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[2025] NSWCA 221
respondent. Appeal dismissed. The appellant is to pay the respondent’s costs of the appeal: [82].
Nest argued that RIB breached a confidentiality clause when it made Nest’s client portfolio information available to ACIS after terminating Nest for misconduct. The Court of Appeal held that the information was not Nest’s Confidential Information under the contract, read in the context of the AFSL arrangement and the parties’ principal-agent relationship. It also rejected Nest’s challenges to the primary judge’s conclusions about RIB’s legal obligations and the proof of damages. The appeal was dismissed, with Nest ordered to pay RIB’s appeal costs.
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Nest Insurance Consult Pty Ltd provided insurance brokerage services as an authorised representative of Resilium Insurance Broking Pty Ltd (RIB), operating under RIB’s Australian financial services licence. The written agreement between them, dated 30 June 2020, described their relationship as “of principal and agent” and authorised Nest to provide specified financial services on RIB’s behalf: [17]–[20].
In November 2020, RIB learned that Nest had supplied insurers with false information when arranging commercial insurance, including information about vehicle garaging postcodes and the age of the youngest driver. The primary judge found that the admitted conduct affected at least 74 policies: [30]–[31]. Nest did not contest RIB’s basis for terminating the agreement. RIB revoked Nest’s authority and arranged for another authorised representative, ACIS, to service the clients. ACIS received access to information about Nest’s client portfolio held in RIB’s broker management system: [32]–[40].
Nest alleged that providing the information to ACIS breached clause 13, which required each party to keep the other party’s Confidential Information confidential and not use or disclose it, except as necessary to perform the agreement or as required by law: [28]–[29]. Nest said the disclosure deprived it of the chance to sell the portfolio at market value. It claimed damages based on a valuation using portfolio revenue and a multiplier: [43]–[44], [76]–[77].
The primary judge dismissed the claim. The Court of Appeal, in reasons delivered by Mitchelmore JA with Bell CJ and Free JA agreeing, dismissed Nest’s appeal. The central reason was that the portfolio information was not Nest’s Confidential Information under the agreement, properly construed. The Court also considered the statutory-obligation and damages arguments, although its conclusion on confidentiality was enough to dispose of the appeal: [63]–[64].
The Court approached the confidentiality question as one of contractual construction. The parties accepted that a commercial contract is construed objectively, with attention to the words used, the commercial circumstances and the contract’s purpose. A construction should give the agreement’s provisions a coherent operation: [55].
The wording mattered. Clause 13.1 protected “the other party’s Confidential Information”. Clause 16.2 defined Confidential Information as information relating to a party, or its related body corporate, that the other party became aware of in negotiating or performing the agreement and related activities: [28]–[29], [56]. Mitchelmore JA agreed with the primary judge that this wording was directed to protecting information relating to one party from disclosure by the other. It was not framed as a general protection for information held by one party about its own business or customers: [56].
The regulatory and contractual context supported that reading. RIB was the AFSL holder. Nest provided financial services on RIB’s behalf as its agent. The Corporations Act provisions described in the judgment made the AFSL holder responsible to clients for relevant conduct by its authorised representative, whether or not the representative acted within authority: [8]–[10]. RIB was therefore not merely a custodian of information supplied by Nest. The client information related to insurance services conducted under RIB’s licence and to clients for whom RIB had regulatory responsibilities: [57]–[59].
The contract’s transfer provisions also mattered. Nest had a right under clause 8.2 to obtain access to Client Data if Nest gave notice to terminate. But clause 8 did not survive termination, and the agreement contained no equivalent right for Nest to obtain the data if RIB terminated, including an immediate termination for cause. Clause 6.6 instead contemplated a transfer of client data to another AFSL holder, subject to the required arrangements: [25]–[27], [59]–[61]. The Court considered that difference inconsistent with Nest’s argument that it retained a contractual right to control or protect the information after RIB terminated the relationship.
Nest also relied on clause 8.1, which said it retained ownership of the goodwill attaching to the Business. The Court held that the goodwill provision did not convert the client portfolio information into Nest’s Confidential Information. It provided protection for Nest’s goodwill during the agreement, but did not alter the separate meaning of Confidential Information: [62]. On that basis, the Court held the information given to ACIS was not information whose use or disclosure breached clause 13.1: [63].
The Court then addressed RIB’s “required by law” argument. It rejected the suggestion that RIB’s initial willingness to discuss a possible sale of Nest’s business meant that it was not legally required to take the steps it later took. After terminating Nest’s authorisation, RIB had obligations as licensee to ensure that clients’ needs were met and appropriate advice was available. Renewals were approaching, and RIB knew of policies affected by Nest’s misconduct. The Court accepted that the affected policies could not be isolated from the rest of the client portfolio for purposes of RIB’s obligations: [70]–[71].
Finally, the Court considered the damages evidence. The experts’ agreed estimates used annual revenue and a multiplier derived from other portfolio transactions: [77]. But agreement between experts on figures produced using a particular method did not establish that the assumptions behind that method were sound. The primary judge was not satisfied that the evidence established maintainable portfolio revenue or a suitable multiplier in light of the misconduct. RIB had raised those deficiencies at trial, and the primary judge was entitled to rely on them: [79]–[80].
The judgment applied established principles of contractual construction, rather than announcing a new general test. It relied on Electricity Generation Corporation v Woodside Energy Ltd and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd for the approach to commercial contracts: identify the objective meaning of the words in their text, context and purpose, and prefer a reading that gives the contract a coherent commercial operation: [55].
The judgment’s contribution is its application of those principles to a particular kind of agreement: an authorised representative arrangement under an AFSL. The Court read the confidentiality language alongside provisions dealing with agency, client data, business goodwill, termination and transfers, and alongside the AFSL holder’s responsibilities: [57]–[62]. The judgment does not say that client information can never be confidential or that such information always belongs to a licensee. Its conclusion is tied to the specific wording and structure of this agreement and the particular regulatory relationship.
On expert evidence, the Court considered Hull v Thompson, which recognises that unchallenged expert evidence may still be rejected where a report is illogical, inconsistent, based on an incorrect or incomplete history, or rests on assumptions that are not established: [78]. The Court also applied Troulis v Vamvoukakis in addressing the limits on damages assessment where the evidence does not provide a rational basis for valuation: [79]–[80]. The result was not a rule that expert evidence must be cross-examined before a judge can question it. Rather, the relevant point was that the primary judge’s concerns related to unproved assumptions and had been raised by RIB at trial: [79]–[80].
The supplied judgment gives no account of later decisions applying or distinguishing this case. It is therefore not possible, from this source alone, to describe a subsequent state of the law or later judicial treatment.
At [56], Mitchelmore JA explained that the definition and obligation were “directed to protecting information which relates to one party from being disclosed by the other party who learns of it”. In plain English, the clause did not automatically protect every item of information one party supplied to the other. The court first had to decide whose information it was, applying the wording of the agreement.
At [58], the Court said Nest’s argument that the information was Nest’s Confidential Information “cannot be sustained” against the background of the parties’ arrangement. Put simply, the fact that Nest supplied client details did not, by itself, determine the contractual character of information held on RIB’s systems for services provided under RIB’s licence.
At [62], the Court said clause 8.1 did not “convert what was not otherwise Confidential Information into information of that character”. In plain English, Nest’s contractual goodwill interest did not rewrite the distinct confidentiality provisions. Each clause had to be given its own effect.
At [71], the Court explained that the parties’ initial discussion of a possible sale did not mean RIB was not required by law to act as it did. The initial discussion did not displace RIB’s responsibilities as licensee once Nest’s authority had been terminated and client servicing needs remained.
