Richmond Valley Council v JLT Risk Solutions Pty Ltd [2022] NSWSC 1761

Supreme Court New South Wales

Medium Neutral Citation: Richmond Valley Council v JLT Risk Solutions Pty Ltd [2022] NSWSC 1761 Hearing dates: 11, 12, 13, 14, 15, 18, 19, 21, 22, 25, 26, 27, 28 and 29 October and 2, 3, 4, 9, 10, 11 and 12 November 2021 Date of orders: 19 December 2022 Decision date: 19 December 2022 Jurisdiction: Equity - Commercial List Before: Williams J Decision: See paragraph [665] Catchwords: CONTRACT – where plaintiff and defendant were parties to a deed establishing a mutual risk scheme for the pooling of local councils' property and public liability/professional indemnity risks and the insurance of those pooled risks – where plaintiff was a local council whose risks had been pooled and insured in accordance with the deed since 2000 and defendant was the manager of the scheme – where plaintiff and each other party to the deed appointed the defendant to advise the Board of the scheme in relation to the insurance to be obtained for the pooled risks and to negotiate and place that insurance on the instructions of the Board – where that insurance was renewed annually – where annual renewal practices included the defendant seeking information from the plaintiff in relation to its property and public liability/professional indemnity risks and issuing a renewal report naming the scheme as the "recommended insurer" or "recommended provider" for the plaintiff's property and public liability/professional indemnity cover - where renewal report and other annual renewal documentation issued by the defendant also addressed the renewal of the plaintiff's insurance policies that were outside the scope of the scheme and in respect of which the defendant acted as the plaintiff's insurance broker – where, at the time the defendant issued the annual renewal documentation to the plaintiff, the plaintiff was required by the deed to pay contributions to the scheme in respect of property and public liability/professional indemnity cover for the immediately forthcoming insurance year by reason of not having given the requisite period of notice of retirement from the scheme – whether the defendant acted as the plaintiff's insurance broker in respect of property and public liability/professional indemnity cover during each annual renewal process and whether the defendant recommended to the plaintiff during each annual renewal process that the plaintiff's property and public liability/professional indemnity cover for the immediately forthcoming insurance year should be arranged within the rubric of the scheme – whether the defendant and the plaintiff entered into a contract during each annual renewal process for the provision of such insurance broking services to the plaintiff, including an implied term requiring the defendant to exercise reasonable care and skill in providing such services – whether alleged contracts inconsistent with deed – whether alleged contracts breached – whether any such breach caused loss of opportunity for plaintiff to obtain alternative suitable property and public liability/professional indemnity insurance in the market at lower cost than its contributions to the scheme and/or loss of opportunity to negotiate or "obtain" lower contributions payable to the scheme - whether causes of action barred by application of s 14 of the Limitation Act 1969 (NSW). TORT – whether, in the circumstances referred to above, the defendant acted as the plaintiff's insurance broker in respect of property and public liability/professional indemnity cover during each annual renewal process and whether the defendant recommended to the plaintiff during each annual renewal process that the plaintiff's property and public liability/professional indemnity cover for the immediately forthcoming insurance year should be arranged within the rubric of the scheme – whether the defendant owed a duty to the plaintiff to exercise reasonable care and skill in providing any such broking services and in making any such recommendations to the plaintiff - whether alleged duty of care inconsistent with deed – whether known reliance by the plaintiff on any such recommendations - whether alleged duty of care breached – whether such any breach caused loss of opportunity for plaintiff to obtain alternative suitable property and public liability/professional indemnity insurance in the market at lower cost than its contributions to the scheme and/or loss of opportunity to negotiate or "obtain" lower contributions payable to the scheme - whether causes of action barred by application of s 14 of the