Sharechat Logo

Fight for Bridgecorp's $20M insurance cover hits the appeal court

Wednesday 5th September 2012

Text too small?

The battle for Bridgecorp's $20 million insurance cover hit the Court of Appeal today, with the failed lender's receivers arguing their claim should trump legal fees when the pay-out is made.

The former Bridgecorp directors Peter Steigrad, Bruce Davidson and Gary Urwin are appealing a ruling in the High Court last year that blocked access to the D&O policy to cover their defence costs.

Another appeal testing similar ground, involving Chartis New Zealand and former Feltex Carpets shareholder Eric Houghton, is being heard at the same time. Houghton is leading a class suit against the failed carpetmaker, which had indemnity cover with Chartis and wants guidance following the Bridgecorp ruling.

Counsel for the receiver, Murray Tingey, told Justices Mark O'Regan, Terence Arnold and Rhys Harrison in Wellington the structure of the Bridgecorp directors & officers' liability policy meant defence costs ranked behind a potential claim on liability and couldn't be drawn on.

Tingey argued the full amount should come to the receivers. By pooling the policy's limit, rather than divvying up how much could be allocated to defence costs and how much to liability, secured creditors had priority.

"When those directors came to claim their costs, the liability limit was exhausted by the charge, so the insurer can say we're not going to pay this," Tingey said. "They chose to take a policy with composite (pooling) - the reason they may have done that was for the benefit of the company, but that's just what the bargain is."

Michael Ring QC, counsel for Chartis, told the court it wasn't an either/or proposition, because "defence costs cover are fundamental" to the policy contract. The defence cover is designed to either prevent legal liability, or minimise it, with anything left over to go to a claimant.

Alan Galbraith QC, counsel for the former Feltex directors, said the obligation between the insurer and the insured party would be breached if defence costs couldn't be claimed, and would "increase exposure of the insurer" and "change the contract entitlements for the insured."

The hearing is set down for two days and is proceeding.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

AIA June 2020 Monthly Traffic Update and July 2020 Preview
PCT - Delivering on strategy underpins strong operating result
KFL - August 2020 monthly update
BRM - August 2020 monthly update
MLN - August 2020 monthly update
Further COVID-19 Restrictions at SkyCity’s New Zealand Properties
FY20 results guidance met, Results date, Banking Facility
Sky sells OSB assets to NEP NZ, secures 10 year partnership
NZX fully operational - announcement re COVID-19
Heartland Market Update

IRG See IRG research reports