What's New in Professional Indemnity and Negligence

Lawyers need to be spared the burden of government interference in its professional conduct and regulation, the profession itself claims (09 November 2009)

A high-profile Gold Coast real estate agent has been banned from the industry for life. Queensland Fair Trading Minister Peter Lawlor says the agent blatantly ignored the law by operating without a licence (30 October 2009)

The Local Government Association of Queensland (LGAQ) has sent all councils a draft code of conduct for dealing with developers. The move follows recent controversy about the links between government and business in Queensland

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The financial ombudsman has determined that even though the adviser had failed to fully explain the risks involved in the investment and did not provide a product disclosure statement, the claimant in this case was not entitled to compensation because the loss he suffered was not a direct result of the advice he received (28 October 2009)

A senior lawyer could face disciplinary action over his behaviour during a trial described by the Court of Appeal as a fiasco. The Court of Appeal ordered a retrial in the controversial case after finding that misconduct by barrister Paul Scanlon, a Queen's Counsel, was likely to have prejudiced the jury and caused a miscarriage of justice

Personal injury law firms, sometimes derided as the ''ambulance chasers'' of the legal profession, are using a variety of tricks to exploit loopholes in NSW laws banning them from advertising their services. Last year the managing partner of Keddies, the largest specialised personal injury law firm in NSW, was found guilty of professional misconduct and fined $10,000 for advertising (03 November 2009)

A new report, commissioned by the government, suggests there could be a significant reduction in formal litigation if dispute resolution services were better utilised. It has recommended several changes be made, including making it a legal requirement for prospective litigants to try to resolve disputes before going to court. There could also be legal requirements for lawyers and the courts to provide litigants with information on alternative dispute resolution services (04 November 2009)

The global regulatory group IOSCO has issued a report outlining guidelines for private equity managers stating that they should be honest and always act in their clients best interests. IOSCO is the international organisation for securities regulators and their eight point guidelines follow global industry-wide reviews into the practices of private equity managers (04 November 2009)

A leading judge has taken aim at litigation funders, saying courts "should not be delayed or distracted by claims which are brought only because there are profits in their promotion". Justice Patrick Keane of the Queensland Court of Appeal also says the "easy and lucrative" reliance on information technology is hampering efforts to streamline litigation (16 October 2009)

Architects risk bankruptcy for BER work

Regional architects in NSW are risking bankruptcy by signing contracts that make them responsible for potentially huge expenses not covered by their professional indemnity insurance, according to the Australian Institute of Architects (AIA) (14 October 2009)

 

A Gold Coast property developer has lodged court documents claiming he was defamed by an "extravagant and sensational" Today Tonight story which painted him as untrustworthy, unethical and dishonest. Former V8 racing team owner Craig Gore has launched legal action against a former business associate, Sydney builder Ivan McFadyen, suing him for $250,000 in defamation damages

 

Directors of Australian companies that foundered during the global financial crisis are squarely in the sights of the corporate regulator after it launched unprecedented legal action over the fall of former blue-chip company Centro Properties. ASIC has filed a civil claim in the Federal Court against eight former and current Centro directors and executives in its first major case alleging negligence by corporate Australia during the crisis (22 October 2009)

The Federal Government has approved the activation of the scheme used to accommodate policyholders when an insurance company fails – the Financial Claims Scheme Policyholder Compensation Facility – in relation to a small general insurer, Australian Family Assurance Limited (16 October 2009)

ASIC is seeking not only civil penalties (of up to $200,000 for each breach) against the former executives, but orders against all but one of the executives, that they be required to pay compensation ranging from $103m to $147.5m. But unlike Centro, or for that matter James Hardie, ASIC is not pursuing the non-executive directors because it considers they were misled and provided false information and documents (03 November 2009)

ASIC press release: ASIC commences civil proceedings against former officers of MFS Group

ASIC grants class action lawyers relief
ASICwill grant transitional relief tolegal representatives offunded class actions, following a Federal Court decision which characterised such actions as managed investment schemes. The relief, which will apply until 30 June 2010, is from the requirements that would otherwise apply to funded class actions as ‘managed investment schemes’ under Chapter 5C and Chapter 7 of the Corporations Act 2001 (the Act) (05 November 2009)

The Australian Prudential Regulation Authority has entered into a formal arrangement to exchange information and cooperate with other insurance supervisors around the world (26 October 2009)

The Federal Court ruling forcing Professional Investment Services (PIS) to pay more than $5 million in Westpoint compensation could have greater consequences for the industry as a whole rather than just for the dealer group. ASIC alleged PIS was negligent in its provision of advice, the judgment found no such evidence. The ASIC proceedings settled for commercial reasons without any admission of liability on the part of PIS or its advisers (09 November 2009)

The tightening of the professional indemnity insurance market has led the corporate regulator to amend its requirements of Australian Financial Services Licensees (AFSLs). ASIC has released an updated version of Regulatory Guide 126 – Compensation and insurance arrangements for AFS licensees (RG 126). In the updated guide, ASIC has removed the requirement for AFSLs to obtain automatic run-off cover (26 October 2009)

