The Law Society of New South Wales v Attorney General of New South Wales; ABC Insurance Pty Ltd v The Law Society of New South Wales

[2024] NSWCA 90

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The Law Society of New South Wales v Attorney General of New South Wales; ABC Insurance Pty Ltd v The Law Society of New South Wales [2024] NSWCA 90

Hearing dates:

2 April 2024

Date of orders:

23 April 2024

Decision date:

23 April 2024

Before:

Bell CJ; Meagher JA; Harrison CJ at CL

Decision:

The separate questions stated by Harrison CJ at CL on 8 March 2024 (2024/79043; 2024/90355) for determination by the Court of Appeal pursuant to r 28.2 of the Uniform Civil Procedure Rules (NSW) be answered as follows:

Question 1

Can the Law Society of New South Wales grant or renew a practising certificate under s 44 and s 45 of the Legal Profession Uniform Law (NSW) (LPUL) if the applicant:

(a) does not have or will not have on or before the grant or renewal, professional indemnity insurance approved by the Attorney General of New South Wales pursuant to s 95 of the Legal Profession Uniform Law Application Act 2014 (NSW); and

(b) is not exempt from the requirement to hold or be covered by professional indemnity insurance pursuant to the LPUL or the Legal Profession Uniform General Rules 2015 (NSW)?

Answer

No, provided the Attorney General has approved at least one insurance policy under s 95(2) of the Legal Profession Uniform Law Application Act 2014 (NSW) for a class of entities that includes the applicant for the practising certificate.

Question 2

If the answer to Question 1 is yes:

(a)   is the ABC Insurance Professional Indemnity Insurance Policy for Solicitors in Australia – 1 January 2024 (the ABC policy) a policy of professional indemnity insurance issued or provided by an insurer authorised by APRA under the Insurance Act 1973 of the Commonwealth to carry on insurance business in Australia, within the meaning of s 210(1)(a)(ii)(A) of the LPUL; and

(b) does the ABC policy comply with the minimum standards specified in the Uniform Rules for the purpose of s 210 of the LPUL, as required by s 210(1)(b)(i) of the LPUL?

Answer

This question does not arise as the proviso to the answer to Question 1 is satisfied with respect to a policy for the 2024-2025 practising year.

Catchwords:

INSURANCE – liability insurance – professional indemnity insurance – legal practitioners’ “approved insurance policy” for purposes of s 210 of Legal Profession Uniform Law (NSW) – whether s 95(2) of Legal Profession Uniform Law Application Act 2014 (NSW) confers power on Attorney General to approve insurer under policy – whether, for purposes of s 210(1)(a), s 95 is a “legislative arrangement for the approval or selection of insurers”

Legislation Cited:

Legal Practice Act 1996 (Vic), s 234

Legal Profession Act 1987 (NSW), ss 38R, 40, 41, 46

Legal Profession Act 2004 (NSW), ss 403, 406

Legal Profession Act 2004 (Vic), ss 3.5.2, 3.5.6, 6.2.1, 6.6.3, 6.6.19

Legal Profession Uniform General Rules 2015 (NSW)

Legal Profession Uniform Law Application Act 2014 (NSW), ss 3, 11, 37, 94, 95

Legal Profession Uniform Law Application Act 2014 (Vic), ss 4, 13, 102, 118, 120

Legal Profession Uniform Law Application Regulation 2015 (NSW), reg 4(2)

Legal Profession Uniform Law (NSW), ss 3, 43, 44, 45, 209, 210, 211, Pt 8.2

Legal Profession Uniform Law (Vic), Pt 4.4

Supreme Court Act 1970 (NSW), s 51(1)

Cases Cited:

Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453; [1995] HCA 44

Plaintiff S297/2013 v Minister for Immigration and Border Protection (2014) 255 CLR 179; [2014] HCA 24

R v Seller [2013] NSWCCA 42; (2013) 273 FLR 155

Texts Cited:

Bilateral Agreement on the Legal Profession Uniform Framework (5 December 2013)

Explanatory Note, Legal Profession Uniform Law Application Bill 2014 (NSW)

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 27 March 2014

Category:

Principal judgment

Parties:

2024/107445:

The Law Society of New South Wales (Applicant)
Attorney General of New South Wales (Respondent)

2024/107482:

ABC Insurance Pty Ltd (Applicant)
The Law Society of New South Wales (Respondent)

Representation:

Counsel:

2024/107445:

K Morgan SC with S Fitzpatrick, M Gvozdenovic (Applicant)
J Gleeson SC with C Winnett (Respondent)

2024/107482:

C Lenehan SC with S Baron Levi, M Mellos (Applicant)
K Morgan SC with S Fitzpatrick, M Gvozdenovic (Respondent)

Solicitors:

2024/107445:

Clayton Utz (Applicant)
Crown Solicitor’s Office (Respondent)

2024/107482:

Meridian Lawyers (Applicant)
Clayton Utz (Respondent)

File Number(s):

2024/107445; 2024/107482

Publication restriction:

Nil

HEADNOTE

[This headnote is not to be read as part of the judgment]

An Australian lawyer must have a current Australian practising certificate to engage in legal practice in New South Wales (Legal Profession Uniform Law (NSW) (LPUL), s 43). A prerequisite for the grant or renewal of a practising certificate is that the legal practitioner has or will have professional indemnity insurance for the period of that practising certificate (LPUL, ss 44, 45). For the purposes of the LPUL, a legal practitioner or law practice has professional indemnity insurance if the practitioner or law practice holds or is covered by an “approved insurance policy” for New South Wales (LPUL, s 210(4)).