Limitation Act 1969 (NSW). EQUITY – fiduciary duties – whether, in the circumstances referred to above, the defendant acted as the plaintiff's insurance broker in respect of property and public liability/professional indemnity cover during each annual renewal process and whether the defendant recommended to the plaintiff during each annual renewal process that the plaintiff's property and public liability/professional indemnity cover for the immediately forthcoming insurance year should be arranged within the rubric of the scheme – whether defendant owed fiduciary duties to plaintiff – "no conflict" and "no profit" rules - where defendant entitled under the deed referred to above to such fees and remuneration as determined by the Board for the defendant's services in relation to the scheme – whether conflict at the time of the alleged recommendations between defendant's interests in earning fees under the deed and plaintiff's interests in obtaining suitable property and public liability/professional indemnity insurance at best premium rates reasonably available to it in the market – whether the alleged recommendations (if made) were made in breach of fiduciary duties owed by defendant to plaintiff – whether causes of action barred by application of ss 14-15 of the Limitation Act 1969 (NSW) applied by analogy. REPRESENTATIVE PROCEEDINGS – where plaintiff brought proceedings on own behalf and on behalf of nineteen local councils who were also parties to the deed – common questions answered. PRACTICE AND PROCEDURE – pleadings – amendment – where proposed amendments incoherent – leave to amend refused. PRACTICE AND PROCEDURE – pleadings – essential function of pleadings – disputes about scope of pleaded causes of action – whether defendant required to read plaintiff's pleading in a manner contrary to its plain terms and including certain unstated matters as a matter of "necessary" inference in order for the pleading to make "coherent sense" and to avoid fundamental difficulties that otherwise beset the plaintiff's pleaded causes of action – whether plaintiff entitled to run a case at final hearing that defendant had made the alleged recommendations with the intention of maintaining or maximising its fees to the detriment of the plaintiff – whether allegation amounts to an allegation of fraud – whether proper notice of the allegation given by the statement in the pleading that the defendant "pursued or advanced its own interests" by making the alleged recommendations – whether defendant taken by surprise. Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56-58, s 64 Limitation Act 1969 (NSW), ss 14-15 Cases Cited: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; (2020) 381 ALR 427; [2020] HCA 27 Branir Pty Ltd v Owiston Nominees (No. 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 Caldwell v J A Neilson Investments Pty Ltd (2007) 69 NSWLR 120; [2007] NSWCA 3 Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364 Derry v Peek (1889) 14 App Cas 337 DSHE Holdings Ltd (receivers and managers appointed) (in liq) v Potts; HSBC Bank Ltd v Abboud; Potts v National Australia Bank Ltd [2022] NSWCA 165 English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 Forrest v Australian Securities and Investment Commission (2012) 247 CLR 486; [2012] HCA 39 Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1994] HCA 64 Ku-ring-gai Council v Chan [2017] NSWCA 226 Miles v Luneburger Franchising Pty Ltd [2021] NSWCA 248 Mutual Life & Citizens Assurance Company Limited v Evatt (1968) 122 CLR 556 Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 Norwest Refrigeration Services Pty Ltd v Bain Daws (WA) Pty Ltd (1984) 157 CLR 149 Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd [1981] VR 981 PC Case Gear Pty Ltd v Instrat Insurance Brokers Pty Ltd (2020) 379 ALR 732; [2020] FCA 137 RinRim Pty Ltd v Deutsche Bank AG [2017] NSWCA 169 Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No. 7) [2019] QSC 241 Stewart v Australia and New Zealand Banking Group Ltd [2020] NSWSC 1787 Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 Tecnicas Reunidas SA v Andrew [2018] NSWCA 192 YTO Construction Pty Ltd v Innovative Civil Pty Ltd [2019] NSWCA 110 Texts Cited: J D Heydon, M J Leeming, P G Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) Category: Principal judgment Parties: Richmond Valley Council (Plaintiff) JLT Risk Solutions Pty Ltd (Defendant) Representation: Counsel: Mr C. Withers SC with Mr R. Yezerski, Mr P. Gaffney, Mr D. Barnett and Mr C. Mitchell (Plaintiff) Mr M. Darke SC with Mr I. Ahmed, Ms J. Findlay and Ms A. Hammond (Defendant)