At [80], the Court upheld the primary judge’s concern that there was “no data on which it can make a rational assessment” of appropriate revenue and multiplier assumptions. In plain English, a valuation method may produce a number, but the court still needs evidence supporting the inputs used to reach that number.
The decision is particularly relevant to contractual disputes involving an authorised representative who provides financial services under another entity’s AFSL, where the agreement defines confidentiality by reference to information relating to a party and information received or learned during performance. Its reasoning highlights the need to read confidentiality clauses alongside the provisions defining the parties’ roles and dealing with client data, termination, transfers and goodwill: [55]–[63].
The decision is also relevant where a licensee terminates an authorised representative after alleged or admitted misconduct and arranges for another representative to service clients. It shows that, on the facts and contract before the Court, an earlier discussion about a possible sale did not resolve whether the licensee was required to take later client-protection steps: [70]–[71].
On damages, the case may be relevant where a party relies on expert valuations based on revenue and a multiplier, but the evidence does not establish whether the revenue is maintainable or whether the transactions used to derive the multiplier are comparable. The Court’s reasoning turns on the particular weaknesses the primary judge identified and RIB had raised at trial: [77]–[80].
The decision should not be read more broadly than its actual reasoning. It does not decide the status of all customer lists, broker portfolios or commercially valuable information. Nor does it establish a universal answer to whether disclosure to a replacement service provider is required by law. Those questions depend on the contractual language, regulatory setting and evidence relevant to the particular dispute.
The judgment identifies no later decision that has applied, distinguished or otherwise treated Nest Insurance Consult Pty Ltd v Resilium Insurance Broking Pty Ltd. The source is the NSW Court of Appeal judgment itself, dated 7 October 2025, and it contains no subsequent judicial history.
Within this judgment, the Court applied Woodside and Mount Bruce Mining in stating the approach to contractual construction: [55]. It considered Hull v Thompson when addressing unchallenged expert evidence: [78]. It applied Troulis v Vamvoukakis in considering whether damages could be assessed without a rational evidentiary foundation: [79]–[80]. Those relationships describe the authorities used by the Court in this judgment, not later treatment of the judgment itself.
The judgment leaves questions that would depend on the wording and evidence in another dispute. First, the Court did not decide how a differently drafted confidentiality clause would apply if it expressly allocated ownership or control of client data, or expressly protected information supplied by the authorised representative: [56]–[63].
Second, the Court’s conclusion about the required-by-law exception was made in the context of RIB’s statutory role, the misconduct affecting policies, the approaching renewals and the facts concerning client servicing. The judgment does not define a general boundary between steps that are legally required and steps that are merely convenient or commercially preferred: [69]–[71].
Third, the damages discussion does not prescribe a particular method for valuing an insurance portfolio. It identifies evidentiary gaps in Nest’s approach, especially the lack of a rational basis for maintainable revenue and a multiplier adjusted for the misconduct: [79]–[80]. Other evidence or a different valuation methodology was not assessed in this judgment.
Finally, the Court did not determine the proper construction or effect of the 2016 agreement between Nest and Resilium. Nest said it was unnecessary for the Court to decide that issue, and Resilium was not a party to the appeal: [81]. The judgment’s conclusions therefore rest on the RIB-Nest Agreement and the issues properly argued in the appeal.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have it checked by a qualified Australian lawyer.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Nest Insurance Consult Pty Ltd v Resilium Insurance Broking Pty Ltd [2025] NSWCA 221
Hearing dates: 23 June 2025
Date of orders: 7 October 2025
Decision date: 07 October 2025
Before: Bell CJ at [1];
Mitchelmore JA at [2];
Free JA at [83]
Decision: (1) The appeal is dismissed.
(2) The appellant is to pay the respondent’s costs of the appeal.
Catchwords: CONTRACTS — contractual construction — authorised financial services agreement terminated for cause — clause requiring parties to keep other party’s confidential information confidential and not use — whether disclosure of client portfolio information to competitor following termination was breach of confidentiality clause — whether client portfolio information was confidential information as defined — where parties were in the relationship of principal and agent — where authorised representative provided financial services under principal’s Australian financial services licence — where authorised representative retained goodwill in the business during the currency of the agreement but not post-termination
CONTRACTS — contractual construction — whether disclosure was required by law — where licensee had obligations to clients under Corporations Act 2001 (Cth), Part 7.6
DAMAGES — whether primary judge was entitled to conclude loss not proved where experts produced joint report and were not cross examined — whether denial of procedural fairness — where primary judge not satisfied of assumptions underpinning expert evidence — no denial of procedural fairness in primary judge’s approach
Legislation Cited: Corporations Act 2001 (Cth), Pt 7.6, ss 911A, 912A, 912EA, 915C, 916A, 917A, 917B, 917E
Cases Cited: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Hull v Thompson [2001] NSWCA 359
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Troulis v Vamvoukakis [1998] NSWCA 237
Texts Cited: Nil
Category: Principal judgment
Parties: Nest Insurance Consult Pty Ltd (Appellant)
Resilium Insurance Broking Pty Ltd (Respondent)
Representation: Counsel:
P Braham SC / S Gray (Appellant)
M Elliott SC / D Ratnam (Respondent)
Solicitors:
Mills Oakley (Appellant)
Roberts & Partners Lawyers (Respondent)
File Number(s): 2024/00390081
Publication restriction: Nil
[This headnote is not to be read as part of the judgment]
Nest Insurance Consult Pty Ltd (Nest) provided insurance brokerage services under the Australian financial services licence (AFSL) of Resilium Insurance Broking Pty Ltd (RIB), as RIB’s authorised representative, pursuant to a written agreement (the RIB-Nest Agreement).
In November 2020, RIB discovered that Nest had engaged in misconduct. RIB terminated the RIB-Nest Agreement for cause and revoked Nest’s status as its authorised representative. The parties initially contemplated Nest being given the opportunity to sell its client portfolio. However, shortly thereafter RIB provided access to the details of Nest’s client portfolio (the client portfolio information) to another authorised representative, Milestone GI Pty Ltd, t/a Australian Consolidated Insurance Services (ACIS), on RIB’s broker management software.
In the court below, Nest alleged that RIB’s provision of the client portfolio information to ACIS was a breach of clause 13 of the Nest-RIB Agreement, which required each party to keep confidential and not use or disclose “the other party’s Confidential Information” except as necessary to perform the agreement or as required by law. Nest contended that the disclosure to ACIS had deprived Nest of the opportunity to sell the portfolio at market value and sought damages.
The primary judge dismissed Nest’s claim. His Honour was not satisfied that the client portfolio information was Nest’s “Confidential Information” as defined. In any event, his Honour considered that the disclosure of the information was not a breach of clause 13 because RIB was required to take the steps it did by reason of its statutory obligations as an AFSL holder. Further, his Honour considered that Nest’s misconduct was the cause of any loss it suffered. Finally, his Honour was not satisfied that Nest had established that it in fact suffered loss, or the quantum of any such loss.
On appeal, Nest challenged each of the primary judge’s conclusions.
The Court (Mitchelmore JA, Bell CJ and Free JA agreeing) held, dismissing the appeal:
As to issue 1 (whether the client portfolio information was “Confidential Information” as defined):
Applying well-settled principles of contractual construction, the contention that the client portfolio information was confidential information of Nest cannot be sustained. That construction does not accord with the contractual, commercial and regulatory context of the relationship between RIB (as AFSL holder and principal) and Nest (as its authorised representative and agent). The provisions that provided that Nest retained the goodwill in the business during the currency of the agreement did not call for a contrary conclusion: [51] to [63].
