A decision of the New Zealand High Court last year cast doubt on
whether directors could rely on D&O policies to fund their
defence costs. It was held that civil claimants held the priority
interest in Directors' and Officers' liability cover
(D&O) under a statutory charge, and could prevent company
directors from accessing the insurance funds to pay defence
This case created uncertainty in Australia because several
states, including New South Wales, have very similar legislation to
the provisions that created the charge over the policy in New
In an attempt to clarify the issue, the NSW Supreme Court has
been asked to consider a policy for the Centro Property Group,
which collapsed nearly four years ago following the Board's
failure to disclose about $5.7 billion of debt.
A major Australian corporate insurer recently filed an
application with the Court seeking declarations to clarify whether
shareholders claiming against Centro in a class action have a
priority claim on the D&O policy. The Court is expected to
clarify how section 6 of the Law Reform (Miscellaneous
Provisions) Act 1946 (NSW) might apply to the insurance
The Centro shareholders' class action is currently before
the Federal Court sitting in Melbourne, with claims estimated to
exceed $200 million.
Winner - EOWA Employer of Choice for Women Citation 2009, 2010
Winner - Australasian Law Awards Gold Employer of Choice 2011
Finalist - ALB Australasian Law Awards 2008, 2010 and 2011 (Best
Winner - BRW Client Choice Awards 2009 and 2010 - Best Australian
Law Firm (revenue less than $50m)
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).