Prosperity alleged that the harm it suffered was in the form of the loss of a chance to obtain or negotiate an alternative insurance policy on terms that would have minimised its liability in the circumstances. The trial judge accepted that Prosperity had lost an opportunity to procure insurance on more favourable terms, but emphasised the need for Prosperity to prove that such loss was of some value.
“The possibility that Prosperity could have and would have obtained cover that meant that only one deductible would have been applied to the Westpoint claims was at best speculative and (did) not satisfy the threshold needed to assess Prosperity’s damages as loss of a chance,” said Justice Ball.
Prosperity then appealed the decision, but the NSW Court of Appeal has now unanimously found that Prosperity failed to establish that its loss of opportunity constituted a loss capable of being valued.
According to the Court there was insufficient evidence as to what Prosperity would have done had it known that its policy did not offer cover on the terms it wanted.
“The message from this decision is that damages do not necessarily flow from every negligent act or omission of an insurance broker,” said the Grace Cooper Ward Lawyers report.
“It is for the client to prove that the negligent advice has caused loss or damage. The client must be able to prove that, properly advised, it would have chosen a different policy, if necessary, was prepared to pay a higher premium, and an alternative policy was available.”