CATLIN AUSTRALIA PTY LTD V DIAMOND WORLD JEWELLERS PTY LTD

[2022] NSWCA 282, New South Wales Court of Appeal, Justice of Appeal Leeming, Justice of Appeal White and Justice of Appeal Mitchelmore, 21 December 2022

Insurance (property) – Theft of jewellers – Construction of stock records clause – Whether insurers in breach of duty of utmost good faith by failure to pay claim

DW, which operated a jewellery shop, was insured by Catlin. The policy covered all risks of physical loss and/or damage to goods at the premises, in the event of robbery. The measure of indemnity was “Cost Price, including tax where applicable”. The “stock records clause” required DW, in the event of a claim, to provide Catlin with “all available information including documentary evidence, whether these be official or unofficial, of all purchases, sales and other transactions of insured stock”. The “information in event of loss” required the assured, as a condition of indemnification, to give Catlin “such information and evidence as to the property lost or damaged and the circumstances of the loss or damage as the Underwriters may reasonably require and as may be in the insured’s power”. DW suffered a robbery when three masked offenders armed with knives and hammers threatened the staff, smashed six glass-topped showcases and stole stock which they put into bags. They escaped in a getaway vehicle driven by a fourth member of the gang. They were subsequently arrested and convicted, but most of the jewellery was not recovered. In addition to the stolen jewellery, DW asserted that some of the jewellery left behind in the cabinets by the robbers had been dented or scratched by the implements used to break the glass. Notice of the loss was given to Catlin. On the day following the robbery the shop was cleaned on the advice of DW’s broker, so that Catlin’s loss adjuster and DW’s loss assessor had been unable to inspect the damage. DW had not computerised its records and initially unable to provide the police or Catlin with a list of what had been stolen. The remaining jewellery in the damaged cabinets was melted down without Catlin’s authorisation so the gold and stones could be reused. Catlin offered $500,000 against a claim of $1,307,597.02.