 

The Australian Computer Society will next year unveil a professional indemnity scheme but the plan has the ability to give the ACS "dangerous certification power" according to critics. Such a scheme is well-established in the medical and legal fraternity and seeks to cap the amount a professional can be sued if they have been negligent in discharging their duties (09 November 2009)

National water broker Waterfind has called for better regulation of water brokers. Waterfind’s 2008-09 Annual Water Market report says minimum standards for water brokers must include the introduction of a licensing regime for water brokers and the requirement for brokers to retain professional indemnity insurance to protect their clients against any business negligence (29 October 2009)

Original claim - solicitor was negligent in failing to give it correct advice as to a means available to terminate the development agreement – damages - respondent now seeks an order that the appellant pay his costs of the appeal on an indemnity basis - whether the respondent should also have his costs on an indemnity basis prior to the date of the offer made in this Court - appellant pay the respondent’s costs

LEGAL PRACTITIONERS - Solicitors - Obligations of confidence - Plaintiff’s solicitor had acted for other parties against defendant in other proceedings raising similar issues - Those proceedings settled following mediation - Mediation agreement contained promise by parties not to disclose or use confidential information acquired in the course of the mediation - Whether plaintiff’s solicitor owed an obligation of confidence to defendant - Whether there was a threat of breach of that obligation sufficient to justify an injunction against the solicitor acting for the plaintiff - Whether there was a basis for such an injunction in the inherent jurisdiction of the court

LEGAL PRACTITIONERS - Appeal by defendant from dismissal of application to restrain solicitors from acting for plaintiff in main proceeding - Whether employee of solicitors obtained confidential information in capacity as employee of defendant's former solicitors - Whether breach of duty of loyalty owed to defendant - Effect of removal of employee from acting in main proceeding on behalf of plaintiff - Whether solicitors should be restrained from acting - Appeal dismissed.

PROFESSIONS AND TRADES – LAWYERS – MISCONDUCT, UNFITNESS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – Statutory proceedings – Queensland – where respondent solicitor acted for purchaser of residential property – where contract of sale subject to purchaser obtaining finance by specified date – where no notification to vendors by finance date that finance approved and vendors terminated contract – where respondent admitted that he had failed to maintain reasonable standards of competence and diligence by failing to request an extension for finance approval – whether purchaser had informed the respondent before finance date that finance was approved – whether respondent’s file note of his conversation with purchaser on the finance date was a truthful record – whether applicant discharged the onus of proof in relation to the charges that depended on proving that purchaser had informed the respondent that finance was approved and that the respondent’s file note of conversation with purchaser on the finance date was a truthful record

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT – TRUST MONEY – where the respondent practitioner on two occasions withdrew monies from a trust account and paid the monies into his general account without first obtaining the consent of his client or other authorisation – where the practitioner is charged with two breaches of s 8 of the Trust Accounts Act 1973 (Qld) – whether the practitioner is guilty of unprofessional conduct pursuant to the Queensland Law Society Act 1952 (Qld)

 

Disciplinary proceedings – Real Estate Agent- Property Agents and Motor Dealers Act 2000, Sections 26, 128, 160, 496(1)(b) – Acting as a real estate agent without a licence- acts amounting to- Continuation of interest and involvement in real estate business by disqualified person- Meaning of “not a suitable person to hold a licence” in s496(1)(g)(ii) and section 26.

Real estate agent found guilty of gross mismanagement and misappropriations from trust account – penalty

CONTRACT - promisor's obligations performed by subcontractor - subcontractor's work defective - whether promisor liable for breach of contract

TORT - negligence - whether railway authority owed non-delegable duty to major user of railway

DAMAGES - amount paid by plaintiff to third party in settlement of claim - whether amount recoverable in contract and tort against wrongdoers - whether plaintiff's settlement with third party reasonable

INSURANCE - professional indemnity policy - civil engineering works - meaning of "profession"

TORT - recoverability of pure economic loss considered - claim by third party on plaintiff consequent on damage to plaintiff's railway track caused by defective work of tortfeasor

Stay application – section 103 of the Commercial and Consumer Tribunal Act 2003 – decision to suspend licence.

