On 9 December 2011, the New Zealand High Court held in Ruscoe v
Canterbury Policy Holders HC WN CIV 2011-485-1535 that a charge
under section 9(1) of the Law Reform Act 1936 (the
LRA) applied so as to give Canterbury first charge over
the proceeds of reinsurance. This follows the earlier New Zealand
High Court decision in Bridgecorp1, where it was held
that section 9 of the LRA prevented directors who were insured
under a D&O policy from accessing defence costs because a
charge had been placed over those proceeds.
Facts
The Applicants, the Liquidators of Western Pacific Insurance
Limited (Western Pacific) applied to the Court for
orders regarding the distribution of proceeds of reinsurance. The
Liquidators submitted that the proceeds were available to all
claimants and unsecured creditors. The Respondent, Canterbury
Policy Holders (Canterbury) contended that section
9(1) of the LRA applied so as to give them first charge over the
proceeds of reinsurance.