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 applied.
Although the Court’s determination of issue 1 was dispositive of the appeal, the Court nonetheless dealt with the balance of the issues.
As to issue 2 (whether RIB’s provision of the client portfolio information to ACIS was “required by law”):
It did not follow from the fact that the parties initially contemplated that Nest would sell the client portfolio that RIB was not required by law to act in the manner that it did. Nor did the course of action that RIB took have to be the only available course of action in order to meet the description of “required by law”. As the holder of an AFSL, RIB was subject to obligations under the Corporations Act 2001 (Cth) and was responsible for the conduct of its authorised representatives. RIB was obliged to take steps to protect the insureds for whom Nest (as agent of RIB) had obtained insurance, and it was not possible to isolate the insureds who were affected by the misconduct from those who were not: [65] to [71].
As to issue 3 (whether it could be said that any loss was caused the breach):
Nest’s argument on this issue was premised upon it being successful as to issue 2. Issue 3 falls away in light of the Court’s rejection of Nest’s argument on that issue: [72].
As to issue 4 (whether the primary judge erred in reject**ing the expert evidence):
There was no error in the primary judge’s conclusion that Nest’s approach to quantifying its claimed loss was unsound. His Honour’s conclusion did not represent a departure from the views of the experts. Rather, his Honour was not satisfied as to the assumptions that underpinned those views. In circumstances where RIB relied on these deficiencies at trial, there was no denial of procedural fairness. Nor did justice dictate that a figure be plucked out of the air: [73] to [80].
Hull v Thompson [2001] NSWCA 359 considered. Troulis v Vamvoukakis [1998] NSWCA 237 applied.
BELL CJ: I agree with Mitchelmore JA.
MITCHELMORE JA: The appellant, Nest Insurance Consult Pty Ltd (Nest), appeals from the dismissal of its claim for damages for breach of a term of a written contract that it entered into with the respondent, Resilium Insurance Broking Pty Ltd (RIB). RIB held an Australian financial services licence (AFSL) under the Corporations Act 2001 (Cth) authorising it to deal in and advise on general insurance products. Between 2016 and 2020, Nest provided insurance brokerage services as an authorised representative of RIB, under RIB’s AFSL. In November 2020, RIB discovered that Nest had engaged in misconduct and terminated its contract with Nest, as well as revoking Nest’s status as its authorised representative.
Nest did not take issue with the basis on which RIB terminated the contract. However, it alleged that RIB breached the contract in disclosing information about Nest’s clients to another authorised representative, Milestone GI Pty Ltd, t/a Australian Consolidated Insurance Services (ACIS). Nest relied in this respect on a term of the contract that required each party to keep confidential and not use or disclose “the other party’s Confidential Information” except as necessary to perform the agreement or as required by law. Nest sought damages, contending that by disclosing its client portfolio information to ACIS, RIB had deprived it of the opportunity to sell that portfolio at market value.
The primary judge, Hammerschlag CJ in Eq, dismissed Nest’s claim. His Honour concluded that Nest had not established that the information concerned was Nest’s “Confidential Information” as defined in the contract. In any event, his Honour concluded that RIB was entitled to use and disclose the client portfolio information because RIB was required by law to do so. His Honour also concluded that Nest was the cause of any loss that it suffered and, further, that it had not established that it suffered loss by reason of RIB’s conduct or the amount of any such loss.
By its appeal, Nest challenges each of the primary judge’s conclusions, and in order to disturb his Honour’s orders Nest must succeed as to each of them. For the following reasons Nest has not discharged that burden. It follows that I would dismiss the appeal.
A person who carries on a financial services business must hold an AFSL covering the provision of the relevant financial services: Corporations Act, s 911A. As the primary judge noted at [9], Div 4 of Pt 7.6 of the Corporations Act provides for a person to apply to the Australian Securities and Investments Commission (ASIC), and for ASIC to grant, an AFSL to fit and proper persons in order to provide the financial services covered by the licence: ss 913A, 913B.
Each of RIB and its parent company, Resilium Pty Ltd (Resilium), held an AFSL authorising it to deal in and advise on general insurance products. As the holder of an AFSL, s 912A of the Act imposed a series of obligations on RIB, and Resilium, including to do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly: s 912A(1)(a). ASIC may suspend or cancel an AFSL if, relevantly, the AFSL holder has not complied with their obligations under s 912A: s 915C(1)(a).
Section 911A(2)(a) of the Corporations Act exempts a person from the requirement to hold an AFSL if the person provides the service as a representative of a second person who carries on a financial services business and holds an AFSL covering provision of the service. Section 916A(1) provides that an AFSL holder may give a person (an “authorised representative”) a written notice authorising the person, for the purposes of Ch 7, to provide a specified financial service or services on behalf of the AFSL holder.
Division 6 of Pt 7.6 addresses the liability of AFSL holders for their authorised representatives, and applies to any conduct of a representative that relates to the provision of a financial service on which a third person, the “client”, could reasonably be expected to rely and on which the client in fact relied in good faith: s 917A(1). Section 917B provides that an AFSL holder is responsible, as between them and the client, for the conduct of the representative “whether or not the representative’s conduct is within authority”. An AFSL holder is also liable to the client in respect of any loss or damage suffered by the client as a result of the representative’s conduct: s 917E.
The primary judge observed that after the events giving rise to the proceedings, s 912EA was enacted, providing that an AFSL holder must take reasonable steps to notify a person (the “affected client”) of a reportable situation, which includes where an authorised representative has breached a core obligation and the breach is significant. The obligation to do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly is a core obligation. His Honour recognised that the section did not apply in the present case, but considered it was reflective “of RIB’s general obligation to those for whom it acts as broker under its AFSL”: at [14].
Nest was incorporated by Mr Kien Nhat Nguyen, who has at all material times been its sole director: at [3]. Between 2008 and 2012, Mr Nguyen worked for GIO as a service consultant and a member of its general sales team. In mid-2012, he started in the role of business insurance specialist, brokering commercial insurance products for clients with more complex risks than those covered by the general commercial sales team: at [15].
Until 2016, RIB was part of an authorised representative network within the Suncorp Group, the ultimate holding company of which was AAI Limited which traded as GIO: [16]. In 2016, the authorised representative network was restructured, with a view to the authorised representatives owning the insurance broking portfolios they respectively ran and carrying on business in their own right. The restructure effectively made in-house advisers at GIO redundant, including Mr Nguyen. However, the advisers were offered the opportunity to join the Resilium network as authorised representatives of Resilium: at [18].
On 14 July 2016, Mr Nguyen incorporated Nest. On or around 20 July 2016, Resilium and Nest entered into a written referral and allocation agreement, under which Nest agreed to pay an allocation price of $510,431 (including GST), in 60 equal monthly instalments, as consideration for Resilium referring to Nest for renewal particular clients and identified policies that were recorded on a register that Resilium maintained. Resilium would then allocate to Nest, within the register, all such policies where the client elected to renew with Nest: at [19]. In accordance with this agreement, Resilium provided Nest with a list of client insureds together with information about them and their policies: at [20].
On 28 July 2016, Nest and Resilium entered into an Authorised Representative Deed of Agreement (Corporate), by which Resilium authorised Nest to provide financial services on its behalf for the purposes of Ch 7 of the Corporations Act: at [21]. On the same date, Nest and RIB entered into an Authorised Representative Agreement (Corporate) on similar terms: at [22].
