Professional Liability Guide

CHAPTER 5 – WHAT IS A PROFESSIONAL/PROFESSIONAL DUTY?

In Drayton v Martin (and the decision on appeal), it was, therefore, determined that the investment advice provided was in connection with the business of an accountant because it was either advice given by an accountant performing an accountant’s role or inextricably intertwined with the business of an accountant. This reasoning was distinguished in Solicitors’ Liability Fund v Gray & Winter on the basis that the solicitors there did not undertake any legal work in connection with the property investment scheme. Exclusion clauses Professional services exclusions will often be found in public or products liability or Directors & Officers (D&O) insurance policies. These policies insure different risks from those arising out of professional negligence or related breaches. Therefore, it is appropriate that claims connected with the provision of professional services are carved out (eg in circumstances where separate professional indemnity insurance should be obtained) without circumscribing the cover entirely. In Toomey v Scolaro’s Concrete Constructions Pty Ltd (in liq) (No 5), it was submitted that ‘ professional ’ must carry the same meaning in an exclusion clause of a public liability policy as that in the indemnity clause of a professional indemnity policy. 373 In response, Eames J observed: ‘we must not lose sight of the fact that the context in which the word “professional” appears in the two policies is likely to be different. Furthermore, when the term appears in an exclusion clause, the overlaying principle of contra proferentem applies – with particular force … [T]he considerations relevant to the application of the word “professional” in one policy are not necessarily the same as those for another.’ 374

On appeal 375 the Victorian Court of Appeal did not express a concluded view on whether the exclusion could apply, although it noted that the exclusion was at least ‘ debatable’ . 376

The term ‘ professional ’ will not necessarily bear an identical meaning in an indemnity clause of a professional indemnity policy on the one hand and an exclusion clause of a different policy on the other. In Fitzpatrick v Job t/as Jobs Engineering, 377 the Western Australian Court of Appeal confirmed that the context in which the term is used in a policy can determine its meaning.

In that case the Court had to consider the operation of an exclusion clause in a public liability policy for claims ‘arising out of a breach of duty owed in a professional capacity’ .

The claim in question was brought by Fitzpatrick, the purchaser of a wood-processing machine. Jobs Engineering had originally designed and manufactured the machine and supplied it to another party, Ridolfo, without a cabin. Ridolfo arranged for a cabin to be made before it was sold to Fitzpatrick. Fitzpatrick suffered injuries while operating the machine and brought a claim against Jobs Engineering for failing to advise or inform Ridolfo properly of the need for a barrier or safety switch in the cabin.

373 [2002] VSC 48. 374 Ibid [66]. 375 Manren Ltd v Royal and Sun Alliance Insurance Australia Ltd [2003] VSCA 59. 376 Ibid [28]. 377 [2007] WASCA 63. Distinguished in Liberty Mutual Insurance Co, Australia Branch v SunWater Ltd (No 2) [2021] NSWSC 1582.

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