In January 2024, ABC Insurance Pty Ltd on behalf of Liberty Mutual Insurance Company announced that it proposed to offer and issue a policy of professional indemnity insurance to legal practitioners in New South Wales covering the period 1 July 2024 to 30 June 2025. It described that policy as an “approved insurance policy” by reason that it satisfied the requirements of s 210(1).

In response, the Law Society of New South Wales (Law Society) maintained that s 210(1) either did not apply to or could not be satisfied by the ABC Insurance policy because of the enactment of s 95 of the Legal Profession Uniform Law Application Act 2014 (NSW) (NSW Application Act) and the fact that the Attorney General had approved under that section, in February 2024, three professional indemnity policies to be offered and issued by Lawcover Insurance Pty Ltd, a wholly-owned subsidiary of the Law Society. This contention raised issues as to the interaction between s 95 of the NSW Application Act and s 210(1) of the LPUL.

For the purpose of determining those issues as formulated in two separate questions, the two proceedings which had been commenced were removed to this Court.

The Court (Bell CJ, Meagher JA, Harrison CJ at CL) answered Question 1 in the negative, making it unnecessary to answer Question 2. In doing so, the Court held:

(1) Section 95 is legislation of the kind described in s 210(1)(a), namely, a “legislative arrangement for the approval or selection of insurers or other providers” of professional indemnity insurance: at [31]-[37].

(2) Section 95(2) is to be construed as conferring on the Attorney General the power to approve a policy of professional indemnity insurance, including the identity of the insurer by which the policy is to be issued: at [38]-[43].

(3) By the Attorney General’s order in writing made on 8 February 2024, three policies of professional indemnity insurance to be issued by Lawcover Insurance were approved under s 95(2), with the result that those policies were “approved insurance polic[ies]” for the purposes of s 210: at [44].

(4) In the absence of any order under s 95(2) in respect of Liberty Mutual, it did not satisfy s 210(1)(a)(i). Nor could it satisfy s 210(1)(a)(ii) because there was a relevant “legislative arrangement” and there was “another insurer approved under or selected in accordance with that legislation”: at [45].

JUDGMENT

1. THE COURT: There are two proceedings before the Court. Each was commenced in the Common Law Division and has been removed to this Court under Supreme Court Act 1970 (NSW), s 51(1) for the determination of two questions which arise in each proceeding. The underlying issue is as to the application and interaction of s 95 of the Legal Profession Uniform Law Application Act 2014 (NSW) (NSW Application Act) and s 210 of the Legal Profession Uniform Law (NSW) (LPUL). Those provisions describe what constitutes an “approved insurance policy” for the purposes of the LPUL. That uniform law provides that an “Australian practising certificate” for a barrister or solicitor practising in New South Wales may only be issued by the relevant professional body if it is satisfied that the practitioner has or will have an “approved insurance policy” on the grant or renewal of that practising certificate. A legal practitioner is prohibited from engaging in practice in New South Wales unless he or she holds or is covered by such a policy.

2. In proceedings 2024/79043, the parties are the Law Society of New South Wales (Law Society) as plaintiff and the Attorney General of New South Wales (Attorney General) as defendant; and in proceedings 2024/90355, ABC Insurance Pty Ltd (ABC Insurance) is plaintiff and the Law Society is defendant. On 8 March 2024, both proceedings were listed for directions before Harrison CJ at CL. At that time, his Honour made orders that the two proceedings be heard together and removed into this Court for the hearing of two separate questions.

3. The argument concerning those separate questions was heard on 2 April 2024, and on 23 April 2024 this Court made orders that those questions be answered as follows:

Question 1

Can the Law Society of New South Wales grant or renew a practising certificate under s 44 and s 45 of the Legal Profession Uniform Law (NSW) (LPUL) if the applicant:

(a) does not have or will not have on or before the grant or renewal, professional indemnity insurance approved by the Attorney General of New South Wales pursuant to s 95 of the Legal Profession Uniform Law Application Act 2014 (NSW); and

(b) is not exempt from the requirement to hold or be covered by professional indemnity insurance pursuant to the LPUL or the Legal Profession Uniform General Rules 2015 (NSW)?

Answer

No, provided the Attorney General has approved at least one insurance policy under s 95(2) of the Legal Profession Uniform Law Application Act 2014 (NSW) for a class of entities that includes the applicant for the practising certificate.

Question 2

If the answer to Question 1 is yes:

(a)   is the ABC Insurance Professional Indemnity Insurance Policy for Solicitors in Australia – 1 January 2024 (the ABC policy) a policy of professional indemnity insurance issued or provided by an insurer authorised by APRA under the Insurance Act 1973 of the Commonwealth to carry on insurance business in Australia, within the meaning of s 210(1)(a)(ii)(A) of the LPUL; and

(b) does the ABC policy comply with the minimum standards specified in the Uniform Rules for the purpose of s 210 of the LPUL, as required by s 210(1)(b)(i) of the LPUL?

