By Monique Carroll, Partner
The Supreme Court of NSW Court of Appeal recently held in Nest Insurance Consult Pty Ltd v Resilium Insurance Broking Pty Ltd [2025] NSWCA 221 that, based on a contract between an AFSL holder and its authorised representative, the client information that the AFSL holder obtained through the operation of the authorised representative’s business was not protected as the confidential information of the authorised representative, and that the authorised representative only maintained the goodwill of the business during the term of the agreement.
Between 2016 and 2020, Nest Insurance Consult Pty Ltd (Nest) provided insurance brokerage services as an authorised representative of Resilium Insurance Broking Pty Ltd (RIB), who held an Australian financial services licence (AFSL). In 2020 RIB terminated its contract with Nest, and revoked Nest’s status as an authorised representative after discovering that Nest had engaged in misconduct. After termination RIB proceeded to provide Nest’s client list to another authorised representative without Nest’s consent or any compensation to it. RIB’s right to terminate the contract was not disputed.
Nest alleged that RIB breached the contract when it disclosed Nest’s client information to another authorised representative upon termination.
The contract defined Confidential Information in cl 16.2 as information or data relating to a party, or customers, of which the other party, became aware of in performing the agreement. Nest in the course of providing brokerage services would input client information into the RIB system. As this was the process by which RIB became aware of the client information, Nest submitted that the client information satisfied the cl 16.2 definition of Confidential Information.
Clause 13.1 required that each party keep confidential and not disclose ‘“the other party’s Confidential Information”, except as necessary to perform the agreement or as required by law.[1] Nest alleged that the information contained in its client list was Confidential Information as defined by the contract (cl 16.2), and that, in breach of cl 13.1, RIB failed to keep that client list confidential when it provided it to another authorised representative for use. Nest sought damages alleging that disclosure of the information had deprived it of the opportunity to sell the portfolio at market value.
Nest submitted that its interpretation of cl 13.1 was supported by a protection of goodwill provision (cl 8.1) which provided that Nest ‘retains ownership of the goodwill attaching to the Business including goodwill developed by [it] in carrying on the Business in accordance with this agreement’. ‘Nest submitted that if the information in question was not Confidential Information to which the obligation in cl 13.1 applied, Nest’s goodwill in relation to the Business would not be protected despite cl 8.1’.[2]
The primary judge accepted that the relevant agreement was one which intended to implement a business model under which, Nest, as the authorised representative, would have ownership of, and the goodwill in, its own business.[3]
Contrary to Nest’s submission, the primary judge found that the client information was RIB’s.[4]
Upholding the primary judge’s decision, the Court found that the client information obtained by Nest in the course of operating its business was not protected as Confidential Information of Nest, against RIB. At [56]-[58]:
The primary judge identified the primary difficulty with Nest’s construction at [73], namely, that the definition of Confidential Information in cl 16.2 of the RIB-Nest Agreement “is directed to protecting information which relates to one party from being disclosed by the other party who learns of it”. That notion in the definition is given emphasis in the terms of the obligation in cl 13.1 not to use “the other party’s Confidential Information” (emphasis added). As the primary judge stated, neither the definition in cl 16.2, nor the obligation in cl 13.1, is directed at information which relates to the receiving party or which is that party’s information.
The surrounding contractual and regulatory context is important in this respect. The RIB-Nest Agreement was the written notice required by s916A of the Corporations Act, by which RIB authorised Nest to provide the Authorised Financial Services “on its behalf” (cl 1.1, cl 1.3). Ultimately, as the holder of the AFSL, RIB was the broker on the policies that Nest arranged with its clients, and RIB was liable to those clients for Nest’s conduct as its authorised representative, whether or not Nest acted within the scope of its authority. As cl 1.5 stated, the relationship was one of principal and agent.
Against that background, Nest’s contention, that the information RIB held on its broker management software relating to the financial services that Nest was authorised to provide was Confidential Information of Nest because RIB became aware of that information upon Nest providing it, cannot be sustained…
The Court acknowledged that if Nest had given notice to terminate, cl 8.2 would have required RIB to ‘provide such consents as were reasonable and necessary to enable Nest to obtain an electronic copy of the Client Data from RIB’s software provider’ (‘Client Data’ being defined in cl 16.2 as ‘the information held by the Licensee on the Licensee’s broker management software relating to the Authorised Representative’s Business’[5]). Clause 8.2 was an ancillary clause to cl 8.1 which declared that Nest retained ownership of the goodwill attaching to its Business. Clause 8.1 did not survive termination, and no such protection of Client Data was provided for in the case of termination by RIB, the AFSL holder, as was the case.[6]
The Court went on to state that the absence of an equivalent to cl 8.2 if RIB were to terminate told against Nest’s contention that the client list was its information.[7]
Finally, the Court found that it, ‘did not follow from Nest retaining “ownership of the goodwill attaching to the Business including goodwill developed by the Authorised Representative in carrying on the Business in accordance with this agreement” under cl 8.1 that Nest’s client portfolio information must be Confidential Information. As RIB submitted, cl 8.1 provided protection to Nest by preventing RIB from redistributing Nest’s clients during the currency of the agreement. The clause certainly does not operate to convert what was not otherwise Confidential Information into information of that character’.[8]
It is important that authorised representatives are aware of the particular terms of their contracts with their respective AFSL holders.
The implications of the decision for contracts between AFSL holders and their authorised representatives containing similar clauses are:
Authorised representatives should be aware of the implications of the decision and understand whether additional steps are required to protect the goodwill in their client lists.
Please contact Monique Carroll if you wish to discuss further.
[1] Nest Insurance Consult Pty Ltd v Resilium Insurance Broking Pty Ltd [2025] NSWCA 221 (Appeal Judgment), [3].
[2] Appeal Judgment at [54].
[3] Resilium Pty Ltd v Nest Insurance Consult Pty Ltd [2024] NSWSC 1190 (Primary Judgment), [25] (Hammerschlag CJ).
[4] Primary Judgment at [78].
[5] Appeal Judgment at [27].
[6] Appeal Judgment at [60].
[7] Appeal Judgment at [61].
[8] Appeal Judgment at [62].
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