Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited

Miller & Associates Insurance Broking Pty Ltd (Miller) and BMW Australia Finance Limited (BMW) were the parties involved in a dispute before the High Court of Australia. The core of the disagreement concerned whether Miller, an insurance broker, had breached its duty of care to BMW, a finance company, by failing to advise BMW of the need for comprehensive motor vehicle insurance for a vehicle financed under a novated lease agreement. BMW had suffered a loss when the vehicle was stolen and uninsured.

The High Court was required to determine whether Miller owed a duty of care to BMW in relation to the provision of advice concerning insurance for the financed vehicle. Specifically, the Court considered the scope of the duty of care owed by an insurance broker to a financier in the context of a novated lease arrangement, and whether the existing contractual relationship between the parties, or the circumstances surrounding it, gave rise to such a duty. The Court also had to consider whether, if a duty of care was owed, Miller had breached that duty by failing to advise BMW about the necessity of comprehensive insurance.

In its reasoning, the High Court affirmed that a duty of care can arise in circumstances where a party voluntarily assumes a role that requires them to exercise skill and care, and where it is foreseeable that the other party would rely on that assumption. The Court analysed the relationship between Miller and BMW, noting that while there was no direct contractual relationship between them concerning the insurance advice, Miller's role as the broker arranging the finance and insurance for the novated lease created a situation where it was foreseeable that BMW would rely on Miller to ensure appropriate insurance was in place. The Court found that Miller had assumed a responsibility to advise BMW on the insurance aspects of the transaction, and that its failure to advise on the need for comprehensive insurance fell short of the standard of care expected of a reasonably competent insurance broker in such circumstances.

The High Court allowed the appeal, finding that Miller had breached its duty of care to BMW. The matter was remitted to the trial judge for the assessment of damages.