Answer

This question does not arise as the proviso to the answer to Question 1 is satisfied with respect to a policy for the 2024-2025 practising year.

4. The Court’s reasons for so answering those questions follow.

5. Two matters should be noted at this point, although not raised by the parties or referred to in argument. Neither affects the orders made on 23 April 2024 or the Court’s answers to the two separate questions. The first is that the reference in Question 1 to “the Law Society of New South Wales” as the entity which grants or renews a practising certificate is not correct. That entity is the Law Society Council (as to which see [23] below). The second is that the proviso to the answer to Question 1 does not expressly say that the period for which an insurance policy must have been approved is the same period as that for which the relevant practising certificate is to be granted or renewed.

Legislative context

6. In Australia, regulation of the legal profession is the responsibility of states and territories. The LPUL was originally developed “under the auspices of the Council of Australian Governments … with the aim of delivering harmonised regulation of the legal profession across all States and Territories” (Second Reading Speech, New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 27 March 2014 at 28047-28048). A step towards the introduction of that uniform law was the making of the Bilateral Agreement on the Legal Profession Uniform Framework between Victoria and New South Wales dated 5 December 2013. (Although not relevant to the matter in issue here, Western Australia became a party to that intergovernmental agreement in February 2019.)

7. Relevantly, in its introductory language, that intergovernmental agreement (in the form signed by New South Wales and Victoria in 2013) describes the objectives of the LPUL as being to promote the administration of justice and to establish an efficient and effective Australian legal profession, including by “enhancing the protection of clients of law practices and the protection of the public generally”. By cl 4.1.1, each party undertakes to adopt a legislative scheme comprising “the Uniform Law, the Uniform Rules and the Uniform Regulations”. The agreement of the parties in cl 4.3.1 not to make or introduce any “Additional Jurisdictional Provisions” that are inconsistent with, or which would alter the scope or operation of, those “Uniform” provisions is qualified and excludes the enactment of the provisions “referred to in cl 4.3.2”, namely:

4.3.2   Each Party agrees to introduce into its Parliament and use its best endeavours to enact Additional Jurisdictional Provisions that provide for:

…

(b)   any arrangements with, or establishing, a professional indemnity insurer or other provider.

…

8. The phrase “Additional Jurisdictional Provisions” is defined as “legislation and subordinate legislation that regulate the legal profession in the States and Territories Party to this Agreement, other than the Uniform Law, Uniform Rules or Uniform Regulations”.

9. The reference in cl 4.3.2 to “arrangements with, or establishing, a professional indemnity insurer or other provider” is to be understood in the context of the then existing Victorian and New South Wales legislation concerning the provision of compulsory professional indemnity insurance to solicitors. In Victoria, that insurance could only be provided by a specific insurer, which was a named public authority having that function. In New South Wales, that insurance was provided by LawCover, a wholly-owned subsidiary of the Law Society, which in turn was authorised by the relevant statute to negotiate with insurers in relation to the provision of insurance to any solicitor or former solicitor practising in New South Wales.

10. In Victoria, the relevant provisions were in Pt 3.5 of the Legal Profession Act 2004 (Vic). Law practices other than barristers were required to be insured with the Legal Practitioners’ Liability Committee (Liability Committee), an entity established under s 234 of the Legal Practice Act 1996 (Vic), whose functions included “providing professional indemnity insurance to law practices” (Legal Profession Act 2004 (Vic), s 6.6.3(1)(a)). Under s 6.6.19, the Liability Committee could levy practices holding a contract of professional indemnity insurance with the Committee where it was of the opinion that its funds were likely to be insufficient to meet its liabilities. The terms and conditions of the contracts by which the law practices had to be insured were determined by the Liability Committee, but subject to the approval of the Legal Services Board (s 3.5.6(1)), an entity established by s 6.2.1. As to barristers, they also could apply for insurance with the Liability Committee. However, it was not required to provide that insurance (s 3.5.2(5)). If a barrister was not insured with the Liability Committee, he or she had to be insured on terms and conditions approved by the Legal Services Board (s 3.5.2(6)).

11. The relevant provisions in New South Wales were in Pt 3.3 of the Legal Profession Act 2004 (NSW) (2004 Act). Division 2 dealt with barristers, and Div 3 with solicitors, neither of whom could hold a practising certificate until the relevant issuing body (the Bar Council or Law Society Council respectively) was satisfied that there was or would be in force an “approved indemnity insurance policy” (ss 403(1), 406(1)(a)). Such a policy was, in the case of a barrister, relevantly approved if three conditions were satisfied, one of which was that the Attorney General (s 403(2)(b)):

… has, by order in writing given to the Bar Council, approved the type of policy, the level of insurance provided by the policy and the terms of the policy.

In the case of a solicitor, the three conditions to be satisfied included that the Attorney General (s 406(2)(b)):

… has, by order in writing given to the Law Society, approved of the insurer the type of policy, the level of insurance provided by the policy and the terms of the policy.

