Steadfast Insurance Co Ltd v F and B Trading Co Pty Ltd

In *Steadfast Insurance Co Ltd v F and B Trading Co Pty Ltd*, the High Court of Australia considered a dispute between an insurer, Steadfast Insurance Co Ltd, and a policyholder, F and B Trading Co Pty Ltd. The core of the disagreement concerned the interpretation of a public liability insurance policy and whether it covered certain losses incurred by the policyholder.

The High Court was required to determine whether the policy provided indemnity for losses arising from the policyholder's liability to a third party, specifically in circumstances where the policyholder had entered into a settlement agreement with that third party. A key issue was whether the insurer's liability under the policy was discharged by the policyholder's failure to obtain the insurer's consent to the settlement, as stipulated in the policy terms.

The Court reasoned that the policy's conditions, particularly those requiring the insurer's consent to any settlement, were conditions precedent to the insurer's liability. The majority held that by settling with the third party without obtaining Steadfast's consent, F and B Trading Co Pty Ltd had breached a fundamental condition of the policy. This breach meant that the insurer was not liable to indemnify the policyholder for the amount paid in settlement. The legal principle applied was that an insured must comply with the express terms of the policy, including conditions relating to the conduct of claims and settlements, to maintain their right to indemnity.

The High Court allowed the appeal, setting aside the judgment of the Supreme Court of New South Wales and ordering that the plaintiff's (Steadfast Insurance Co Ltd) summons be dismissed.