Richmond Valley Council v Jardine Lloyd Thompson Pty Ltd

[2019] NSWSC 126

Supreme Court

New South Wales

Medium Neutral Citation:	Richmond Valley Council v Jardine Lloyd Thompson Pty Ltd [2019] NSWSC 126
Hearing dates:	15 February 2019
Decision date:	21 February 2019
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Plaintiff to disclose to defendant identity of current group members; defendant’s applications otherwise refused
Catchwords:	CIVIL PROCEDURE – representative proceedings – group members – identifying – where group members are local government councils – where some group members have ongoing commercial relationships with defendant insurance broker   CIVIL PROCEDURE – representative proceedings – conduct of proceedings – whether plaintiff should disclose any insurance procured other than through defendant – whether direction should be made for service of plaintiff’s evidence
Legislation Cited:	Civil Procedure Act 2005 (NSW) Local Government Act 1993 (NSW)
Category:	Procedural and other rulings
Parties:	Richmond Valley Council (Plaintiff) Jardine Lloyd Thompson Pty Ltd (Defendant)
Representation:	Counsel: G K J Rich SC with R Yezerski (Plaintiff) I M Jackman SC with I J M Ahmed (Defendant)   Solicitors: Quinn Emanuel Urquhart & Sullivan (Plaintiff) Clayton Utz (Defendant)
File Number(s):	SC 2018/371447

Judgment

1. Richmond Valley Council (“RVC”) brings these proceedings under Pt 10 of the Civil Procedure Act 2005 (NSW) (“CPA”) on behalf of itself and group members identified in the Commercial List Statement.

2. Those group members are councils constituted by the Local Government Act 1993 (NSW):

1. to which the defendant, Jardine Lloyd Thompson Pty Ltd (“JLT”), provided insurance broking services between 1 January 2009 and 3 December 2018 (the “Relevant Period”);

2. that obtained Property and/or Public Liability and Professional Indemnity Insurance (“Insurance”) through the “NSW Local Government (Jardine Lloyd Thompson) Mutual Liability Scheme” (the “Scheme”); and

3. that have consented in writing to be Group Members for the purpose of s 159(2)(c) of the CPA.

3. These proceedings are, in effect, an “opt in” class action. That is because local government councils, being bodies corporate established for a public purpose by the law of a State, must by reason of s 159(2)(c) of the CPA, consent in writing to being group members.

4. RVC claims that:

1. JLT effected Insurance on behalf of RVC and other councils;

2. in so doing, JLT did not obtain Insurance with premiums as low as were reasonably available in the market;

3. JLT did not disclose its financial interest in earning fees and commissions; and

4. RVC, and the group members, have suffered damage as a result.

5. At a case conference on 15 February 2019, the following issues arose:

1. should RVC disclose to JLT the identity of the current group members; that is those councils for which JLT effected Insurance during the Relevant Period who have to date consented in writing to being group members?;

2. should RVC disclose to JLT for itself and for each group member the terms of any Insurance procured during the Relevant Period otherwise than through the Scheme?; and

3. should an order now be made specifying the time by which RVC is to serve its evidence?

6. It is common ground that, whatever may be the answer to these questions, JLT should file and serve its Commercial List Response by 13 March 2019.

7. My conclusion is that the answers to the questions set out at [5] are:

1. yes;

2. no; and

3. no.

Identification of members

8. By reason of s 157(1)(a) of the CPA, there must be at least six councils that are group members besides RVC itself, as representative proceedings may only be brought where seven or more persons have claims against the same person.

9. RVC has offered to disclose to JLT’s legal advisors the written consent of those councils who have agreed to being group members but only on the basis that those documents remain confidential and not be disclosed to JLT.

10. In their written submissions, Mr Rich SC and Mr Yezerski, who appeared for RVC, submitted that this was the appropriate because:

“…group members are not ordinarily required to identify themselves to the Defendant (at least, not prior to determination of the common issues), and also because, in this particular case, some of the group members have ongoing commercial relationships with the Defendant which they apprehend may be adversely affected by the revelation that they have consented to being group members.”

11. Their submissions continued:

“There are powerful policy reasons why the Court would not order the identification of all group members in the proceeding. The evidence of the Plaintiff’s solicitor is that the majority of the councils with whom her firm has spoken have expressed a reluctance to have their identity disclosed to the Defendant. Many councils have ongoing commercial relationships with the Defendant.