12. Prior to 2004, in New South Wales, barristers and solicitors had also been required to hold a professional indemnity insurance policy approved by the Attorney General (Legal Profession Act 1987 (NSW) (1987 Act), ss 38R and 41). By s 41(4), the Law Society was authorised to negotiate with insurers for the provision of professional indemnity insurance to solicitors. LawCover acting on behalf of the Law Society and pursuant to that authority negotiated with insurers for professional indemnity insurance cover which was provided and managed by LawCover (and underwritten by those insurers). The policy or policies of insurance was or were approved by the Attorney General; and no other policies were approved. During part of that period, the insurer of the LawCover scheme was HIH Insurance, which failed in March 2001. During the same period, a statutory mutual fund, known as the Solicitors’ Mutual Indemnity Fund (SMIF), was set up to support the scheme managed by LawCover. Under s 46 of the 1987 Act, solicitors could be levied to make contributions to the capital of that fund, which was also managed by LawCover. After 2004, the Law Society continue to arrange professional indemnity insurance on behalf of solicitors in New South Wales in the exercise of its statutory authority, but with a wholly-owned subsidiary of the Law Society, LawCover Insurance Pty Ltd, as insurer.

13. Giving effect to Victoria’s obligations under cl 4.1 of the 2013 intergovernmental agreement, by s 4 of the Legal Profession Uniform Law Application Act 2014 (Vic) (Victorian Application Act), the LPUL was enacted to apply as a law of Victoria. Section 13 in Pt 2, Div 2, headed “Further application provisions”, provides:

13   Approved insurance policy

(1)   A policy of professional indemnity insurance is an approved insurance policy for this jurisdiction for the purposes of Part 4.4 of the Legal Profession Uniform Law (Victoria) if the policy is issued or provided by the Liability Committee.

(2)   A policy of professional indemnity insurance the terms and conditions of which are approved by the Victorian Legal Services Board is an approved insurance policy for this jurisdiction for the purposes of Part 4.4 of the Legal Profession Uniform Law (Victoria) in relation to—

(a)   a community legal service; or

(b)   an Australian legal practitioner who is engaged in practice for or on behalf of a community legal service; or

(c)   a corporate legal practitioner or government legal practitioner who provides legal services on a pro bono basis (other than as a volunteer at a community legal service); or

(d)   an Australian-registered foreign lawyer.

(3) This section applies despite anything to the contrary in section 210(1) of the Legal Profession Uniform Law (Victoria).

14. By s 102(1) of that Act, the functions and powers conferred on the Liability Committee include to carry on the business of providing professional indemnity insurance in accordance with Pt 4.4 of the LPUL and to undertake liability under contracts of insurance provided in accordance with that Part. Under s 120(1), the Liability Committee retains the power to determine, subject to the approval of the Legal Services Board, the terms and conditions of that insurance in which it is named as insurer. Under s 118, the Liability Committee may require law practices that have current insurance with it to make contributions to it if the Committee is of the opinion that its assets are likely to be insufficient to meet its liabilities.

14. Sections 209, 210 and 211 in Pt 4.4, Div 8 of the LPUL are set out below. References to “this jurisdiction” are to the enacting jurisdiction and references to a “participating jurisdiction” are to the States of Victoria and New South Wales until they were joined by Western Australia. The references to the “Council” are to the Legal Services Council established under LPUL, Pt 8.2. Those sections provide:

209   Objectives

The objectives of this Part are—

(a)   to ensure that each Australian legal practitioner who engages in legal practice in this jurisdiction has or is covered by approved professional indemnity insurance; and

(b)   to ensure that clients of law practices have adequate protection against the consequences of professional negligence.

210   Approved insurance policy

(1)   For the purposes of this Part, a policy of professional indemnity insurance is an approved insurance policy for a participating jurisdiction if—

(a)   it is issued or provided by—

(i)    an insurer or other provider approved under, or selected in accordance with, applicable legislation of the jurisdiction; or

(ii)   if there is no insurer or other provider approved under or selected in accordance with that legislation or if there is no legislative arrangement for the approval or selection of insurers or other providers in the jurisdiction—

(A)   an insurer authorised by APRA under the Insurance Act 1973 of the Commonwealth to carry on insurance business in Australia; or

(B)   an insurer or other provider approved by the Council; and

(b)   it—

(i)   complies with the minimum standards specified in the Uniform Rules for the purposes of this section; or

(ii)   is approved by the Council.

(2)   For the purposes of this Part, a policy of professional indemnity insurance is an approved insurance policy for a jurisdiction that is not a participating jurisdiction if it is approved by the Council.

(3)   If it considers it is appropriate to do so in relation to this jurisdiction, the Council may give an approval for the purposes of this section unconditionally or subject to conditions specified in the approval, and may vary or revoke an approval.

(4)   For the purposes of this Law, an Australian legal practitioner or law practice has professional indemnity insurance for this jurisdiction if the practitioner or law practice holds or is covered by an approved insurance policy for this jurisdiction.

211   Australian legal practitioners

An Australian legal practitioner must not engage in legal practice in this jurisdiction unless the practitioner holds or is covered by an approved insurance policy for this jurisdiction and the policy covers that legal practice.

