Campbell Wallis Moule & Co Pty Ltd & Ors v Ce Heath Underwriting & Insurance (Australia) PTy Ltd

The parties to this matter before the High Court of Australia were Campbell Wallis Moule & Co Pty Ltd and others (the applicants) and C.E. Heath Underwriting & Insurance (Australia) Pty Ltd and others (the respondents). The dispute concerned whether insurers are obliged to promptly decide whether to admit or deny liability to indemnify upon receiving relevant information, or if they can continue to control litigation based on the insured's assent.

The central legal issue before the court was whether an insurer, having received all relevant information concerning its liability to indemnify, must then make a timely decision regarding that liability. The applicants argued that the Victorian Court of Appeal erred in holding that the underwriters' conduct of the litigation was solely attributable to the insured's assent, rather than a contractual right under the policy. This, they contended, rejected the proposition that there is a point after which an insurer must decide on its liability, and that if such a duty existed, it had been breached in this case.

The applicants submitted that the Court of Appeal's decision allowed insurers to indefinitely control litigation by relying on the insured's initial assent, even after all relevant information was available. They argued that this created a general principle where insurers could preserve their position pending further inquiry without a time limit for making a decision on indemnity. The applicants contended that the Court of Appeal's reasoning meant the underwriters could have returned control of the defence to the insured at any point, including on the eve of trial or even after a verdict, without having made an election regarding their liability.