Indemnity, Insurance and Legal Claims Policy

Policy Corporate Governance Indemnity, Insurance and Legal Claims Policy

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Intent

To outline the circumstances under which indemnity and insurances are provided by the University to staff, students and external parties and the process for dealing with legal claims.

Scope

To staff, students and external parties.

Introduction

JCU is regulated primarily by the James Cook University Act 1997 (the JCU Act). Section 51 of the Act states that JCU is also regulated under the Statutory Bodies Financial Arrangements Act 1982 (SBFA). Section 60A of the SBFA provides that the Treasurer may authorise statutory bodies (such as JCU) to enter into Type 1 Financial Arrangements. This term includes -

“entering into an arrangement, covenant, guarantee, promise or undertaking to meet liabilities or obligations incurred by or to a person, whether or not the person is a party to the arrangement, covenant, guarantee, promise or undertaking”

On 3 September 2003 the then Treasurer gave approval (the SBFA Approval) to JCU entering into financial arrangements involving the provision of guarantees or indemnities on behalf of –

  • the Council;

  • JCU committees;

  • JCU employees;

  • JCU students; and

  • contractors and consultants to JCU

where these persons are undertaking activities associated with discharging the statutory functions of JCU.

For convenience, the above persons are referred to as the Indemnity Group.

The following conditions apply to the SBFA Approval –

  • firstly, the Council must have endorsed that the JCU risk mitigation and control strategies are appropriate to manage the risk of providing guarantees or indemnities; and

  • secondly, where JCU does not hold appropriate insurance for the relevant activities (or JCU is not satisfied that consultants or contractors engaged by JCU hold appropriate insurance coverage for these activities), the Council is satisfied that the risks are mitigated and warranted before the guarantee or indemnity is granted.

It is important to note that –

  • indemnities can only be granted for the benefit of persons who come within the Indemnity Group; and

  • the two conditions of the SBFA Approval must be met.

This Policy details the strategies and related considerations which JCU adopts in order for it to manage the risks associated with the provision by JCU of guarantees and indemnities under the SBFA Approval.

Policy and Procedures

1. Indemnity - staff and other officers

a) University employees

As an employer, JCU Council indemnifies its employees in respect of the lawful and proper actions considered to be within the scope of their employment at the University.

Council recognises that many officers perform difficult and delicate duties and functions, and that in the course of such duties they may be exposed to claims for damages. Such officers should not be restricted in carrying out their duties and functions by any fear that they may have to make payment regarding any claim arising out of due performance of these duties and functions.

JCU accepts full and sole responsibility for all claims including the cost of defending or settling them in cases where, in the reasonable opinion of the Council, the officer concerned has diligently and conscientiously endeavoured to carry out his or her duties and has complied with JCU policies and procedures.

Where JCU makes any payment in settlement of a claim which has arisen as a result of an officer endeavouring to carry out his or her duties in a conscientious and diligent manner, it will not seek to exercise any claim for contribution from the employee.

The University does not accept any liability for any act of an employee which is not related to or connected with his or her employment. This means that staff are insured by JCU only against claims for damages made against them as a result of their work for JCU.

b) Members of JCU committees

The University provides an indemnity to all members of its committees acting within the scope of their authority. This includes both staff and non-staff of JCU.

2. Indemnity - Nominee Directors

In this Policy, the term JCU Nominee Director is used to describe a person who –

  • is a director of a company regulated by the Corporations Act 2001 in which JCU is a member of, is a stakeholder of, or otherwise has a material interest in; and

  • JCU has requested or approved (or both) that the director act as the nominee of JCU on the board of directors of the company (where the approval is given in writing by the Vice-Chancellor)

JCU Nominee Directors may apply for an indemnity by JCU in relation to any claims or liabilities arising out of their role by making application in accordance with the Guidelines for Indemnity of JCU Nominee Directors (the Guidelines) which have been approved by Finance Committee.

When Council has approved that JCU indemnifies a JCU Nominee Director it shall be in the form set out in the Guidelines. As set out in the Guidelines, it should be noted that –

  • the indemnity applies only to the extent that the JCU Nominee Director is not already protected under a policy of insurance; and

  • the indemnity does not extend to an Excluded Liability – being a liability for which JCU would not be permitted to indemnify the JCU Nominee Director if JCU were a company regulated under the Corporations Act 2001.

Finance Committee is generally responsible for considering and reporting to Council on applications by JCU Nominee Directors for indemnity as well as ensuring that indemnities are processed in accordance with this Policy and the Guidelines.

Audit and Compliance Committee is responsible for reviewing the system of compliance which Finance Committee has adopted.

3. Indemnity - external parties

JCU officers who have delegated authority (refer to the Schedule of Council’s Delegations of Authority) may only enter into contracts containing an indemnity clause in favour of another party where the risk is determined to be low / medium.

