AON Risk Services Australia Limited v Australian National University

The High Court of Australia considered an appeal by AON Risk Services Australia Limited (AON) against a decision of the Australian National University (ANU). The dispute concerned AON's liability for professional negligence in advising ANU on its insurance arrangements, specifically in relation to a claim for workers' compensation benefits by an ANU employee. ANU alleged that AON failed to exercise reasonable care and skill in advising on the appropriate insurance cover, leading to a shortfall in benefits paid to the injured employee.

The central legal issue before the High Court was whether AON owed a duty of care to ANU in providing its insurance broking services, and if so, whether that duty had been breached. This involved determining the scope of the professional duty owed by an insurance broker to its client, particularly in circumstances where the client relies on the broker's expertise to navigate complex insurance and compensation schemes. The Court also had to consider the causation of loss, namely whether any breach of duty by AON directly caused the financial detriment suffered by ANU.

The High Court found that AON did owe a duty of care to ANU. The Court reasoned that the relationship between an insurance broker and its client is one of trust and confidence, where the client typically relies on the broker's specialised knowledge. This reliance gives rise to a duty to exercise reasonable care and skill in advising on and arranging appropriate insurance cover. The Court emphasised that the scope of this duty is determined by the specific circumstances of the retainer, including the client's instructions and the broker's undertaking. In this instance, AON's failure to adequately advise ANU on the implications of the relevant workers' compensation legislation for its insurance program was found to be a breach of that duty. The Court also found that this breach caused ANU to suffer loss.

The High Court dismissed AON's appeal, upholding the decision of the lower court.