The High Court of New Zealand's recent decision in the
Bridgecorp Case1 may have serious consequences for
Australian directors seeking to rely on directors' and
officers' insurance policies (D&O policies) to fund their
defence costs in civil and criminal proceedings. The High Court
found in the case that a statutory charge existed in favour of a
potential claimant over monies payable to directors under a D&O
policy. The decision has resulted in the insurer of the D&O
policy being unable to advance monies to New Zealand directors for
the directors' defence costs.
In light of the risk that the High Court's decision may be
followed in Australian states and territories which have similar
legislation, Australian directors and company officers should
ensure that they have adequate cover for all likely claims and
defence costs under their insurance policies.
