New Zealand: Court refuses application for disclosure of insurance policy

The High Court has confirmed that a defendant is not required to provide or discover details of any insurance it holds

A defendant to a civil proceeding, particularly a defendant who is alleged to have acted negligently, will often hold liability insurance that provides cover for the damage that is being claimed. More often than not, that defendant and the insurer will want to keep the details of the insurance confidential. On the other hand, a plaintiff might want to know the details of a defendant's financial position to assess the merits of continuing to pursue that defendant or settling.

Historically, the courts in New Zealand, Australia and England have held that a plaintiff does not have a right to obtain information about a defendant's financial position, unless there is a real risk that the defendant's assets are being or are about to be dissipated. The courts have also held that the terms of an insurance policy are not relevant to the issues in a negligence proceeding, and a defendant is not required to disclose an insurance policy during the discovery process.

These principles were recently raised and fully argued in the High Court in Walker v Forbes [2017] NZHC 2694. The High Court concluded there is no reason to overturn well-established principles, and re-affirmed that a defendant in a civil proceeding does not need to disclose its insurance policy.

The application to the High Court for disclosure of insurance policy

The issue came up in a long-running proceeding in the High Court involving Property Ventures Limited (PVL), which was put into liquidation during the global financial crisis. The proceeding was brought by the liquidators of PVL and a number of PVL subsidiaries against the former directors of those companies, as well as against the companies' auditors and valuers. The liquidators were being funded in the proceeding by LPF Group, a litigation funder.

Amongst other things, the liquidators alleged that the directors allowed PVL and its subsidiaries to enter into property developments and financial obligations they knew could not be performed, which caused significant losses to investors and lenders. The liquidators alleged such actions breached various sections of the Companies Act 1993, as well as fiduciary duties the directors owed to the PVL companies.

The liquidators settled with and discontinued against the valuers and the auditors. Only the directors remained. The proceeding was scheduled for a 12 week trial.

The liquidators then learned that one of the directors held an insurance policy that might provide cover for his liability in the proceeding. They considered that full knowledge of the director's insurance position would assist them in further settlement negotiations. The director refused to provide any details of his insurance, and the liquidators applied for discovery of the insurance policy. They also applied for the same information by way of pre-commencement discovery for a proceeding they said they intended to commence against the director's insurer under s 9 of the Law Reform Act 1936.

The insurance policy is not relevant

Documents are relevant and discoverable in a proceeding if they relate to issues raised by the pleadings that have been filed. The High Court saw no reason to modify or change this established principle.

There was no issue raised in the liquidators' claim against the director regarding the director's insurance. For this reason, the director's insurance policy was neither relevant nor discoverable. The Court noted the application amounted to an attempt to require disclosure of an aspect of the director's financial position, but the liquidators did not have any right to obtain this information in the circumstances of the case. The Court also said the liquidators and their litigation funder must make their own assessment on their views of the merits of the claim, and whatever other information they can glean, to determine whether it is worthwhile pursuing the director to judgment.

"It follows that I do not consider there are any policy factors that would justify a shift from the established principle that the issues raised by the pleadings remain the touchstone of relevance for the purposes of discovery."

No proposed proceeding against the insurer

The plaintiffs also sought discovery of the details of the insurance cover on the basis that they may wish to bring a claim directly against the insurer under s 9 of the Law Reform Act 1936.

The Court decided not to exercise its discretion to order disclosure for this purpose at the late stage of the proceeding. It noted the policy was already subject to a charge under s 9, the insurer was aware of the liquidators' claims, and there was no indication there was any issue regarding cover. The Court also considered that the liquidators were not genuinely considering a claim against the director's insurer, and that their real motive for seeking the insurance policy was for other purposes, including to aid them in settlement negotiations with the director.


The liquidators' application for disclosure of the insurance policy was dismissed.

The judgment is a thorough re-statement of the applicable principles based on a review of New Zealand, Australian and English case law and following detailed argument from two experienced Queen's Counsel. In summary, a defendant's insurance policy and details are not generally relevant to issues in a civil proceeding, and are not required to be disclosed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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