16. The Explanatory Note to the Legal Profession Uniform Law Application Bill 2014 (NSW) provides with respect to what became Pt 8, Div 1 of the Act, relevantly including ss 94 and 95:

Part 8   Professional indemnity insurance

Part 8 complements provisions contained in Part 4.4 of the Uniform Law relating to professional indemnity insurance.

Division 1 contains arrangements for the approval of kinds of insurance policies for professional indemnity insurance. Policies that comply with the arrangements are approved insurance policies for the purposes of Part 4.4 of the Uniform Law. This provision corresponds with arrangements under the repealed Act and has a similar effect to section 13 of the Legal Profession Uniform Law Application Act 2014 of Victoria.

17. In the Second Reading Speech for that Bill, the Attorney General said with respect to Pt 8 (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 27 March 2014 at 28049):

Part 8 relates to professional indemnity insurance [PII] and provides a mechanism for the approval of professional indemnity insurance policies for practitioners by the Attorney General. This part also retains the provisions of the Legal Profession Act 2004 in relation to the Solicitors’ Mutual Indemnity Fund. This fund exists for the purpose of covering liabilities arising from the collapse of HIH Insurance and it is important that these provisions are carried over to facilitate the resolution of a small number of pending claims.

18. Sections 94 and 95 in Pt 8, Div 1 of the NSW Application Act provide:

94   Purpose of this Part

The purpose of this Part is to supplement Part 4.4 of the Legal Profession Uniform Law (NSW).

95   Approved insurance policy

(1) A policy of professional indemnity insurance that complies with this section is an approved insurance policy for this jurisdiction for the purposes of Part 4.4 of the Legal Profession Uniform Law (NSW) in relation to an entity that—

(a)   is required to hold or be covered by an approved policy of professional indemnity insurance, and

(b)   is of a class of entities to which an order under subsection (2) applies.

(2)   A policy of professional indemnity insurance complies with this section if—

(a)   the Attorney General has, by order in writing (given to the Bar Council in the case of professional indemnity insurance for a barrister or to the Law Society Council in any other case), approved of—

(i)   the type of policy, and

(ii)   the level of insurance provided by the policy, and

(iii)   the terms and conditions of the policy, and

(b)   (Repealed)

(c)   the policy is not to expire before the expiration of the term of the Australian practising certificate of the entity to whom the policy relates.

(3)   An order may apply to a class or classes of those entities. An order that does not expressly or impliedly apply to any particular class of entities is taken to apply to all classes of entities.

(3A)   If any terms or conditions imposed by an order are not complied with by the insurer or provider that issued the policy—

(a)   the order may be amended to prohibit or restrict the future issue of policies by the insurer or provider or in any other manner the Attorney General considers appropriate in the circumstances, and

(b)   the Attorney General may take into account any failure to comply by the insurer or provider when deciding whether to approve future policies issued by that insurer or provider.

(3B)   Nothing in subsection (3A) limits any other power of the Attorney General.

(4) This section applies despite anything to the contrary in section 210(1) of the Legal Profession Uniform Law (NSW).

The issues between the parties

19. In January 2024, ABC Insurance announced that it proposed to distribute a professional indemnity insurance policy for solicitors practising in New South Wales effective from 1 July 2024 for the forthcoming annual renewal of practising certificates. The insurer named in that policy is Liberty Mutual Insurance Company (Liberty Mutual), ABC Insurance issuing the policy as its agent. The letter dated 17 January 2024 by which the announcement was made also stated that the policy would be an “approved insurance policy” within the meaning of LPUL, s 210.

20. At that time, ABC Insurance had applied to the Attorney General for an order approving the policy under s 95(2) of the NSW Application Act. However, no approval had been issued by the time of the hearing in this Court. ABC Insurance’s contention that the policy is nevertheless an “approved insurance policy” relies upon the application and satisfaction of s 210(1). The addendum to its letter described the following circumstances as having the consequence that the policy to be issued would be an “approved” policy:

3. The policy will be underwritten by an insurer which is authorised by the Australian Prudential Regulation Authority (APRA) under the Insurance Act 1973 of the Commonwealth to carry on insurance business in Australia.

4. Accordingly, the Policy will be issued or provided by an insurer that meets the requirements set out in section 210(1)(a)(ii)(A) of the Legal Profession Uniform Law 2014 (NSW) (the Uniform Law).

5. The policy complies with the minimum standards specified in rule 78 of the Uniform Rules, and accordingly with the requirements set out in section 210(1)(b)(i) of the Uniform Law.

21. On 8 February 2024, the Attorney General, by order in writing, for the “purposes of section 95”, approved for the 2024-2025 practising year the “type, level of insurance, and terms and conditions set out in” three policies of professional indemnity insurance. In each case the policy names the insurer as Lawcover Insurance Pty Ltd (Lawcover Insurance). Those policies as described in the Attorney General’s written order are:

• Lawcover 2024/25 Professional Indemnity Insurance Policy;

• Lawcover 2024/25 Run Off Professional Indemnity Insurance Policy; and

• Lawcover Professional Indemnity Insurance Policy 2024/25 – Community Legal Services.

