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FAQs - What liablity is limited?
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Last Updated: 10 March 2008 
 
These questions and answers regarding the Institute’s Limitation of Liability Scheme/s are a general guide only. They are not intended as professional advice, and you should rely on your own inquiries and assessment and other suitably qualified and specific professional advice. 
 
The Institute expressly disclaims all liability for any loss or damage arising from reliance upon any information in these questions and answers.

  1. What liability will be limited?
    2.  
  2. Will my liability be limited in relation to a claim under the Trade Practices Act 1974 (Cth)
    3.  
  3. What is meant by “acting in the performance of his or her occupation”
    4.  
  4. What is the Institute’s definition of ‘public accountancy services’?
    5.  
  5. I am a director of a company related to a practice entity. All the directors of the related entity are CPP holders. This related entity provides services which do not fall within the definition of “public accountancy services”. Do I have the benefit of the cap on liability for these services?
    6.  
  6. Will I get the benefit of the cap for all claims made after the commencement of the scheme?
    7.  
  7. A claim was made against me where the scheme operated to limit my liability. Will the scheme be available to limit my liability in relation to other unrelated claims?
    8.  
  8. If a single event results in a number of claims, will the cap apply to the total of these claims?
    9.  
  9. Will I get the benefit of the cap if I provide services in another state/territory?
    10.  
  10. I am a member holding a CPP, operating in Malaysia to provide outsourced accounting services for clients in Australia in relation to their Australian businesses. Do I have the benefit of the cap for these services.
 
 
1. What liability will be limited? 
Professional Standards Legislation (PSL) is state based legislation which enables the creation of schemes to limit the civil liability of professionals.  
 
Participating members of approved schemes will have their occupational liability limited. Occupational liability is defined (with only slight variations between the States and Territories) as:
“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.”[emphasis added]
PSL specifically excludes any limitation of liability for damages in relation to death or personal injury, breach of trust, fraud or dishonesty. In SA and Tasmania damages in relation to intentional tort are excluded and in Tasmania damages in relation to fiduciary duty are also excluded. 
 
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2. Will my liability be limited in relation to a claim under the Trade Practices Act 1974 (Cth) 
 
The Commonwealth Government has passed the Treasury Legislation Amendment (Professional Standards) Act 2004 which will extend the operation of state/territory schemes. The schemes which have been prescribed by the Commonwealth, become effective in capping liability arising from breaches of the Trade Practices Act (misleading or deceptive conduct provisions). 
 
The NSW and WA schemes were prescribed by the Commonwealth on 25 October 2007. 
 
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3. What is meant by “acting in the performance of his or her occupation” 
 
The court hearing a claim against a member will decide whether an activity is ‘in the performance of the occupation’ of the member. It making this determination the court is likely to have regard to all relevant material, including the Institute’s definition of ‘public accountancy services’ in the Members’ Handbook, as well as evidence as to the nature and scope of the services ordinarily provided by members of the Institute at the time of the act or omission the subject of the claim. 
 
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4. What is the Institute’s definition of ‘public accountancy services’? 
 
Public accountancy services are defined in the Article 2(f) of the Eighth Supplemental Royal Charter as meaning such services as the Board may from time to time determine to be “public accountancy services”. 
 
The Board’s determination, as stated in Regulation 4 which will be included in the April 2008 Update to the Members’ Handbook: 
 
The Board has determined such services to be accounting, auditing, management consulting, taxation, financial management and insolvency. With effect from 1 July 2005, the Board has also determined that forensic accounting, risk management and corporate advisory services are “public accountancy services”  
 
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5. I am a director of a company related to a practice entity. All the directors of the related entity are CPP holders. This related entity provides services which do not fall within the definition of “public accountancy services”. Do I have the benefit of the cap on liability for these services? 
 
No, not if the claim was against the related company and you in your capacity as directors. It is probable that liability arising from the provision of non “public accountancy services” would not be considered to be “occupational liability” and would therefore not be limited. 
 
However if the principal claim was against you in relation to the provision of “public accountancy services”, and a related cause of action (resulting from the same event as that from which the principal cause of action arose) were brought against directors of the related company who were your partners or employees, then both you and those other directors would be covered – even though their liability was not an occupational liability. 
 
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6. Will I get the benefit of the cap for all claims made after the commencement of the scheme? 
 
No. The PSL only limits liability in relation to an act or omission which occurs after the commencement of the scheme. A claim which relates to an act or omission which occurred before the commencement of the scheme is not limited. 
 
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7. A claim was made against me where the scheme operated to limit my liability. Will the scheme be available to limit my liability in relation to other unrelated claims? 
 
Yes. The court should limit damages in relation to each cause of action relating to occupational liability as long as the requirements of the PSL and scheme are met, subject to the limitation in Q.8 below. 
 
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8. If a single event results in a number of claims, will the cap apply to the total of these claims?  
 
No. The PSL specifically states that the cap applies to each 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. However, if separate claims are made by a number of people who have a joint interest in a cause of action, then the PSL provides that their claims will be treated as a single claim for the purposes of the legislation. 
 
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9. Will I get the benefit of the cap if I provide services in another state/territory? 
 
Yes. As the Institute of Chartered Accountants is a national association, all members nationally are participating members of each state scheme. Unlike the prior NSW scheme, there is no limitation regarding the residence of CPP holders, affiliates or practice entity members in the new schemes 
 
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10. I am a member holding a CPP, operating in Malaysia to provide outsourced accounting services for clients in Australia in relation to their Australian businesses. Do I have the benefit of the cap for these services. 
 
If sued for negligence in Malaysia, the Australian Act would not apply to limit the member's liability.  
If and to the extent that the services are delivered in Australia, the client could sue in the relevant Australian jurisdiction, and the PSC of that jurisdiction would apply to limit the member's liability. 
 
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