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Treasury Legislation Amendment (Professional Standards) Bill 2004

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2002-2003-2004

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

 

TREASURY LEGISLATION AMENDMENT (PROFESSIONAL STANDARDS) BILL 2003

SUPPLEMENTARY EXPLANATORY MEMORANDUM

Amendments and New Clauses to be Moved on Behalf of the Government

(Circulated by authority of the Minister for Revenue and Assistant Treasurer,

Senator the Hon Helen Coonan)

 



 



 

Table of Contents

General Outline............................................................................................... 1

Financial Impact and Regulation Impact Statement....................................... 2

Notes on Individual Amendments.................................................................. 3

 



 



 

1

General Outline

1.1     The amendments to the Treasury Legislation Amendment (Professional Standards) Bill 2003 (the Bill) are to ensure that the Government’s goal of supporting State and Territory reforms to improve the cost and availability of insurance to the Australian community is achieved.

1.2     The Bill supports State professional standards laws by allowing liability for broad-ranging provisions which might provide an alternative cause of action to the law of negligence to be limited in certain circumstances.  In that context, the prohibition of misleading and deceptive conduct in s. 52 of the Trade Practices Act 1974 (the TPA) had been broadly recognized as having the potential to be used as an alternative cause of action to negligence.

1.3     Other provisions which are similarly capable of being used as an alternative to negligence in a wide range of circumstances are those in the TPA and the Australian Securities and Investments Commission Act 2001 (the ASIC Act) which imply into contracts an obligation to supply services with ‘due care and skill’, a concept which has remarkable similarities to the duty of care required by the law of negligence.

1.4     While contract law is ordinarily dealt with by the States and Territories, the Commonwealth has been provided with legal advice that the effect of the High Court’s decision in Wallis v Downard-Pickford (North Queensland) Pty Ltd is that actions in contract based on a breach of the condition that services be provided with ‘due care and skill’ would not be subject to any limitations which might be applied by a State and Territory to contractual remedies.

1.5     The amendments will seek to ensure that State and Territory reforms of the law of contract are not undermined.

 



 

2

Financial Impact and Regulation Impact Statement

2.1     The Commonwealth’s contingent liabilities in relation to these amendments are uncertain and are not quantifiable.  This takes into account the Senate Economics Legislation Committee report on the Bill.

 



 



3

Notes on Individual Amendments

Amendment 1 - Long Title

3.1     This amendment is of a technical and clarifying nature, as it is not certain that the words “and for related purposes” in the long title is sufficient to cover the intent of the amendments

Amendment 2 - Item 1A After subsection 12ED(2)

3.2     This amendment inserts a new Item 1A into Schedule 1.

3.3     Item 1A inserts a new subsection (2A) after subsection 12ED(2) of the ASIC Act.  Section 12ED implies warranties into contracts for the supply of financial services and mirrors section 74 of the TPA.  The amendment is located in section 12ED rather than in Subdivision G of Division 2 of Part 2 of the ASIC Act (which deals with enforcement and remedies) so as to take advantage of s. 12EA (to apply the State/Territory law limit even if the contract provides that the proper law of the contract is a foreign law).

Amendment 3 - Item 8A  After subsection 74(2)

3.4     This amendment inserts a new Item 8A into Schedule 1.

3.5     Item 8A inserts a new subsection (2A) after subsection 74(2) of the TPA.  Section 74 implies warranties into contracts for the supply of services (other than financial services or those specifically excluded by subsection (3)).  The amendment is located in section 74 rather than in Part VI of the TPA (which deals with enforcement and remedies) so as to take advantage of s. 67 (to apply the State/Territory law limit even if the contract provides that the proper law of the contract is a foreign law).