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Court rules JLT class action to proceed

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The NSW Supreme Court has ruled a dispute between JLT and local governments over insurance cover should proceed as a class action, with a trial scheduled for October.

Justice David Hammerschlag last week rejected JLT’s request for the case to be discontinued as a representative action. The ruling also outlined a preliminary list of questions for consideration at the trial and highlighted that the operation of a scheme Deed will be at the heart of the case.

The Richmond Valley Council began the action on behalf of 12 NSW councils in 2018, alleging JLT breached its broker duties and arranged cover “at less advantageous rates than were available”, earned commissions while in a position of conflict and that group members suffered loss and damage.

JLT says it didn’t act as an insurance broker for the group as its role and obligations were determined by the Deed, under which the Statewide NSW local government liability scheme was established in 1994.

“When fairly looked at” cover arranged was not less advantageous and councils suffered no loss or damage, it says.

Justice Hammerschlag says a summary and analysis of documents lodged shows the proceedings are “entirely appropriate” to be brought as a class action.

“JLT’s business practices, in the context of Statewide, were the same with respect to Richmond as they were with respect to each member of the group,” he says.

Richmond also alleges there was a separate broking services contract and an “implied term” to exercise reasonable care and skill in providing broking services and making recommendations.

JLT maintains its contractual relationship with Richmond and the group members “in respect of the provision of insurance broking services” is governed by the Deed and there’s no scope for any separate contract to be implied.

“What will be material is whether, having regard to the way JLT conducted itself, (in respect of which there seems to be little dispute), the terms of the broking services contracts (if established), and the effect of the Deed, JLT owed to the group the obligations and duties which they assert,” Justice Hammerschlag says.

“In this context, it is not suggested that there is any relevant difference between JLT’s position vis-a-vis Richmond and its position vis-a-vis any other member of the group.”

The court transcript says Statewide “is not an insurer, but the arrangements may be thought to mimic insurance”.

Justice Hammerschlag says the trial is set to start on October 11, with “perhaps a little generous” 25 days allocated.

JLT was acquired by Marsh & McLennan in 2019.

The court decision is available here.