by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd
Professional indemnity insurance for licensed conveyancers is a high-risk problem. The licensing of conveyancers under the Victorian Conveyancers Act 2006 was expected to safeguard consumers by requiring all licensed conveyancers to have professional indemnity insurance cover. However, the requirement for professional indemnity insurance has had the reverse effect in that more consumers are now exposed to greater risk than had ever been anticipated. The problems discussed in this article are just the tip of a very dangerous iceberg.
In its document titled “Victorian Conveyancers Professional Indemnity Insurance 2008/2009” the Business Licensing Authority (which administers the licensing of licensed conveyancers under the Conveyancers Act 2006) provides a series of questions and answers to advise licensed conveyancers about their professional indemnity insurance policy.
The document starts with the following disclaimer:
The information provided in this document is intended for general use only. It is not a definitive guide to the law, does
not constitute formal advice, and does not take into consideration the particular circumstances and needs of your
organisation. Every effort has been made to ensure the accuracy and completeness of this document at the date of
publication. BLA, Resource Underwriting Pacific Pty Ltd, CAV or VMIA cannot be held responsible and extends no
warranties as to the suitability of the information in this document for any particular purpose and for actions taken by
Obviously, the BLA doesn’t want to be sued by licensed conveyancers who rely on the document only to find themselves in strife. Without saying so directly, the BLA expects every licensed conveyancer to obtain their own independent legal advice from a qualified lawyer. While licensed conveyancers try to portray themselves as being equal to lawyers in the area of conveyancing, there always comes a time when the licensed conveyancer has no alternative but to call on a lawyer for assistance.
How can a licensed conveyancer tell the difference?
This is the greatest single flaw in the professional indemnity insurance carried by licensed conveyancers. Somehow, a licensed conveyancer is supposed to know enough about the law, and how the law applies to a given set of circumstances, to be able to determine when a client must be referred to a fully qualified lawyer for legal advice. This is because a licensed conveyancer’s professional indemnity insurance covers the licensed conveyancer only for conveyancing work, and not for other legal work or legal advice. Here’s how the BLA document explains it:
“What activities does this master policy for professional indemnity insurance cover me for?
The policy only provides cover for Conveyancing Work as defined by Section 4 of the Conveyancers Act 2006 (Victoria). The policy only covers Conveyancing Work in the state of Victoria. The master insurance policy provides cover for any civil liability incurred in the conduct of the Conveyancing Work, subject to the terms, conditions and exclusions set out in the policy wording.“
This is followed by:
“What about non-conveyancing work which is conducted as a part of my conveyancing business?
Any activities, past and future, not deemed Conveyancing Work under the Conveyancing Act 2006 (Victoria) are not covered under the policy, even if they are conducted as part of your business…”
“Conveyancing work” has a specific and very limited definition in the Conveyancers Act 2006. Licensed conveyancers are not permitted to engage in any form of legal work beyond “conveyancing work”. This is because licensed conveyancers are not trained to identify legal issues associated with matters beyond basic “conveyancing work”. This raises a very important question, one which does not appear in the BLA document:
“How do I know when an issue involves conveyancing work AND non-conveyancing work if my knowledge of the law is confined to ‘conveyancing work’?”