AMP Financial Planning Pty Ltd v CGU Insurance Ltd

In the case of AMP Financial Planning Pty Ltd v CGU Insurance Ltd, the central dispute revolves around the obligations and liabilities of AMPFP under its insurance policies with CGU Insurance, specifically whether CGU is responsible for compensating AMPFP for settlements it made to investors, and whether CGU is liable for unpaid claims under the policies. The court was tasked with determining whether AMPFP could establish its liability to investors through admissible evidence and whether CGU was liable for damages of settlements made prior to any breach of the policies by CGU.

The court addressed two primary issues. Firstly, it was established that AMPFP must provide admissible evidence of its legal liability to investors, rather than relying solely on proof of settlements. The court found that settlements between AMPFP and investors did not constitute claims for civil liability as defined in the policies. The court rejected AMPFP's argument that requiring such proof would necessitate numerous separate trials, suggesting that a more manageable approach could involve suing for a declaration of rights in a few test cases.

Secondly, the court ruled that CGU was not liable for damages related to settlements made before any breach of the policies by CGU. The court referenced the principles in Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Limited, noting that while an insured party can recover reasonable settlement amounts as damages if the insurer breaches the contract, this does not apply to settlements made before any breach occurs. The court also dismissed AMPFP's claims of estoppel, waiver, or breaches of good faith by CGU as grounds for liability.

The court concluded that AMPFP failed to prove its liability to investors by admissible evidence, and therefore, CGU was not liable for payouts made prior to any breach. The issue of CGU's obligation to indemnify AMPFP for unpaid claims was adjourned for further submissions. Consequently, the proceeding was stood over to allow the parties to make additional submissions on this unresolved matter.