DMS Maritime Pty Limited
v Royal & Sun Alliance Insurance Plc [2018] QSC
303.
Key Point:
- When an insurer denies liability for a claim, or allows its
insured to resolve a potentially insured loss against a third
party, it loses control of the process. When this occurs, a Court
will allow an insured significant discretion as to the terms on how
it resolves the third party claim.
Background:
The plaintiff was a ship builder that had a contract with the
Commonwealth to design, manufacture and supply Navy patrol boats,
plus provide the government with service support for a 15-year
period. On 11 August 2014, one of the boats, the HMAS
Bundaberg, was destroyed by fire.
Pursuant to the contract, the plaintiff became liable to
indemnify the Commonwealth against "... any loss or damage to
the [Bundaberg]" and also to "promptly replace or
otherwise make good any loss of ... the [Bundaberg]".
There was no dispute that the insurer had insured the plaintiff