On 1 June 2019, Resilium ceased to be a member of the Suncorp Group and Suncorp ceased offering corporate policy renewals from Resilium, which would henceforth be offered via Vero (another GIO brand name): at [23]. From that time, practically speaking, RIB took the place of Resilium with respect to the authorised representative relationship with Nest: at [24].
On 30 June 2020, RIB and Nest entered into the Authorised Representative Agreement (Corporate) (the RIB-Nest Agreement). As described by the primary judge, the RIB-Nest Agreement implemented “the business model under which Nest would have ownership of, and the goodwill in, its own business”: at [25].
The “Background” section of the RIB-Nest Agreement noted that RIB (the “Licensee”) was a general insurance broker with an AFSL authorising it to provide general and personal financial product advice in relation to general insurance products, and to deal in such products. It also noted that RIB wished to authorise Nest (the “Authorised Representative”) to provide financial services on its behalf on the terms and conditions set out in the agreement.
In cl 1.1, RIB authorised Nest, under s 916A of the Corporations Act (cl 1.3), to provide the following financial services “on its behalf”, which were defined collectively as the “Authorised Financial Services”:
“1.1.1 provide general and personal financial product advice in relation to general insurance products; and
1.1.2 deal in a financial product by arranging for another person to apply for, acquire, vary or dispose of general insurance products, to retail and wholesale clients.
1.1.3 deal in a financial product by arranging for another person to apply for, to acquire, to vary or dispose of premium funding products to retail and wholesale clients.”
“1.5 The relationship that exists between the Licensee and the Authorised Representative is of principal and agent. The Authorised Representative is not in any way a partner or employee of the Licensee and must not represent itself as such in any circumstances.”
Clause 1.6 limited the scope of Nest’s appointment to providing only the Authorised Financial Services, stating that it was not authorised to provide any other financial services on behalf of RIB. Clause 1.8 prohibited Nest from acting as an authorised representative of another licensee without RIB’s written consent (to be given or refused at RIB’s “absolute discretion”).
Clause 3.1 required Nest to provide the Authorised Financial Services in accordance with: the requirements of the “Relevant Law”, the conditions of RIB’s AFSL, and the terms and conditions of the RIB-Nest Agreement. The term “Relevant Law” was defined to mean “all legislation and regulation that relates to the Authorised Financial Services and Licensee’s AFS Licence, including but not limited to, the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 (Cth)”. Clause 3 also contained the following provisions that are relevant to the arguments the parties advanced on the appeal:
“3.6 The Authorised Representative will provide the Licensee with all information necessary (and within the time necessary) for the Licensee to comply with its obligations under the Relevant Law and the conditions of its AFS Licence.
3.7 The Authorised Representative will provide the Licensee with all information necessary (and within the time necessary) that the Licensee requires to ensure the Authorised Representative is complying with its obligations under this Authorised Representative Agreement.
…
3.14 Upon being appointed as an Authorised Representative, the Authorised Representative will provide all necessary assistance to enable the prompt transfer to the Licensee of the Authorised Representative’s Existing Brokered Policies.”
Clause 4 of the RIB-Nest Agreement dealt with remuneration. As the primary judge summarised at [29], the Agreement provided for an 80/20 split of the broking commission and fee income earned from the portfolio in favour of Nest (cl 4.1 and Schedule 3, Item 1). Nest was also required to pay an Annual Licence Fee to RIB (cl 4.3), which Item 2 of Schedule 3 explained as being “for access to the Broker Management System and ongoing training and support provided by the Licensee”. In his affidavit of 24 February 2022, Mr Nguyen gave evidence that RIB had two broker management systems, called “Insight” and “Sunrise”, both of which Nest used to obtain insurance quotes and which required a range of client information to be provided in order to provide a quote.
Clause 5.1 provided that Nest’s authorisation commenced “upon receiving notification from the licensee and continues until revoked in accordance with this agreement”. In relation to revocation, cl 5.3 relevantly provided:
“5.3 The Licensee may revoke the Authorisation of the Authorised Representative immediately by written notice to the Authorised Representative (but without any prior notice) on the happening of any of the following events:
…
5.3.4 If the Licensee is of the reasonable opinion that the Authorised Representative has, or if the Licensee reasonably suspects that the Authorised Representative has, engaged in or falls within one or more of the following:
(a) engages in conduct that is considered to be an act of dishonesty or serious misconduct;
…
(c) fails to perform their duties efficiently, honestly and fairly;
…
It is agreed that each of the above events give the Licensee the right to revoke the Authorisation of the Authorised Representative notwithstanding that the events may, in some cases, overlap.”
“Authorised Representative termination rights
6.2 The Authorised Representative may terminate this Agreement by:
6.2.1 3 months written notice in the first 12 months of being authorised by the Licensee (or sooner as may be agreed by both parties);
6.2.2 365 days written notice after 12 months of being authorised by the Licensee (or sooner as may be agreed by both parties);
Licensee termination rights
6.3 The Licensee may terminate this Agreement:
6.3.1 3 months written notice in the first 12 months of being authorised by the Licensee (or sooner as may be agreed by both parties);
6.3.2 365 days written notice after 12 months of being authorised by the Licensee (or sooner as may be agreed by both parties); or
6.3.3 immediately by written notice to the Authorised Representative (but without any prior notice) on the happening of any of the events listed or described in clause 5.3.
6.3.4 the Authorised Representative can no longer fulfil its obligations under this agreement;
6.3.5 ASIC informs the Licensee that it considers that the Authorised Representative’s involvement in the provision of financial services on behalf of the Licensee will significantly impair the Licensee’s ability to meet its obligations under Chapter 7 of the Corporations Act or its AFS Licence Conditions; or
6.3.6 a banning or disqualification order is made against the Authorised Representative in accordance with section 915C(1) of the Corporations Act.
Consequences of termination
6.4 Upon the termination of this agreement or the Authorisation, the Authorised Representative shall, if requested by the Licensee, provide all reasonable assistance to the Licensee in the orderly transfer of the Authorisation, functions and operations provided in accordance with this agreement to another service provider or to the Licensee itself.
…
6.6 Upon the termination of this agreement the Licensee/s and the Authorised Representative if requested, will be required to sign a termination/transfer deed to ensure all requirements are met prior to any client data being released. Please refer to a draft copy of the transfer deed: Appendix 1 – Resilium Transfer Deed.
Clauses surviving termination
6.7 Clauses 9, 10, 12, 13 survive termination of this agreement.”
“Goodwill and other interests
8.1 The Authorised Representative retains ownership of the goodwill attaching to the Business including goodwill developed by the Authorised Representative in carrying on the Business in accordance with this agreement.”
“8.2 If the Authorised Representative gives notice to terminate this agreement pursuant to clause 6.2, the Licensee will provide such consents as are reasonable and necessary to enable the Authorised Representative to obtain an electronic copy of Client Data from the Licensee’s broking software provider. The Authorised Representative must contact the broking software provider directly to arrange for access to the Client Data and must bear any costs associated with the broking software provider granting access to the Client Data.”
“Confidential Information means all information, data, practices and techniques relating to a party, or a related body corporate, customers, competitors, business, operations, strategies, computer systems, marketing systems and intellectual property or other property of which the other party becomes aware in negotiating or performing this agreement and the terms of this agreement and arranging or issuing policies of insurance.
Confidential Information does not include information that is in the public domain or later comes into the public domain (unless it came into the public domain by a breach of confidentiality or this agreement).”
“13.1 Subject to clause 13.2, during and after termination of this agreement, each party must keep confidential and must not use, the other party’s Confidential Information except as necessary to perform this agreement or as required by law.