22. Lawcover Insurance is a wholly-owned subsidiary of the Law Society. The terms and conditions of each of these policies are set out over six or seven pages and include, on the last page of each, a Schedule which identifies as separately numbered items the insurer (as Lawcover Insurance), the period of insurance (being from 1 July 2024 to 30 June 2025), and the maximum amount of the insurer’s indemnity per claim. Each of these items is in turn referred to in one of the numbered clauses in the policy of which the Schedule is a part. For example, with respect to the first policy, cl 4 (the insuring clause) commences “We agree to indemnify the Insured against civil liability…” and cl 45(r) defines “we” to mean the insurer named in Item 1 of the Schedule, which in turn is identified as Lawcover Insurance; and cl 8 describes the maximum amount of the indemnity referred to in Item 5 of the Schedule. The amount of the excess is not stated in the Schedule to this policy. However, it is stated in the Schedules to each of the other two policies.

23. By s 44(1) of the LPUL, the Law Society Council as “designated local regulatory authority” (as to which see NSW Application Act, s 11 Table 1 and the definition of “appropriate Council” in s 3(1)) may grant or renew an Australian practising certificate to a solicitor practising in New South Wales only if it is satisfied that the applicant has, or will have, on or before the grant or renewal of the certificate “professional indemnity insurance in accordance with this Law and the Uniform Rules” (LPUL, s 45(1)(b)). In the NSW LPUL, the reference to a “local practising certificate” describes an Australian practising certificate issued under that law to a practitioner whose “home jurisdiction under that law is New South Wales”. Such a certificate may be renewed, in relation to a solicitor, in the period commencing on 1 April and ending on 30 June and “before the current local practising certificate expires” (NSW Application Act, s 37(1); Legal Profession Uniform Law Application Regulation 2015 (NSW), reg 4(2)). The period of insurance for each of the policies approved by the Attorney General in the previous year was from 1 July 2023 to 30 June 2024 inclusive.

24. In the face of ABC Insurance’s announcement, the position taken by the Law Society Council is that a policy is an “approved insurance policy” under the LPUL if, and only if, it has been approved by the Attorney General pursuant to s 95 of the NSW Application Act. The position of the Law Society Council and the Law Society (as the party to each of the proceedings) as explained in argument is that s 95 “replaces” s 210(1) of the NSW LPUL so that, once an order is made under s 95(2) approving a policy, that policy is the only “approved insurance policy” unless the Attorney General approves another policy under that section.

25. The Attorney General’s position is substantially different and accepts that s 210 remains capable of applying. It is contended that, because the Lawcover Insurance policies have been approved for a period of one year commencing 1 July 2024, neither of the two limbs of s 210(1)(a) is satisfied in respect of ABC Insurance’s proposed policy. As to the first limb, ABC Insurance is not an insurer approved under or selected in accordance with s 95, which provision is within the description “applicable legislation of the jurisdiction” (s 210(1)(a)(i)). As to the second limb, there is a “legislative arrangement for the approval or selection of insurers … in the jurisdiction”, namely s 95, and there is an insurer “approved under or selected in accordance with that legislation”, namely Lawcover Insurance (s 210(1)(a)(ii)).

26. ABC Insurance’s position is that s 95 and s 210 provide independent pathways for a policy to be an “approved insurance policy” for the purposes of Pt 4.4. Section 210(1) contains a two-step approval mechanism. The first step relates to approval or selection of an insurer; and it is submitted that in this context the references to approval under “applicable legislation” in s 210(a)(i) and (ii) refer only to legislative arrangements which approve or select an insurer for the purposes of s 210(1)(a). Section 95 does not answer that description. Accordingly, the application of s 210(1)(a)(ii)(A) or (B) must be considered, which depends on whether the insurer is authorised by APRA to carry on insurance business (subpar (A)) or approved by the Legal Services Council (subpar (B)).

27. In argument ABC Insurance accepted that if the making of an order in accordance with s 95(2) involves the approval or selection of an insurer in accordance with applicable legislation of the jurisdiction (s 210(1)(a)(ii)), the ABC Insurance policy is not an “approved” policy within s 210 because s 210(1)(a) is not satisfied.

Reasons for answer to Question 1

28. The stated objectives of Pt 4.4 of the LPUL as set out in s 209 are twofold, namely, to ensure legal practitioners have or are covered by “approved” professional indemnity insurance and to ensure that clients of law practices have “adequate protection against the consequences of professional negligence”. Those objectives together are directed to the LPUL’s larger objectives, which include enhancing the protection of clients of law practices by ensuring there is effective and sufficient insurance against such negligence (LPUL, s 3(c)).

29. Section 210(4) of the NSW LPUL makes clear that a practitioner or law practice has the required professional indemnity insurance if insured under or by an “approved insurance policy” for this State. A policy which satisfies s 210(1) will answer that description. So too, by virtue of the language of s 95(1), will a policy which complies with s 95(2) of the NSW Application Act.

30. Section 210(1) adopts two reference points for determining whether a policy of professional indemnity insurance is an “approved” policy. They are the identity of the insurer which is to issue the policy (par (a)) and the terms of the insurance to be provided (par (b)). In the application of each, the requirement with respect to that reference point may instead be satisfied by an approval of the Legal Services Council (s 210(1)(a)(ii)(B) and (b)(ii)).

