Stuart Clark December 11 2002 New Standard of Care Proposed For Professionals Clayton Utz | Professional Negligence - Australia Stuart Clark Professional Negligence Background Legislative Reform Standard of Care Definition Proportionate Liability Comment Background Over the past 12 months, Australia has experienced a public liability crisis, involving: the collapse of a major general insurer; the collapse of a leading medical indemnity insurer; spiralling insurance premiums; and business and other organizations experiencing serious difficulties in obtaining insurance cover. This crisis has resulted in extensive tort law reform at state and federal level.Legislative ReformIn New South Wales, the first response to the crisis was the Civil Liability Act 2002 (NSW). The act limited the amount of damages payable under certain heads of damage, while abolishing others. On November 20 2002, the second stage of the reform process, the Civil Liability Amendment (Personal Responsibility) Bill 2002 passed through the final stage of the New South Wales Parliament. Standard of CareThe bill establishes a new standard of care for 'professionals'. Specifically, Section 5(O) provides that: "A person practising a profession (a professional) does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice." The new standard takes into account the possibility of more than one opinion on a particular issue being 'widely accepted'. Specifically, Section 5(O)(3) provides that if there are divergent peer professional opinions that are 'widely accepted' in Australia, one or more of these opinions can be relied upon for the purposes of the section.Similarly, Section 5(O)(4) provides that a 'peer professional opinion' does not have to be universally accepted to be considered 'widely accepted'. However, a court cannot rely on such opinion if it "considers that the opinion is irrational".There is an exception to the general rule which preserves the common law rule established by the High Court of Australia in Rogers v Whitaker (1992) 175 CLR 479. By virtue of Section 5(P), the standard set out in Section 5(O) does not apply "to liability arising in connection with the giving of (or the failure to give) a warning, advice or other information in respect of the risk of death of or injury to a person associated with the provision by a professional of a professional service."This rule is maintained to ensure that patients of medical practitioners (and clients of other professionals, where relevant) have enough information about the potential risks (of personal injury or death) to decide whether to obtain the service.DefinitionThe only definition of a professional provided in the bill is someone who "practis[es] a profession". While that definition will include traditional professionals such as medical practitioners, lawyers, accountants, auditors, actuaries and the like, it is uncertain how far it extends. Does it extend to 'professional' company directors, teachers or journalists? Are tradespeople 'professionals'? The definition will certainly be considered by the courts, and its limits defined.Common Law FoundationsThe standard which the bill imposes on professionals is founded in the decision of the Queens Bench in Bolam v Friern Hospital Management Committee (1957) 1 WLR 582. Under the Bolam rule a doctor is not negligent if he or she acted in accordance with a practice accepted at the time as proper by a responsible body of medical opinion, even if other doctors adopted a different practice. This rule was rejected by the High Court a decade ago in Rogers, which concerned a doctor's duty to warn. In that case, the High Court held that the "standard is not determined solely or even primarily by reference to the practice followed or supported by a responsible body of opinion in the relevant profession or trade."While the High Court accepted that evidence of accepted practice may help to decide what proper care and skill is required in the profession or trade, "it is for the courts to adjudicate upon what is the appropriate standard of care".There is nothing new in the distinction drawn in the bill between professional advice on the one hand, and professional services on the other. In Rogers the High Court, while rejecting the Bolam rule, recognized that in cases involving professional treatment (as opposed to advice), whether a medical practitioner gave a particular treatment in accordance with the appropriate standard of care is a question in which professional opinion has an influential role. However, the decision in Rogers confirmed that the court was to make the final decision on the appropriate standard of care. This conclusion was recently affirmed by the High Court in Naxakis v West General Hospital (1999) 197 CLR 269.Insofar as the bill removes this power from the court, it fundamentally changes the law of negligence involving professionals. Critics of the High Court's approach to this area of the law have argued that it creates considerable uncertainty, which the bill aims to clarify.Proportionate LiabilityThe bill also introduces proportionate liability, although not in relation to personal injury claims.Professionals such as accountants, lawyers and auditors have long argued for changes to the rule which rendered all joint tortfeasors jointly and severally liable for the whole of the damage or loss, regardless of the extent of their actual contribution to it. Now a joint tortfeasor will be liable only to the extent of his or her actual responsibility for the relevant harm, irrespective of whether the other tortfeasor is insolvent or being wound up, has died or has otherwise ceased to exist. In apportioning responsibility between defendants, a court may also take into account the comparative responsibility of any other joint tortfeasor who is not a party to the action. CommentIt is not surprising that these changes have been welcomed by professionals working in New South Wales and throughout Australia. The new standard of care that has been introduced is seen as a return to a system which recognizes the importance of acknowledging the realities of professional practice. Similarly, the introduction of proportionate liability is generally viewed as preventing the injustice of rendering one defendant responsible for a loss that may have been caused by many. For further information on this topic please contact Stuart Clark at Clayton Utz by telephone (+61 2 9353 4000) or by fax (+61 2 8220 6700) or by email ([email protected]). The Clayton Utz website can be accessed at www.claytonutz.com.