Torts - Negligence - Balcony collapse - Lack of redundancy in structural design - Substitution of oregon for jarrah - Failure to eliminate or reduce moisture traps

Liability of engineer - Whether structural information incorporated in design of balconies obtained from engineer - Whether engineer assumed responsibility for structural design - Failure to identify deficiencies

Liability of architect - Whether architect shared responsibility for structural design - Whether architect observed or should have observed substitution of oregon for jarrah - Whether failure to notify builder of substitution causative - Whether risk of structurally significant wood rot due to moisture traps reasonably foreseeable - Whether reasonable to eliminate or materially reduce risk - Causation

Liability of strata company - s 35(1)(c) Strata Titles Act 1985(WA) - Statutory duty to keep in good and serviceable repair and properly maintain common property - Scope and purpose of statute - Whether duty is strict - Whether breach of duty gives private right to damages - To whom duty is owed

Liability of local council - Statutory requirement to inspect building and certify consistency with building plans and specifications - Limited inspection of building - Failure to identify substitution of oregon for jarrah - Whether common law duty of care owed to visitors of building - Breach - Causation - Apportionment of damagesCosts - Sanderson and Bullock orders

TRADE PRACTICES – misleading and deceptive conduct – head contract and subcontract – whether directions conveyed a representation that subcontractor permanently precluded from working as a subcontractor for the contractor – whether such a representation accurately reflected the required state of mind – whether directions conveyed a representation that there was a reasonable basis to prohibit the subcontractor from working for the contractor – whether there was such a reasonable basis on the facts of the case

TORT – whether government Department owes duty of care to a subcontractor – whether Department required to have the interests of the subcontractor in contemplation before issuing a direction to prohibit the subcontractor working for the Department’s contractor – commercial context – pure economic loss – individual autonomy arising out of commercial context – no duty of care

PROCEDURE – INFERIOR COURTS – QUEENSLAND – COMMERCIAL AND CONSUMER TRIBUNAL – where unsatisfactory grounds for the grant of leave to appeal – where no reasonable prospect of establishing an error of law or want or excess of jurisdiction

INSURANCE – Indemnity for legal costs incurred – Identification of claim – Application of exclusion of indemnity clause – Whether claim for the rendering of professional advice or service or the making or formulating of a design.

 

NEGLIGENCE - duty of care in utterance - defendant plaintiff's financial adviser - advice volunteered -duty of care existed.

MISREPRESENTATION - need not the sole cause of plaintiff's change of position - liability not excluded by other contributing causes. MISREPRESENTATION – when representation continues.

CONTRACT – Breach of contract – Professional negligence – Valuer retained by bank to value mortgaged premises – Negligent overvaluation causing bank to lend too much against security of mortgaged premises – Damages for breach of retainer – Quantum of damages required to place bank in position as if valuation had been competently performed – Whether bank would have entered into alternative transaction – Whether alternative transaction would have been productive of loss – Damages for loss of opportunity – Evidence required to prove value of lost opportunity – Contributory negligence – Whether bank at fault in failing adequately to assess borrower’s capacity to repay loan – Whether bank’s failure was causative of loss – Proportionate liability – Whether valuer’s liability limited by Part IVAA of Wrongs Act 1958 – Whether delinquent borrower and valuer were concurrent wrongdoers – Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109, Royal Brompton Hospital NHS Trust v Hammon [2002] UKHL 14; [2002] 1 WLR 1397, considered; Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505, distinguished – Wrongs Act 1958, Part IVAA, ss 23B, 24, 24AH and 24AI.

CORPORATIONS – FINANCIAL SERVICES AND MARKETS – MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT – MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT – where the bank made no representation that it would provide whatever funding was required for certain purposes irrespective of the terms of its facility including the terms for loan to value ratios – whether the bank has engaged in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive in contravention of s 12DA of the ASIC Act 2001 (Cth)

CORPORATIONS – FINANCIAL SERVICES AND MARKETS – FINANCIAL SERVICES PROVIDERS – OTHER MATTERS – where the extent of the funds required was dependent on contingencies outside the bank’s control – where there is no evidence that the principal debtor had relied on the bank’s judgment – whether the bank has breached implied warranties contained in the ASIC Act 2001 (Cth) that the financial services be rendered with due care and skill and that the services be reasonably fit for the purpose for which the consumer had made known that the services were required

 

NEGLIGENCE – proposed purchase of three rural properties by joint venture – joint venture included vendors and purchasers – valuer engaged by accountants acting for purchasers – whether valuer owed a duty of care to purchaser in preparation of valuations – whether valuer was negligent in preparation and presentation of valuations

TRADE PRACTICES – misleading and deceptive conduct – whether representations by vendor company through one of its directors to valuer were misleading and deceptive – whether the valuer relied on those representations – whether representations made by vendor company and relied upon and set out by valuer in valuations were representations by valuer – whether vendor company liable to purchaser for misrepresentations as well as valuer being liable for misrepresentations

DAMAGES – contribution – concurrent liability of valuer and vendor company – contribution claimed between valuer and vendor company – assessment of relative culpability

DAMAGES – damages for misleading and deceptive conduct and negligent misstatement – consideration of the assessment of damages by primary judge – appropriate measure of damages when the purchaser is not induced to enter into a transaction, but is induced to pay a higher price than it would otherwise have paid – interest calculated under O 35A r 7A(1) of the Federal Court Rules as measure of or substitute for damages for losses consequential upon payment of higher price

COSTS – appeal of valuer and of vendor each successful in part – appropriate order as to costs