Catlin Australia Pty Ltd v Diamond World Jewellers Pty Ltd

Catlin Australia Pty Ltd appealed to the New South Wales Court of Appeal against a decision of the primary judge concerning a property insurance claim made by Diamond World Jewellers Pty Ltd. The dispute arose from the insurer's handling of a claim following a burglary, where the insurer had admitted liability for a portion of the loss but had not paid that admitted amount, instead seeking to determine the quantum of the entire claim.

The Court of Appeal was required to determine whether the primary judge erred in finding that the insurer had acted unreasonably and in bad faith by failing to pay the admitted portion of the claim and by its subsequent conduct in determining the overall quantum. A further issue concerned the construction of the insurance policy and whether the parties had correctly conducted the trial on the assumption that cover was contingent upon the insurer's opinion as to the quantum of the loss.

The Court of Appeal upheld the primary judge's findings. It reasoned that an insurer's obligation to pay an admitted portion of a claim is distinct from the determination of the quantum of the entire claim. The insurer's failure to pay the undisputed amount, coupled with its approach to assessing the full claim, was found to be unreasonable and indicative of bad faith. The Court also commented on the construction of the policy, suggesting that the parties' assumption regarding the insurer's opinion determining cover might have been an overly cautious approach, but ultimately did not alter the outcome given the findings of unreasonableness and bad faith.

The appeal was dismissed, and Catlin Australia Pty Ltd was ordered to pay the costs of the appeal.