13.2 If a government, regulatory authority or court orders a party to disclose Confidential Information, that party will, to the extent permitted, immediately advise the other party and will disclose only such of the Confidential Information necessary to comply with the order.
13.3 Nothing in this clause 13 restricts the use or dissemination of Confidential Information obtained lawfully from a third party.
13.4 The Authorised Representative may only use or disclose Confidential Information solely for the purpose for which it was collected. In addition, the Authorised Representative may use or disclose Confidential Information relating to a Client in any way authorised in writing by that Client.
13.5 Each party authorises the other to disclose its Confidential Information to its auditors, professional agents and advisors and any related bodies corporate.”
On 18 November 2020, in a meeting with Vero, RIB became aware that Nest, as its authorised representative, had engaged in conduct that RIB considered to constitute acts of dishonesty or serious misconduct: at [32]. Nest had knowingly given false information to insurers (including Vero) when applying for commercial (mostly motor vehicle) insurance policies, providing wrong or false post codes as to where vehicles were garaged and false information about the age of the youngest driver: at [33].
The primary judge found that this conduct, which Nest admitted, infected at least 74 insurance policies: at [33], [35]. As his Honour stated, “[t]he seriousness of the implications of this behaviour by an Authorised Representative for an AFSL holder, the client and the insurer is obvious”: at [36]. The clients whose policies were infected were imperilled and the insurers potentially defrauded, while RIB was responsible under the Corporations Act for Nest’s behaviour and liable to the clients for any loss or damage suffered thereby: at [37].
Nest accepted that RIB was entitled immediately to terminate the RIB-Nest Agreement and Nest’s status as an authorised representative: at [38]. At the time, Nest had 754 clients with 1,095 policies: at [39].
On 19 November 2020, Drue Castanelli, RIB’s Director of Operations and Compliance, and Benjamin Hastie, RIB’s Managing Director, had a telephone conversation with Mr Nguyen: at [40]. The same day, Mr Castanelli sent an email file note to Adrian Kitchin, the Executive Director of RIB: at [41]. The email included the following:
“• I said from the information we had seen it is clear that this is a systematic issue and a deliberate misrepresentation and misdescription of client information. As responsible managers we cannot accept this behaviour and we would not put our AFSL and all those who depend upon it at risk. This is a serious breach and we are obliged to report this to ASIC.
• Kien then said that ‘he does not deny manipulating data to achieve cheaper premiums for his clients’. Ben said, thanks for confirming this, I now advise you that we are terminating your authority immediately. We will allow your staff to continue to renew policies and we expect that the information provided on each renewal will be correct.
• I advised that Vero are no (sic) prepared to transact any new business with his practice and would disable this function today.
• Kien asked what next. Ben said he would have to find a buyer and that we had an option in the network that could assist. He asked if his staff could by (sic) the business, I said no, you cannot work within Resilium. He mentioned Blaze Insurance, we said he could talk to him if he wishes. He asked about his TEAL payments and we confirmed these are still on foot and whatever sale arrangement we agreed to would need to consider this.
• We suggested he spend the afternoon/night considering next steps – he said why, you have already made up your mind. We confirmed his considerations should be around who he wants to sell to.”
Mr Kitchin sent an email to Mr Nguyen that same day, providing some examples of what Vero had found on its review of a number of motor vehicle policies and referring to cl 5.3 and cl 6.3.3 of the RIB-Nest Agreement. Noting that Mr Nguyen had not denied any of the conduct in his call with Mr Castanelli and Mr Hastie, Mr Kitchin informed Mr Nguyen that RIB regarded the discrepancies as a failure of Nest to perform its duties efficiently, honestly and fairly, which if they had not been uncovered would represent conduct that was likely to bring Resilium into disrepute. Mr Kitchin confirmed termination of Nest’s status as an authorised representative and that Nest’s access to Insight and Sunrise had been revoked.
The following day, 20 November 2020, Mr Kitchin sent Mr Nguyen a further email. In this email, Mr Kitchin covered some of the same ground as his email of the previous day as well as making a number of further points. Relevantly, Mr Kitchin wrote:
“… 6. We will write to customers advising that Nest Insurance Consult Pty Ltd ABN: 54 613 658 076 and Mr Kien Nguyen is no longer authorised to act under our AFSL. The servicing of the customers’ insurance needs will be handled by Milestone GI Pty Ltd T/as ACIS (a CAR of RIB);
7. ACIS have agreed to undertake a policy remediation plan for all customers previously serviced by the Business under the supervision and direction of RIB as the AFSL holder;
8. We will advise the Insurers with whom we deal that Authorisation for the Business has been terminated;
9. The Business currently has a Loan in place pursuant to the Referral and Allocation Agreement between the Business and RIB dated 20 July 2016. The current Loan balance outstanding is $91,193 which is immediately repayable;
10. ACIS will pay you 50% of all paid income generated from your client register for a period of 12 months; however, RIB will withhold all amounts that would otherwise be payable to the Business until such time as the Loan is repaid;
11. We will prepare a report following our investigation which we will provide to ASIC advising them of our findings in relation to your conduct;
12. You agree to provide all reasonable assistance to the Licensee in the orderly transfer of the Authorisation functions and operations in accordance with this agreement to the Licensee; and
13. ACIS will contact you to discuss next steps and consider the possibility of making employment offers to some/all staff.”
On 22 November 2020, Mr Nguyen sent an email to Mr Kitchin asking that RIB take no action that may “detrimentally affect the value of my proprietary rights in my client register; including making contact with any of my clients” while Nest sought urgent legal advice. Mr Nguyen also referred to cl 6.6 of the RIB-Nest Agreement and asserted that a termination/transfer deed needed to be signed before any client data was released. In his reply, Mr Kitchin stated that RIB was exercising its contractual rights on termination as it was entitled to do, and that Mr Nguyen’s reliance on cl 6.6 was mistaken as RIB had not required the execution of any transfer deed: at [46].
In an email to a RIB staff member dated 24 November 2020, Mr Castanelli gave instructions as to the “next steps”, which included transferring Insight access to the Nest database and practice details from Nest to ACIS, disabling current staff and activating all ACIS staff, and beginning “the process of renewals for December/January”. Mr Castanelli also referred to writing to Nest’s clients to advise them that Nest was no longer authorised to act under RIB’s licence and to introduce the clients to ACIS.
In the standard email sent to Nest’s clients, RIB advised that Nest was “no longer authorised to act under our [AFSL]” and that consequently, “Nest will no longer be managing your general insurance policies”. The email also stated that effective 27 November 2020, the clients’ general insurance policies would be managed by ACIS, although clients could opt to use another broker. Under the heading “Next Steps”, the email stated:
“• The team at [ACIS] will contact you prior to the renewal of your existing policy/s to discuss your options.
• If you wish to speak to someone now, please call the team at [ACIS] on [number].”
The primary judge observed that RIB’s original intention was to sell the Nest portfolio to ACIS for 50% of a year’s net income earned from it. However, RIB ultimately gave ACIS access to the client portfolio information on RIB’s broker management software, which ACIS used as RIB’s authorised representative: at [49].
Nest no longer operates as an insurance broker. Instead, Mr Nguyen set up a separate entity, Postcode Insurance Pty Ltd (Postcode). On 24 December 2020, Mr Nguyen and Postcode became authorised representatives of another insurance broker: at [53]. Postcode has been able to recover a large part of the client portfolio that Nest held at RIB: at [56].