31. With respect to the insurer, s 210(1)(a) anticipates there being legislation of a “participating jurisdiction” (here, New South Wales) which provides for the “approval or selection of insurers or other providers” of professional indemnity insurance for that jurisdiction. It does so by reference to three alternative scenarios. They are: (1) that there is such legislation providing for the approval or selection of insurers and an insurer or insurers has or have been approved under or selected in accordance with that legislation; (2) that there is such legislation but there has been no insurer approved or selected in accordance with it; and (3) that there is no legislation in the participating jurisdiction which would provide for such approval or selection other than s 210(1). In the first scenario, where (as here) the insurer approved or selected is not the insurer seeking to satisfy s 210(1), the policy of that unapproved insurer cannot be an “approved policy”.

32. As these scenarios show, and as counsel for ABC Insurance accepted, the critical question of construction is whether s 95 is legislation of the kind described in s 210(1)(a). If it is, there is no real contest as to the Attorney General’s having purported to exercise the power under s 95(2) to approve such an insurer, namely Lawcover Insurance, by the order dated 8 February 2024. If effective, that approval has the consequence that s 210(1)(a) is not capable of being satisfied by ABC Insurance or Liberty Mutual without their obtaining the approval of the Attorney General.

33. Legislation of the kind anticipated by s 210(1)(a) was expressly contemplated and provided for by cl 4.3.2(b) of the 2013 intergovernmental agreement. By that clause, each participating state agreed to enact “any arrangements with, or establishing, a professional indemnity insurer”. It was accepted that such legislation may not be consistent with s 210(1) of the LPUL. That was reflected in the legislation enacted by each participating jurisdiction, s 95(4) of the NSW Application Act and s 13(4) of the Victorian Application Act, each of which provided that it was to apply “despite anything to the contrary in section 210(1) of the [LPUL]”; and, in the case of New South Wales, notwithstanding that the stated purpose of Pt 8 of the NSW Application Act was described as being to “supplement” the operation of Pt 4.4 of the NSW LPUL.

34. Section 95 provides (as does s 13 of the Victorian Application Act) a separate pathway by which a policy of insurance may constitute an “approved insurance policy” for the purposes of Pt 4.4. In so doing, it supplements the operation of that Part and particularly s 210(1), which in its terms accommodates the possibility of such provisions. At the same time s 95(4) makes plain that, notwithstanding that s 210(1) is also a provision for determining how a policy to be issued may qualify as an “approved insurance policy”, s 95(2) is not to be read with a view to avoiding or resolving apparent or possible inconsistencies or differences with s 210(1).

35. Section 95(4) says nothing as to the construction of s 210(1)(a) and its references to insurers or providers “approved under or selected in accordance with applicable legislation of the jurisdiction”. As used in s 210(1) this language is to be understood in the context of the arrangements which existed at the time the 2013 intergovernmental agreement was made. In relation to New South Wales, this is made clear by the short Explanatory Note (set out above at [16]), which describes s 95 as a provision which “corresponds with arrangements under the repealed Act”, a reference to the 2004 Act. Those “arrangements” were first introduced by the 1987 Act and were continued by the 2004 Act.

36. By virtue of the Law Society’s having authority to negotiate with insurers concerning the provision of professional indemnity insurance to solicitors, the only insurer approved under s 406(2)(b) of the 2004 Act to provide such insurance to solicitors was LawCover Insurance, that insurance being negotiated in the exercise of the Law Society’s authority to do so. Whether any other insurer could have entered the market depended upon the approval of the Attorney General. Thus the “arrangements” under the 2004 Act permitted the Attorney General to determine whether there should be one or more insurers providing annual professional indemnity cover. That approval process was directed to the terms of the policy, including the identity of the insurer.

37. Section 13(1) of the Victorian Application Act continues the statutory “arrangement” which existed under s 3.5.2 of the Legal Profession Act 2004 (Vic). That arrangement was that all law practices (excluding barristers) were to be insured by the Liability Committee. Section 13(1) has that effect by providing that a policy issued by the Liability Committee is an “approved insurance policy”. In relation to the insurance of community legal services, s 13(2) provides that a policy the terms and conditions of which are approved by the Legal Services Board is an “approved insurance policy” for the purposes of Pt 4.4 of the Victorian LPUL.

38. The language of s 95(2) of the NSW Application Act provides (as does that of s 13(2) of the Victorian Application Act) for the Attorney General to approve not only the type of policy and level of insurance provided by the policy but also “the terms and conditions” of the policy. The terms and conditions of a policy ordinarily include the insuring clause and provisions identifying the insurer.

28. ABC Insurance submits that s 95 does not require approval or selection of an insurer. First, it is said that the references in subs (2) to the type of policy, the level of insurance provided and the terms and conditions of the policy do not relate to the identity of the insurer which is to provide the insurance. Secondly, it is pointed out that the precursors to s 95(2)(a) (being s 41(2)(b) of the 1987 Act and s 406(2)(b) of the 2004 Act) contained an express reference to the “insurer” as a matter which must be “approved” by the Attorney General. Thirdly, it is said that s 95(3A) does not “transform” s 95 into a legislative arrangement to approve or select insurers. Finally, it is submitted that the extrinsic materials to the NSW Application Act support an intention to create a mechanism for the approval of policy details, but not of insurers. Specific reference is made to the statement in the Explanatory Note that s 95 contains arrangements “for the approval of kinds of insurance policies” (emphasis added).

