RICHMOND Valley Council’s involvement in a long-running class action against multinational insurance broker Jardine Lloyd Thompson Pty Ltd (JLT) has come to an end, with the NSW Supreme Court ruling in favour of JLT.
Richmond Valley Council began the NSW Supreme Court action on behalf of a number of councils in 2018, alleging JLT breached its broker duties and arranged cover at less advantageous rates than were available.
The class action was funded by leading global litigation funders Harbour Fund III LP, with legal services provided by Sydney-based law firm Quinn Emanuel Urquhart & Sullivan.
The Court found that JLT did not provide the alleged broking services, nor make the alleged recommendations.
Council’s General Manager Vaughan Macdonald said it was surprising to be told by the Court that JLT was not acting for Council and did not owe Council a fiduciary duty, given Council historically relied on JLT as a broker to test the market as indicated in its commentary and marketing documentation.
Mr Macdonald said many NSW councils would also be surprised to be told that.
He said although disappointed with the outcome, leadership on this issue was necessary for the benefit of all NSW ratepayers.
“We remain glad we joined forces with Mid-Western Regional Council and Parkes Shire Council to lead the action and shine a light on the conduct of JLT and, from what we hear in the industry, some of its practices have now changed as a result,” Mr Macdonald said.
“It was important to stand up for local government and we did that with 18 other NSW councils, however, the Court reached its decision and we accept it. We will not be appealing the judgment.”
In 2017, Council put its insurance out to tender, and obtained an instant saving of 53 per cent on the premium it was previously paying when using JLT’s services.
Council will continue to test the market for its insurance premiums, which provides a better understanding of the comparable prices on offer, as well as the quality of cover and the service being provided, which has proven superior under its new insurer Civic Risk Mutual.