Resilium filed a statement of claim in the Local Court for an action in debt, seeking the amount that Nest allegedly owed under the 2016 referral and allocation agreement. The proceedings were transferred to the Supreme Court when Nest filed a cross-claim against Resilium and RIB which pleaded causes of action in contract, equity, and under statute, as well as a quantum meruit/unjust enrichment claim. Resilium’s action in debt and Nest’s claim for quantum meruit/unjust enrichment were settled during the hearing and Nest ultimately did not press the pleaded causes of action in equity or under statute. This left Nest’s claim in contract against RIB.
The primary judge summarised Nest’s position at [63]:
“Nest puts that:
(1) its ‘client list’ (as distinct from every piece of information held by RIB on its broker management software about the clients and their insurance) was Confidential Information under cl 16.2;
(2) in breach of cl 13.1, RIB failed to keep confidential and used the client list by giving it to Milestone;
(3) prior to disclosure to and use by Milestone of the client list, the portfolio had a market (sale) value;
(4) the disclosure and use of the client list denuded it of confidentiality causing Nest loss; and
(5) its loss is the market value of the portfolio of insurance policies brokered by Nest as at the date of the breach. It quantifies its loss by taking the annual revenue derived from the portfolio (as at 19 November 2020) and applying to it a multiplier said to reflect what purchasers have paid for comparable portfolios.”
Nest relied on the evidence of Mr Nguyen and evidence of a forensic accounting expert, Mr McGuiness. Although RIB served lay evidence, it did not call any of its lay witnesses. RIB did rely on an expert witness, Ms Jennings-Jones, who prepared a report and then a joint report with Mr McGuiness. There was no cross-examination of any of the witnesses: at [60].
In rejecting Nest’s first contention, the primary judge concluded that “the client information (including any client list – which no doubt could be generated from the information held on RIB’s computer system)” that RIB disclosed to ACIS was not, on the proper construction of cl 13.1 and cl 16.2, “Confidential Information in the hands of RIB qua Nest”: at [72]. Rather, his Honour held that both the definition in cl 16.2 and the obligation in cl 13.1 were directed “to protecting information which relates to one party from being disclosed by the other party who learns of it”: at [73]. Having regard to the provisions of the RIB-Nest Agreement in relation to client information, his Honour concluded that even though clients may have obtained their insurance through Nest, Nest was acting as RIB’s agent and the client information was RIB’s: at [78].
In rejecting Nest’s second contention, the primary judge found that even assuming that Nest’s client portfolio information was Confidential Information, RIB was required by law to take steps of the kind it did to ensure that the clients in the portfolio were protected: at [79]. In this context, his Honour referred to a concession he considered Nest made during the hearing (which Nest disputes on appeal) that RIB was required by law to take steps of the kind it did in relation to the infected policies and was not in breach of cl 13.1 in relation to those policies. His Honour considered that the reasoning that underpinned that concession applied equally to all clients in Nest’s portfolio, meaning that RIB was required by law to take steps to ensure that all clients were protected: at [79]. His Honour had earlier referred to RIB’s statutory obligation to act efficiently, honestly and fairly as well as its responsibility to clients for Nest’s misconduct. Having terminated Nest’s authorisation for good cause, his Honour stated that “RIB had no choice but to act to protect those insureds”. How it did so was, in his Honour’s opinion, “a matter for it”: at [64].
Turning then to Nest’s contentions about loss and damage, and assuming against his Honour’s conclusions on the first two issues, that RIB breached cl 13.1 of the RIB-Nest Agreement, his Honour found that it was Nest’s dishonest conduct that caused its loss, and not the steps RIB took to assuage the effect of that conduct: at [82]. Further and in any event, his Honour was not satisfied that Nest had established any loss, finding its approach to quantification unsound even though the experts agreed on a market value based on that approach: at [99]. This was so for two reasons. First, his Honour considered that valuing an assumed income stream by applying a multiplier “incorrectly equates loss of confidentiality with the total loss to Nest of the sale value of the Client Portfolio”: at [100]. Apart from the role of Nest’s misconduct in its inability to sell the portfolio, subsequent facts showed that its portfolio was still valuable because Mr Nguyen was able to use it to the advantage of his new brokerage company, Postcode: at [100]. This exposed “the fallacy in the proposition that RIB’s transmission of the client information to [ACIS] made the portfolio worthless”: at [100].
“Anyway, market value is determined by reference to a transaction between willing but not anxious parties. Excluding from the calculation revenue attributable to the infected policies does not take account of the problem. I do not consider it to have been incumbent on Nest to have demonstrated that it would have sold, but it was incumbent on it to demonstrate that it could have sold and then at what price and on what terms. Such terms may have included a non-compete clause by Nest and Nguyen about which there is no evidence. The Court has no data on which it can make a rational assessment either of, what annual revenue figure for the Client Portfolio should be adopted as legitimate, proper and maintainable as at 19 November 2019, or what multiplier is to be applied in circumstances where a significant part of the portfolio is infected policies and it was managed and procured by someone who did what Nest did, and whose AR status was terminated because of it. It is to be remembered that PSC baulked at the opportunity to buy.”
Nest submitted that the primary judge erred in finding that the client portfolio information that RIB provided to ACIS was not Nest’s “Confidential Information” within the meaning of cl 16.2 of the RIB-Nest Agreement.
Nest submitted in writing that RIB had admitted that Nest’s client portfolio information met this definition, in its defence to the amended commercial list cross-claim. It is the case that RIB admitted, without qualification, a subparagraph of the amended commercial list cross-claim that summarised the definition in cl 16.2 and then added, by way of amplification, “which would include that information that made up the Client Portfolio”. However, as senior counsel for RIB submitted orally on the appeal, the proper characterisation of Nest’s client portfolio information as within or outside the scope of that definition was very much in issue in the trial. In circumstances where Nest was unable to refer this Court to where it had raised this admission in the court below, I reject Nest’s reliance upon it on the appeal.
Nest otherwise submitted that in accordance with cl 3.14 of the RIB-Nest Agreement, upon commencement of the arrangement it had provided the details of its existing clients to RIB to facilitate their upload onto its broker management software, Insight. Then, as it grew its business, Nest provided the details of new clients to RIB which were also uploaded. Nest submitted that the client portfolio information thus satisfied the terms of the definition of “Confidential Information” in cl 16.2, as “information”, or “data”, “relating to a party, or … customers … of which [RIB] [became] aware in … performing this agreement … and arranging or issuing policies of insurance”. It followed, Nest submitted, that the client portfolio information was “Confidential Information” of Nest that RIB was required by cl 13.1 to keep confidential. By contrast, on the primary judge’s analysis, as soon as Nest provided the client portfolio information to RIB it was free to use it as it wished, including to share it with other authorised representatives.
Nest submitted that the construction of cl 13.1 for which it contended was supported by the surrounding contractual context, in particular cl 8.1. Nest submitted that if the information in question was not Confidential Information to which the obligation in cl 13.1 applied, Nest’s goodwill in relation to the Business would not be protected despite cl 8.1. Nest also relied on the regime for dealing with client information in cl 6.6, which contemplated that following termination Nest could continue to service its clients under another AFSL. Nest contended that those clauses could not operate in accordance with their terms unless RIB was otherwise obliged to protect Nest’s right to confidentiality in the client portfolio information.
The applicable principles of contractual construction were not in dispute. It is sufficient for present purposes to reproduce the primary judge’s summary of those principles at [70], relying on authorities including (2014) 251 CLR 640; [2014] HCA 7 at [35], and (2015) 256 CLR 104; [2015] HCA 37 at [47]-[51]:
“The RIB-Nest Agreement is a commercial contract which is to be given a business-like interpretation. Interpreting it requires attention to the language used by the parties, the commercial circumstances which it addresses, and the objects which it is intended to secure. The meaning of the words chosen is determined objectively by reference to its text, context, and purpose, the question being what a reasonable businessperson would have understood them to mean. Preference is given to a construction supplying a congruent operation to the various components of the whole, so as to avoid commercial inconvenience. Where language is open to more than one construction, the Court will prefer a construction which avoids consequences which are capricious, unreasonable, inconvenient or unjust.”
