Former Resilium AR battles over clients
A former Resilium authorised representative that had its agreement terminated following insurer concerns over motor policy details is claiming a breach of client portfolio obligations in a dispute before the NSW Supreme Court.
The matter is listed for a directions hearing on October 15, but the court has this month ordered the firm, Nest Insurance Consult, to provide security of $400,000 for potential costs it could face if the decision goes against it, given its financial situation.
Nest held a Corporate Authorised Representative Agreement with Resilium, and then from June 30 last year with Resilium Insurance Broking (RIB). It also held a Referral and Allocation Agreement dated July 20 2016 with Resilium.
Justice James Stevenson says RIB terminated the 2020 Corporate Authorised Representative agreement on November 19 last year after an insurer for motor policies identified about 40 instances where the garaged address was wrongly stated to be in a country area as opposed to a metropolitan location.
“Evidently, the insurer was of the view that the postcode was deliberately misstated so as to lower the likely premium,” Justice Stevenson says.
“Notwithstanding the existence of the postcode issue, Nest does not contend in these proceedings that RIB’s termination of the 2020 Corporate Authorised Representative Agreement was wrongful.”
The court document says Nest does contend that the termination of the Referral and Allocation Agreement in late 2019 was wrongful.
The firm maintains it owned the goodwill attached to its business, including “confidential” client lists, data and information in relation to the policies it brokered.
The former AR alleges that following termination of the relevant agreements, Resilium provided the confidential information to another broker and “aided” that broker to use the information, in a breach of obligations that caused loss to Nest.
The firm estimates the loss of value of the business of Nest at $3.1 million and loss of past and future profits from commission and fee revenues of $1.1 million. It also makes separate claims totalling about $270,000.
Nest also alleges Resilium parties engaged in misleading and deceptive conduct by representing that the entities receiving its broking services, using the Resilium Australian Financial Services Licence, were Nest’s clients or customers.
“Nest alleges that, but for the making of these representations, it would not have entered the relevant agreements with the Resilium parties and that it has thereby suffered loss and damage,” Justice Stevenson said.
Preliminary hearings related to the security have centred on whether Nest would be able to pay the Resilium parties’ costs if its case is unsuccessful.
The judgment says Nest’s fiscal 2021 documents include a profit and loss account that shows a net loss of $52,560, while the balance sheet shows net assets of $925,433, of which $805,275 comprises non-current assets represented by two loans.
Justice Stevenson has ruled security should be lodged and has set out a four-tranche schedule for Nest. If necessary, court proceedings would be stayed until compliance with the order.