Further, the Plaintiff’s solicitor perceives that an identification order may have the effect of limiting the class size, as councils may not be prepared to opt in, or remain in the proceedings, if their identity must be disclosed. There is therefore a risk that the proposed order will have a stultifying effect on the representative proceeding.”

12. RVC’s solicitor, Ms Michelle Fox, has said in an affidavit that solicitors in her employ have spoken to a number of local council representatives who have said words to the effect:

“[T]here are commercial concerns that may arise if council’s involvement in the action is disclosed to JLT; and/or

council has ongoing commercial issues with JLT and therefore asks that the identity of council not be disclosed to JLT; and/or

council is thinking about joining the class action, however JLT is currently council’s broker and council doesn’t want JLT to know that it is considering participating in the action. The relationship between JLT and council, day-to-day, is very close; and/or

if council decides to participate in the class action, can council’s name be kept confidential?”

13. In none of those reported conversations is any council representative said to have stated, in terms, that a particular council considering opting out, or of not opting in to these proceedings by reason of its ongoing professional relationship with JLT. Accordingly, I see no reason to fear that making the direction sought would lead to stultification of these proceedings.

14. I accept that, in representative proceedings, ordinarily, the representative party is not called on to disclose the identity of group members.

15. Here the various allegations made in the Commercial List Statement (that JLT recommended that group members effect Insurance through the Scheme and so on) are particularised by reference only to dealings between RVC and JLT.

16. Those particulars suggest that the precise circumstances in which JLT gave advice to other group members may have differed. For example, the allegation as to what advice or recommendation JLT gave RVC and each group member is particularised by reference to oral representations made annually with representatives of RVC.

17. In those circumstances, I see substance in submissions made on behalf of JLT by Mr Jackman SC and Mr Ahmed that:

“It would facilitate the efficient and transparent conduct of the proceeding for the identity of the group members to be made clear, such that it is possible for JLT to make an assessment of whether the pleaded allegations are true, or what response to those allegations is necessary.”

18. It does appear that there may be ongoing commercial relationships between JLT and some group members. I do not see that as a reason to not disclose to JLT the identity of current group members. The relationships between those group members and JLT are arms-length commercial relationships that are surely sufficiently robust to be capable of efficient operation notwithstanding the subsistence of this litigation.

19. Accordingly I propose to make a direction that RVC disclose to JLT the identity of each current group member.

Provision of insurance information

20. At par C16 of the Commercial List Statement, RVC alleges that the amounts that it and each group member was required to pay to renew Insurance through the Scheme “exceeded the premium rates that were reasonably available from alternate underwriters or providers in the market”.

21. That allegation is particularised by reference only to RVC. The particulars show that in two years during the Relevant Period, when RVC procured Insurance through AON, rather than through JLT, the premiums were substantially less than when procured through JLT.

22. Mr Jackman submitted orally that JLT has reason to believe that, in the case of RVC, this was because during those years the Insurance effected through AON provided less extensive cover than that effected through JLT, and that this likely explains why premiums were lower.

23. Mr Jackman submitted that the terms of Insurance effected by RVC and the other group members during the Relevant Period otherwise than through the Scheme may well cast light on the question of whether it is appropriate that these claims be pursued by means of representative proceedings; and thus on the question of whether the Court should, pursuant to s 166 of the CPA, order that the proceedings no longer continue under Pt 10.

24. It may be that, in due course, the reason RVC and other group members were able to effect Insurance at premiums lower than those applicable to the Scheme will need to be investigated. However, as Mr Rich submitted, the question of whether premium rates in the Scheme exceeded those reasonably available from alternate underwriters and providers in the market will likely depend on what expert evidence RVC is able to deploy, as well as from RVC’s and group members’ own experience.

25. However that may be, I do not see that it is necessary for the efficient management of these proceedings that disclosure of the material sought by JLT be made at this stage of the proceedings.

26. If JLT is confident that the premiums it negotiated on behalf of RVC and the group members did not exceed rates reasonably available from alternate underwriters and providers in the market, it can no doubt simply deny the allegations in the Commercial List Statement.

RVC’s evidence

27. I see no justification in making a direction, at this stage, as to the time by which RVC must serve its evidence. That is matter that can be dealt with at the next directions hearing.

Orders

28. In those circumstances I make the following directions:

1. Direct that the plaintiff disclose to the defendant the identities of the current group members in the proceedings by 5pm on 25 February 2019.

2. Direct that the defendant file and serve a Commercial List Response by 13 March 2019.

3. Stand the matter over for further directions on 15 March 2019.

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Decision last updated: 21 February 2019