The primary judge identified the primary difficulty with Nest’s construction at [73], namely, that the definition of Confidential Information in cl 16.2 of the RIB-Nest Agreement “is directed to protecting information which relates to one party from being disclosed by the other party who learns of it”. That notion in the definition is given emphasis in the terms of the obligation in cl 13.1 not to use “the other party’s Confidential Information” (emphasis added). As the primary judge stated, neither the definition in cl 16.2, nor the obligation in cl 13.1, is directed at information which relates to the receiving party or which is that party’s information.
The surrounding contractual and regulatory context is important in this respect. The RIB-Nest Agreement was the written notice required by s 916A of the Corporations Act, by which RIB authorised Nest to provide the Authorised Financial Services “on its behalf” (cl 1.1, cl 1.3). Ultimately, as the holder of the AFSL, RIB was the broker on the policies that Nest arranged with its clients, and RIB was liable to those clients for Nest’s conduct as its authorised representative, whether or not Nest acted within the scope of its authority. As cl 1.5 stated, the relationship was one of principal and agent.
Against that background, Nest’s contention, that the information RIB held on its broker management software relating to the financial services that Nest was authorised to provide was Confidential Information of Nest because RIB became aware of that information upon Nest providing it, cannot be sustained. As senior counsel for Nest acknowledged at the hearing, while Nest’s clients may be “customers” as referred to in the definition in cl 16.2, and are customers of Nest because they go to Nest for advice, they might also be described as customers of RIB because RIB has responsibility for them as the licence holder, and RIB is liable to them for all of the actions of Nest. Nest’s obligation in cl 3.14 to provide all necessary assistance to enable Nest’s existing brokered policies to be transferred to RIB at the outset of the agreement reflected the statutory reality that such services as Nest provided were as an authorised representative of an AFSL holder, in this case RIB.
Clause 6.6 of the RIB-Nest Agreement, on which Nest relied, was also consistent with Nest’s status as an authorised representative, the purpose of the provision (which applied upon termination and only upon request) being to facilitate the transfer of Nest’s client information from RIB to another AFSL holder “to ensure all requirements are met prior to any client data being released”. That information was held on RIB’s broker management software, to which Nest’s access was subject to a licence for which it paid RIB an annual fee.
It is the case that if Nest gave notice to terminate the agreement under cl 6.2, cl 8.2 required RIB to provide such consents as were reasonable and necessary to enable Nest to obtain an electronic copy of the Client Data from RIB’s software provider. That clause was ancillary to cl 8.1, which declared that Nest retained ownership of the goodwill attaching to its Business, as defined. However, cl 8 did not survive termination of the agreement, and as the primary judge pointed out there was no equivalent requirement in the agreement by which would obtain the client information if terminated the agreement, either on notice or, relevantly for present purposes, immediately for cause. Clause 6.6 did not have that effect, the purpose of the agreement that both RIB and Nest had to sign being to transfer the client portfolio information from RIB to another AFSL holder.
Nest submitted that the primary judge made two erroneous findings in concluding that even if the client information was Confidential Information of Nest, RIB was required by law to take steps to ensure that the clients in the portfolio were protected, and thus did not breach cl 13.1 of the RIB-Nest Agreement. The first finding Nest challenged was that it was “not disputed” that RIB gave Nest’s client portfolio to ACIS to carry out a process of remediating the infected policies: at [55]. The second finding was that Nest had conceded that RIB’s disclosure to ACIS of the client portfolio information was not a breach of cl 13.1 to the extent the disclosure concerned the infected policies: at [64]. These findings were separately the subject of grounds 1(a) and 1(b) of the notice of appeal (ground 1(c) also took issue with an aspect of [64] of the reasons but was not separately addressed in Nest’s written or oral submissions).
It is the case that in [55] of the reasons, the primary judge described the purpose for which RIB disclosed the identity and policy details of Nest’s insured clients to ACIS as being to remediate the infected policies. Nest contended that remediation was not part of RIB’s pleaded case and indeed that RIB had expressly disclaimed it. Even assuming the correctness of that contention, what his Honour said at [55] about purpose did not relevantly bear on the balance of the reasoning. Rather, what his Honour was emphasising in that paragraph was the absence of any dispute that RIB had given the client portfolio information to ACIS. It is noteworthy in this respect that his Honour made no further reference to remediation in the reasons.
In relation to the second finding that the primary judge characterised as involving a concession on Nest’s part, RIB pointed to the following exchange between the primary judge and senior counsel for Nest as the source of his Honour’s understanding of Nest’s position:
“HIS HONOUR: But do you accept that conveying the information to someone else who hadn’t had their authorisation removed to correct the position of those insured who had obtained policies in circumstances where the insurer had been given false information to the knowledge of the authorised representative, do you accept that that’s not confidential?
BRAHAM: I accept that would be permitted by this agreement.
HIS HONOUR: Under what provision?
BRAHAM: Clause 13.1, the last four words [that is, “as required by law”].
HIS HONOUR: But you accept that the law required Resilium to do what? What did the law require Resilium to do?
BRAHAM: Nothing that it did do, by the way, but there are obligations under the Corporations Act that fall on Resilium to remediate customers who have been given poor advice, and it would have been appropriate, and indeed probably required, unless Resilium thought it was otherwise going to happen, in relation to the 44 policies that were affected, to advise those people they should seek other advice, because their policies might be impugned. Some of them will be, some of them won’t be, but that would have been appropriate, and indeed, permitted by the proviso to cl 13.1, but there’s not a jot of evidence that that was the reason for the provision of information to Milestone, not a jot, and indeed the evidence goes the other way. The exception to cl 13.1 wasn’t engaged in the facts that occurred. It could have been. In relation to a small part of that information, it could have been, and that’s one of the reasons why you have a valuation of the information that excludes the goodwill.”
Nest submitted on the appeal that it did not make a concession of the nature his Honour found in [64]. Rather, its submission in the above passage, which it maintained on the appeal, was that RIB had not established by its evidence that what it did was required by law.
In oral submissions, senior counsel for Nest accepted that bearing in mind RIB’s obligations in s 912A of the Corporations Act, providing an authorised representative to clients immediately so as to ensure an orderly transfer might involve the performance of a legal obligation, but it did not follow that it was required by law; and if there were other ways to perform the legal obligation that did not involve contravening the promise in cl 13 then it could not be said that it was “required”. In the present case, where RIB executives had originally invited Mr Nguyen to consider who he wanted to sell the business to, RIB could not establish that the course it subsequently adopted (providing Nest’s client portfolio to another authorised representative) was required by law, absent evidence from one of those executives to the effect that there was no other option.
I do not accept that argument. On 19 November 2020, RIB revoked Nest’s status as its authorised representative without notice and for cause. It is the case that immediately upon terminating the agreement, RIB offered Nest an opportunity to consider selling in the first instance. However, in that same conversation Mr Castanelli emphasised that RIB could not accept Nest’s behaviour and would not put its AFSL “and all those who depend upon it at risk”; and by the following day RIB had rejected Mr Nguyen’s preferred replacement.
