A New South Wales court has drawn a sharp line on insurance brokers’ duties over client data and confidentiality after a business split triggered by misconduct.
In a decision handed down on Oct. 7, the New South Wales Court of Appeal dismissed claims brought by Nest Insurance Consult Pty Ltd against Resilium Insurance Broking Pty Ltd, following the fallout from a terminated brokerage agreement. The ruling, which comes after years of legal wrangling, clarifies how insurance brokers must handle sensitive client information and comply with regulatory obligations when a relationship ends under a cloud.
Nest Insurance Consult Pty Ltd (Nest) had operated as an authorised representative under Resilium Insurance Broking Pty Ltd’s (RIB) Australian Financial Services Licence (AFSL), providing general insurance broking services. The relationship soured in November 2020, when RIB discovered that Nest had engaged in misconduct. According to court documents, Nest had knowingly provided false information to insurers – such as incorrect post codes and inaccurate details about drivers – when arranging commercial insurance policies. This misconduct affected at least 74 insurance policies.
RIB responded by terminating the agreement for cause and revoking Nest’s status as its authorised representative. At the time of termination, Nest’s book included 754 clients and 1,095 policies. In the immediate aftermath, RIB provided access to Nest’s client portfolio – essentially, the details of all those clients and policies – to another authorised representative, Milestone GI Pty Ltd, trading as Australian Consolidated Insurance Services (ACIS), using RIB’s broker management software.
Nest took the matter to court, alleging that RIB’s disclosure of the client portfolio to ACIS breached the confidentiality clause in their agreement. Clause 13 of the RIB-Nest Agreement required each party to keep the other’s confidential information secret and not use or disclose it except as necessary to perform the agreement or as required by law. Nest argued that by handing over its client list, RIB had deprived it of the opportunity to sell the portfolio at market value, and sought damages.
The primary judge was not persuaded. The court found that the client portfolio information was not Nest’s “Confidential Information” as defined in the agreement. Even if it were, the judge ruled, RIB’s disclosure was not a breach because RIB was required to take the steps it did by reason of its statutory obligations as an AFSL holder. The judge also determined that any loss Nest suffered was a direct result of its own misconduct, not RIB’s actions, and that Nest had failed to prove the amount of any loss.
Nest appealed, challenging every major conclusion of the lower court. But the Court of Appeal, with Justices Mitchelmore, Bell, and Free presiding, upheld the original decision. The appellate court agreed that the client portfolio was not Nest’s confidential information within the meaning of the contract, especially given the principal-agent relationship and the regulatory context. The court also found that RIB’s disclosure of the information to ACIS was justified by its statutory obligations to clients and to the regulator. All grounds of appeal were dismissed, and Nest was ordered to pay RIB’s costs.
For insurance professionals, the case is a clear signal: when serious misconduct is uncovered, the regulatory duties of an AFSL holder can override contractual confidentiality claims. The ruling underscores the importance of robust compliance and transparency in managing client data, especially in the wake of termination for cause.
