MetLife Insurance Limited v Sandstrom

MetLife Insurance Limited appealed from a judgment of the Equity Division of the Supreme Court of New South Wales, which had found in favour of the respondent, Ms Sandstrom, an ex-police officer. Ms Sandstrom had claimed a total and permanent disability (TPD) payment under insurance policies issued by MetLife. The central dispute concerned whether MetLife had breached its contractual obligations to assess Ms Sandstrom's claim in good faith and to act fairly and reasonably in its assessment.

The court was required to determine whether MetLife had acted unfairly in its assessment of Ms Sandstrom's TPD claim. Specifically, the issues included whether it was fair for MetLife to rely on certain medical opinions that were adverse to Ms Sandstrom's claim, and whether MetLife had adequately taken into account the written submissions provided by Ms Sandstrom. The cumulative effect of MetLife's actions was central to the assessment of whether there was a lack of overall fairness in the handling of the claim.

The Court of Appeal, comprising Basten, Macfarlan and Meagher JJA, dismissed MetLife's appeal. The court found that MetLife had not acted fairly and reasonably in its assessment of the TPD claim. The court upheld the primary judge's decision that MetLife had breached its contractual obligations. The appeal court also addressed costs, dismissing MetLife's appeal and ordering MetLife to pay Ms Sandstrom's costs of the appeal. Leave was granted for Ms Sandstrom to cross-appeal the refusal of an indemnity costs order, but this cross-appeal was also dismissed, with Ms Sandstrom ordered to pay MetLife's costs of the cross-appeal.