It did not follow from the initial offer of that opportunity that RIB was not required by law to act in the manner that it did. The email record of the conversation between Mr Nguyen and Mr Hastie on 20 November 2020 (the following day) made clear that RIB, as licensee, had the obligation to “ensure client’s (sic) needs are met and the appropriate level of advice is given”. In circumstances where it was on notice (at that time) of 44 policies that were affected by Nest’s misconduct, and with the process of renewals shortly to start, it was not possible to isolate the “infected policies” from the other policies in terms of RIB’s obligations. As the primary judge stated at [64] in relation to the infected policies, RIB had “no choice but to act to protect those insureds”. That same reasoning applied to other insureds for whom RIB had obtained insurance with Nest as its agent. The grounds raising these issues should be dismissed.
Nest took issue with the primary judge’s finding at [82] that any loss caused to Nest in terms of the impairment of the sale value of its client portfolio was “properly to be viewed as having been caused by Nest’s own dishonest conduct, not RIB’s steps taken to assuage its effect”. It submitted in writing that this conclusion seemed to arise from his Honour’s finding that in so far as RIB was required by law to remediate the infected policies, the true cause of any loss arising from that remediation was Nest’s conduct. Nest submitted that if it succeeded on grounds 3(a) and 3(b), then this conclusion could not survive as it was premised on that finding. For the reasons given above I would dismiss those grounds. Accordingly, I also reject this argument.
Nest also took issue with the primary judge’s conclusion that the evidence did not support a finding that the loss of confidentiality caused the loss of the value of its client portfolio. It submitted that this conclusion rested in part on Postcode being able to recover some of Nest’s clients in the period between November 2020 and October 2023, which ignored the following evidence:
the initial contemplation of both RIB and Nest that Nest could and would sell its portfolio;
the manner in which RIB notified Nest that ACIS would be taking over the portfolio, stating that ACIS would pay Nest 50% of all paid income generated from its client register for 12 months (with RIB withholding all amounts until such time as Nest had paid all instalments under the 2016 referral and allocation agreement); and
the cessation of any discussion about Nest being able to sell the portfolio upon RIB giving ACIS access to the client portfolio information on its broker management software (it being understood by everyone involved, Nest submitted, that once ACIS had access to that information Nest could not practicably sell anything).
Nest submitted that the fact that Mr Nguyen was able to reclaim some of Nest’s former customers said nothing about the loss to Nest in November 2020, when it lost the opportunity to sell the whole portfolio for its market value, as determined by the experts.
Specifically in relation to the expert evidence, Nest submitted that it was procedurally unfair for the primary judge to reject that evidence at [101] on the basis that Nest had not proved there was a market for a customer portfolio infected by misconduct. This argument was the focus of Nest’s oral submissions.
As the primary judge noted, Nest’s final formulation of its damages claim focused on “what is said to have flowed from the client list being published to [ACIS], with the attendant loss of confidentiality of its contents”: at [91]. His Honour summarised the questions that Nest asked its expert, Mr McGuinness, as follows at [93]:
“(1) What is the market value of the insurance policies brokered by Nest as of 19 November 2020?
(2) What is the market value of the Client Portfolio less those policies which were ‘recovered’ by Postcode?
(3) What is the market value of the Client Portfolio,
(a) excluding the infected policies; and
(b) excluding those policies not recovered and not infected?”
“(1) $2.33 million;
(2) $660,000;
(3) (a) $2.2 million; and
(b) $599,422.”
“[21] Prima facie if there is no cross-examination of an expert, (and indeed most witnesses), there is no basis for a Judge not to accept the unchallenged evidence. I say ‘prima facie’ because there are circumstances in which evidence in a report may be rejected or subject to criticism or doubt. This may occur where, for example, the report is ex facie illogical or inherently inconsistent; or where it is based on an incorrect or incomplete history; or where the assumptions on which it is founded are not established. However, in the absence of some such matters, there is no rational reason to not accept unchallenged evidence.
[22] The reports of the respondents’ two experts did not suffer from any of these deficiencies. Each recommended demolition and reconstruction. Mr Margo put many submissions to this Court as to why that was an unreasonable response to the problem. However, the matters Mr Margo put by way of submission should, in my opinion, have been put to the witnesses. As a matter of fairness, they should have been given the opportunity of answering criticisms of their views. As experience in conducting litigation frequently shows, cross-examination, far from eroding the expressed views, often strengthens them as the expert explains in more detail the reasoning process.”
“The principles governing the approach which a court should take when there has been a failure of proof by a party carrying the onus of establishing the extent of damage suffered as a result of breach of contract or tort were discussed in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237.
Examples of cases, similar to the present, where courts have declined to substitute guesswork for evidence, and have refused to award damages, where no basis for a rational assessment has been laid in the evidence, include Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23 and Newark Engineering (NZ) Ltd v Jenkin [1980] 1 NZLR 504.
As Deane J observed in The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 118-119, the limitations of the curial process, or the nature of the subject matter in question, often mean that the task of assessing damages involves a pragmatic exercise of a kind traditionally left to the good sense of a jury. Where, however, what is involved is the valuation of the goodwill of a business, and the plaintiff fails to adduce either reliable evidence of the trading results of the business, or evidence as to how one goes about valuing such a business, then there is an absence of the raw material to which good sense may be applied. Justice does not dictate that, in such a case, a figure should be plucked out of the air.”
I propose the following orders:
The appeal is dismissed.
The appellant is to pay the respondent’s costs of the appeal.
FREE JA**:** I agree with Mitchelmore JA.
**********
Nest Insurance Consult Pty Ltd
Resilium Insurance Broking Pty Ltd [2025] NSWCA 221
(2014) 251 CLR 640
(2015) 256 CLR 104
(1977) 16 ALR 23
(1991) 174 CLR 64
Appeal dismissed. The appellant is to pay the respondent’s costs of the appeal: [82].
Secondly, in selecting a multiplier, the experts did not consider “the obvious impact the discovered misconduct of Nest would almost inevitably have had on the assessment by a buyer of what they would be prepared to pay for this Client Portfolio”: at [101]. His Honour stated at [101] (footnotes omitted):
The absence of an equivalent requirement to cl 8.2 when RIB terminated the RIB-Nest Agreement told against Nest’s contention that, contrary to the primary judge’s finding at [75], the client portfolio information was its information. So also did cl 6.4, which also applied following termination and required Nest, if requested by RIB, to “provide all reasonable assistance to [RIB] in the orderly transfer of the Authorisation, functions and operations provided in accordance with this agreement to another service provider or to [RIB] itself”. As the primary judge stated, “reasonable assistance in the orderly transfer of the … functions and operations provided” would include the provision of Nest’s client portfolio information. Nest submitted in its Reply that the obligation in cl 6.4 was not inconsistent with RIB being required to keep the client portfolio information confidential, but that was not the primary judge’s point. His Honour’s point was that the content of cl 6.4 was inconsistent with that information being Nest’s confidential information: at [77].
It otherwise did not follow from Nest retaining “ownership of the goodwill attaching to the Business including goodwill developed by the Authorised Representative in carrying on the Business in accordance with this agreement” under cl 8.1 that Nest’s client portfolio information must be Confidential Information. As RIB submitted, cl 8.1 provided protection to Nest by preventing RIB from redistributing Nest’s clients during the currency of the agreement. The clause certainly does not operate to convert what was not otherwise Confidential Information into information of that character.
His Honour did not err in finding that the information that RIB provided to ACIS regarding Nest’s client portfolio, following its termination of the RIB-Nest Agreement, was not Confidential Information the use and disclosure of which put RIB in breach of cl 13.1 of the RIB-Nest Agreement. The grounds of appeal raising this issue should be dismissed.