Low / medium risk indemnities include the following:

  • indemnities where the relevant subject matter is covered by JCU's existing insurance policies or can be covered through an extension to such policies, at minimal cost; and

  • indemnities where the relevant subject matter is not covered by JCU's insurance policies or where cover is only available at a prohibitive cost, but where a risk assessment of the activity has been carried out by the area assessing the impact of the indemnity and the relevant delegated officer concludes the risk to the University in giving an indemnity would be low / medium.

Extreme / high risk indemnities are those where insurance cover is not available or is only available at a prohibitive cost and where a risk assessment of the activity involved concludes the risk to JCU in giving an indemnity would be extreme / high. Note: The cost of additional cover is an issue for the area involved in the contract negotiation to consider and fund.

The following process is to apply:

  • each case is to be assessed in terms of JCU's existing insurance coverage.

  • if the subject matter of the indemnity is covered by JCU's insurance policies then the indemnity is regarded as low / medium risk and the related contract may be executed.

  • if the subject matter of the proposed indemnity is not covered by JCU insurance policies or coverage is only available at a prohibitive cost, then a written risk assessment is to be carried out. The risk assessment is to be reviewed by the relevant delegated officer (refer to the Schedule of Council’s Delegations of Authority).

  • upon receipt of such risk assessment and any legal opinion considered necessary, the relevant delegated officer will decide whether the indemnity is low / medium risk or extreme / high risk and whether the contract should be entered into by the University.

  • if the delegated officer determines that the indemnity is extreme / high risk, a risk mitigation strategy is to be prepared and forwarded to Finance Committee for consideration and recommendation to Council.

  • if the risk remains extreme / high following consideration of the risk mitigation strategy, Council will noting that the terms of the SBFA approval require that the Council must be satisfied that –

    • JCU’s risk mitigation and control strategies are appropriate;

    • risks have been mitigated; and

    • the indemnity is warranted

Wherever possible, indemnities should be worded to ensure that any potential liability being accepted by JCU falls within the scope of coverage provided by JCU's insurance policies. Terms of insurance policy operate independently of relevant contractual indemnities.

Advice from JCU insurers, as well as legal advice, should be sought on the wording of appropriate amendments to the relevant clauses in order to ensure JCU's interests are not prejudiced (including rights under JCU insurance policies) and risks are minimised.

4. Insurance

The Financial and Business Services Office oversees the appointment of an insurance broker to manage the University's insurance requirements. Details of the insurance broker and the procedures to be followed if the need to make a claim arises are available on the Financial and Business Services website.

The following types of insurance are variously provided to staff , students and JCU Nominee Directors -

  • corporate travel

  • personal accident

  • motor vehicle

  • industrial special risk

  • public and products liability

  • professional indemnity (including medical malpractice insurances)

  • directors and officers liability

  • clinical trials

  • statutory liability

  • marine transit.

It is important to note that not all of these policies are in force for all of the groups referred to above. Policies are taken out and renewed on an annual basis and policy terms can change from year to year. Information on workers' compensation insurance as required under the Workers' Compensation and Rehabilitation Act is found in the Workplace Rehabilitation Policy, which is located in the Policy Library.

5. Writs and legal liability

A register of writs containing potential University liability is maintained by the Director, Governance Services and University Secretary. All writs, with the exception of workers' compensation writs, are to be channelled through the Governance and Corporate Services Office.

The following procedures provide a guide for the processing of writs, depending on the nature of the writ -

a) Writ of non-party discovery

Writs of non-party discovery are served on the Director, Governance Services and University Secretary. In the event that the writ is served by mail or served on another University officer, it should be forwarded to the Governance and Corporate Services Office for action.

b) Workers' compensation writs

Workers' compensation writs should be forwarded to Human Resources for action. Further information on procedures to be observed when workers' compensation writs are served is available from the Human Resources Office.

c) Other writs

All other writs, including claims covered under University insurance liability policies and contractual disputes not covered by insurance, should be forwarded to the Governance and Corporate Services Office for determination of the appropriate action.

d) Legal Enquiries

Enquiries in relation to legal matters and the issue and receipt of legal proceedings can be directed to the Manager, Legal and Compliance Services.

Related documents, legislation or JCU Statutes

Guidelines for Indemnity of JCU Nominee Directors

Risk Management Policy

Schedule of Council’s Delegations of Authority

Workers' Compensation and Rehabilitation Act

Approval Details

Policy sponsor:

Vice Chancellor

Approval authority:

Council

Approval date:

24/06/2015

Version no:

15-01

Date for next review:

04/12/2013

Modification History

Version

Revision date

Description of changes

Author

15-01

23/06/2015

Policy sponsor and approval authority amended to reflect approved policy framework. Published 25/06/2015

Quality, Standards and Policy

Version no.

Approval date

Implementation date

Details

08-1

04/12/2008