Solicitors:
Quinn Emanuel Urquhart & Sullivan - Plaintiff
Herbert Smith Freehills - Defendant
File Number(s): 2018/371447
[2]
JUDGMENT
HIS HONOUR: On 16 April 2021, after a fairly lengthy contest, I identified a series of questions appropriate to go to initial trial and directed the parties to cooperate with respect to the final formulation of those questions: see Richmond Valley Council v JLT Risk Solutions Pty Ltd [2021] NSWSC 383 (the first judgment). The matter is fixed for its initial trial to commence on 11 October 2021.
There has been cooperation but regrettably, although perhaps predictably, the parties have not reached final agreement.
Before dealing with their differences, it is appropriate to observe that the Merck order [1] process is not to be a vehicle for a party: to promote questions which, irrespective of their inutility, are framed in terms intended to produce an answer in its favour and, for that reason, provide it with some perceived tactical advantage; to promote questions (even if inutile) because it believes that it might get some perceived tactical advantage simply by the sheer weight of the number of questions which are to go to initial trial; or to resist questions of real utility because it apprehends that they may be answered adversely to it.
The common questions which the parties have agreed, and the three differences which divide them (marked in bold and underlined), are:
Question 1: During the Relevant Period, did JLT hold itself out in the Renewal Reports that it issued to Richmond and group members as:
(a) being one of the largest insurance brokers in Australia and the world;
(b) possessed of the expertise to deliver the most comprehensive range of insurance and risk solution products and services available to local government authorities across Australia; and/or
(c) capable of ensuring that local councils receive a well-designed insurance programme at a competitive premium cost?
Question 2: Did JLT hold itself out in the Renewal Reports and Financial Services Guides that it issued to Richmond and each group member as being a subscriber to the Code of Practice of the National Insurance Brokers Association at all material times during the Relevant Period?
Question 3: During the Relevant Period, did JLT's conduct by:
(a) issuing insurance declarations, renewal reports, summaries of insurances, financial services guides and invoices for Property and/or Public Liability and Professional Indemnity insurance to Richmond and each group member; and
(b) accepting authorisation forms and payment of those invoices from Richmond and each Group Member;
give rise in each case to a contract between JLT on the one hand, and the relevant local council on the other, an implied term of which was that JLT would exercise reasonable care and skill in:
(c) designing and providing advice with respect to its annual insurance programme and placing or arranging its property and/or public liability and professional indemnity insurance through Statewide; and
(d) advising or recommending that it obtain or renew their property and/or public liability and professional indemnity insurance through Statewide?
Question 4: During the Relevant Period, did JLT by reason of the course of conduct in:
(a) issuing insurance declarations, renewal reports, summaries of insurances, financial services guides and invoices for Property and/or Public Liability and Professional Indemnity insurance to Richmond and each group member;
(b) accepting authorisation forms and payment of those invoices from Richmond and each group member,; and
(c) placing or arranging Richmond and each group member's Property and/or Public Liability and Professional Indemnity insurance,
owe Richmond and each group member a fiduciary duty:
(d) to refrain from pursuing or advancing its own interests in circumstances where there existed a conflict, or significant possibility of conflict, between its own interests and those of Richmond or each group member;
(e) to refrain from using its position or knowledge resulting from its position as an insurance broker so as to obtain a benefit for itself or a third party or to cause detriment to Richmond or a group member (as the case may be)?
Question 5: Did a conflict exist between JLT's own financial interests in earning and continuing to earn fees and commissions, for or in connection with, services it provided to Statewide Mutual and the interests of Richmond and each group member in obtaining suitable property cover and/or liability and professional indemnity cover at the best premium rates that were reasonably available to each of them in the market?
Question 6: In:
(a) issuing insurance declarations, renewal reports, summaries of insurances, financial services guides and invoices for property and/or public liability and professional indemnity cover to Richmond and each group member;
(b) accepting authorisation forms and payment of those invoices from Richmond and each group member,; and
(c) placing or arranging Richmond and each group member's Property and/or Public Liability and Professional Indemnity insurance,
did JLT breach any fiduciary duties by:
(d) pursuing or advancing its own interests in earning or continuing to earn fees or commissions; or
(e) using its position or knowledge resulting from its position for its own financial benefit and to the detriment of Richmond and each group member?
Question 7: Is each question identified above common for Richmond and all Group Members?
Question 7 is proposed by the defendant and opposed by the plaintiff. I will deal with it first because it can be disposed of summarily.
It is not a trial question but an attempt, expressly and inappropriately, to reserve to the defendant an entitlement to cavil before the trial judge with all of the rulings already made, and require her or him to permit that process.
Additionally, it is entirely inutile. The ultimate determination of what questions are determined at the trial is in the hands of the trial judge anyway. I made this clear in paragraph [10] of the first judgment.
I turn then to proposed questions 4(c) and 6(c), which are put forward by the plaintiff and resisted by the defendant.
A significant common question to go to trial is whether the defendant was in the position of a fiduciary to the plaintiff and the group members by virtue of its relationship with them, one aspect of which is its dealings with them in connection with obtaining cover for their property and/or public liability and professional indemnity exposures.
The principal objection of the defendant to the inclusions sought by the plaintiff is that it says that it did not place or arrange insurance because of the nature of the arrangements it had with the plaintiff and the group members and because the Statewide arrangements were not actually insurance.
This is an unproductive semantic debate as to whether the proper descriptor of what the defendant did was placing or arranging (as opposed to, say, assisting the plaintiff and the group members with or facilitating) their property and/or public liability and professional indemnity insurance (as opposed to, say, protection or cover).
What the defendant did is not in dispute and it is not suggested that what it did relevantly differed as between the defendant on the one hand and the plaintiff or any group member on the other.
The significant issue is not the descriptor of what the defendant did, but the legal consequences which flow from its substance.
The plaintiff's insistence on contentious terminology is not productive. By the same token, the defendant appears to have made no attempt to formulate alternative wording which would satisfy it and facilitate the substance of the issue to be dealt with.
Question 7 will not go forward.
Questions 4 and 6 will each go forward with the following amendments:
1. there will be inserted at the end of the chapeau the following words: "doing one or more or all of";
2. the word "and" at the end of subparagraph (b) will be deleted;
3. subparagraph (c) will read: "providing such assistance as it did, to Richmond and each group member to obtain protection for their property and/or public liability and professional indemnity exposure".
Otherwise, the questions that will go forward will be as the parties have agreed.
I make orders accordingly.
The plaintiff is to prepare and send to my Associate Short Minutes of Order.
[3]
Endnote
After Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2009) 355 ALR 20
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Decision last updated: 09 June 2021