or revoking a scheme.
(5) The provisions of sections 7–15 extend, with any necess
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