29. That submission must be rejected. The context and purpose of s 95 strongly supports its construction as necessarily including the approval of the identity of the insurer or provider of the policy. Notwithstanding that the express reference to the “insurer” in the 2004 Act and the 1987 Act is not included in s 95, the language used in that section, in its ordinary meaning, is capable of including the identity of the insurer undertaking the risk. The purpose of the legislation contemplated by cl 4.3.2 of the 2013 intergovernmental agreement was to permit the parties to enact legislation that provided for arrangements made with a professional indemnity insurer or arrangements establishing such an insurer. In either case, what was contemplated was the enactment of provisions which resulted in the identification or selection of an insurer with which such arrangements would exist or be made and result in the provision of insurance under an “approved insurance policy”. That much is wholly consistent with the provisions of s 210(1)(a) of the (proposed) LPUL. It is also consistent with the Second Reading Speech and its reference to s 95 as providing a mechanism for the approval of professional indemnity policies. While the Explanatory Note contains a reference to “approval of kinds of insurance policies”, it states clearly that s 95 “corresponds with arrangements under the repealed Act and has a similar effect to s 13 of the Victorian Act”. The arrangements under the repealed 2004 Act provided for the approval of an “insurer”, as was the effect of s 13(1) in confirming the continuation of the Liability Committee in Victoria. Furthermore, in the context of the collapse of HIH Insurance (referred to in the Second Reading Speech set out at [17] above), there was no apparent or good reason for denying the Attorney General control over the identity, and by extension the number, of insurers offering an approved policy wording to solicitors.

30. Moreover, as ABC Insurance’s submission implicitly concedes, in construing s 95(2) in its current form, regard must also be had to the amendment made by the addition of s 95(3A): Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 463; [1995] HCA 44. As the amended Act must be read as a combined statement of the will of the legislature, the effect of the amending provision may be to make plain or even “alter the meaning which the remaining provisions of the amended act bore before the making of the amendments”: per Bathurst CJ in R v Seller [2013] NSWCCA 42; (2013) 273 FLR 155 at [100]. See also Plaintiff S297/2013 v Minister for Immigration and Border Protection (2014) 255 CLR 179; [2014] HCA 24 at [25]. Subsection (3A)(b) provides that the Attorney General may, in deciding whether to make an order approving a policy to be issued by a particular insurer, take into account any earlier failure by that insurer to comply with the terms and conditions of an earlier approval. This provision expressly contemplates that the Attorney General can, by an order made under s 95(2), approve or refuse to approve policies proposed to be issued by a particular insurer.

31. ABC Insurance contends that a construction of s 95 as conferring a power to approve an insurer produces an unlikely and uncertain outcome. That is said to follow because, if an approval is given under s 95 in respect of a policy, s 210(1)(a) would also be satisfied in respect of that insurer, entitling it by the satisfaction of s 210(1)(b)(i) to issue a different policy which would be “approved” under s 210(1), but not the subject of any further scrutiny by the Attorney General. The flaw in this contention is that an insurer having an approval under s 95 is only approved in respect of a particular insurance policy and would not be an insurer approved or selected under s 210(1)(a) with respect to any other policy, and in particular one that was said to comply with the minimum standards specified in the Uniform Rules and accordingly s 210(1)(b)(i).

32. For these reasons, s 95(2) is to be construed as conferring on the Attorney General the power by order in writing to approve a policy of professional indemnity insurance, the terms and conditions of which identify the insurer that will issue the policy. As s 210(1) when satisfied would result in an “approved insurance policy” to be issued by an approved insurer, it is unlikely, notwithstanding s 95(4), that the legislature intended for s 95(2) when satisfied to result in an “approved insurance policy” for the purposes of Pt 4.4 but not one to be issued by an approved insurer.

33. It is not controversial that the Attorney General’s approval on 8 February 2024 of the three policies was an approval not only of the terms and conditions of each of those policies but also as to Lawcover Insurance being the insurer to issue each policy.

34. It remains to consider the effect of that order under s 95(2) in respect of the three Lawcover policies on the application of s 210 to the policy proposed to be issued on behalf of Liberty Mutual. Addressing s 210(1)(a)(i), Liberty Mutual is not an insurer approved under or selected in accordance with any applicable legislation of New South Wales. Nor can either limb of s 210(1)(a)(ii) be satisfied because there is a “legislative arrangement for the approval or selection of insurers … in the jurisdiction” in the form of s 95 and there is another “insurer … approved under or selected in accordance with that legislation”, namely, Lawcover Insurance. The outcome is that the policy to be issued by Liberty Mutual cannot satisfy s 210(1)(a).

35. For these reasons the Court answered Question 1 in the terms set out in the order made on 23 April 2024. For those same reasons, Question 2 did not arise and the Court answered that question accordingly.

36. The Attorney General does not seek any order as to costs. As between the Law Society and ABC Insurance, ABC Insurance as the unsuccessful party should pay the Law Society’s costs of that proceeding.

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Amendments

09 August 2024 - Numbering added in headnote.

Decision last updated: 09 August 2024