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<P>TPA 'undermines capping'</B></FONT><SPAN style="FONT-SIZE: 18pt"><BR></SPAN><FONT face=Arial size=3>Chris Merritt<BR>28/03/2003 </P>
<P>The ability to bypass the state caps on professional liability and seek unlimited damages under the Trade Practices Act is undermining capping schemes, according to a new report.</P>
<P>The report, which was conducted by Christopher Arup, says the Trade Practices Act is being used as a catch-all provision in litigation against professionals and gives plaintiffs several procedural advantages.</P>
<P>His report says this has created uncertainty among the professions about the level of professional indemnity insurance they need to carry, in turn increasing their cost of doing business.</P>
<P>The report, which reviews the impact of the Trade Practices Act, was commissioned by the Professional Standards Council, which administers the capping schemes in NSW and Western Australia.</P>
<P>The council's chairman, Warwick Wilkinson, said the report revealed that the professional standards legislation had been successful in safeguarding against catastrophic claims.</P>
<P>But continued exposure to the Trade Practices Act had the potential to undermine the caps, he said.</P>
<P>"It is clear that professionals still feel obliged to purchase excessive amounts of insurance because of the uncertainty imposed by the TPA," he said.</P>
<P>"The only way that this uncertainty can be dealt with is to establish a uniform national system of professional standards legislation that is recognised by the Trade Practices Act and other relevant commonwealth legislation," Mr Wilkinson said.</P>
<P>After a series of interviews, Professor Arup found that some professionals believe the capping schemes are not affecting the way insurers price professional indemnity insurance.</P>
<P>"The insurers are not being discerning enough, they tend to lump professionals together regardless of their claims exposure or indeed their claims record," the report says.</P>
<P>While the report concludes that the capping schemes are worthwhile, Professor Arup found that participating professions would support higher caps if they were comprehensive and this meant professional indemnity insurance became more widely available.</P>
<P>He found that a number of procedural aspects of the Trade Practices meant plaintiffs would be at an advantage by litigating under federal law instead of state-based common law.</P>
<P>These advantages included the fact that liability may be more strict, it was easier to recover the full amount of any losses, and damages could not be reduced by using the doctrine of contributory negligence.</P></FONT>
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