No Tortious Duty of Good Faith

Abstract

In July 2006, District Court Judge Goldring delivered a judgment that caused the insurance industry concern. In Garcia v CGU Workers Compensation Pty Ltd (unreported, NSW D Ct, 14 July 2006) it was held that the insurers had breached a tortious duty of good faith it owed to the respondent by stopping the respondent's weekly workers' compensation payments. It was held that this duty of good faith, a novel tort, existed independently of the legislative workers' compensation scheme.

As expected, the decision was appealed and in CGU Workers Compensation Pty Ltd v Garcia [2007] NSWCA 193 (10 August 2007) the New South Wales Court of Appeal rejected the argument that the insurer owed a duty of good faith to the respondent as a worker entitled to compensation under the statutory scheme.