The former directors and executives of a failed tech retailer have been declined leave for the legal action against their insurers to continue.
The insurers, which included
Allianz Australia Insurance,
QBE Underwriting,
Chubb Insurance Australia, and
Berkley Insurance Australia, were caught up in the case, filed by Ferrier Hodgson, receiver of Dick Smith Holdings (DSHE), against eight former directors and executives of the failed tech company.
The case, filed in conjunction with DSHE’s two largest creditors, National Australia Bank (NAB) and HSBC, alleged the defendants of breach of duty by failing to implement an adequate system related to rebates and management,
ARN reported.
The insurers were included in the action against Dick Smith CEO Nick Abboud, Michael Potts, Phillip Cave, Robert Murray, William Wavish, Lorna Raine, Robert Ishak, and Jamie Tomlinson in hopes that the banks would secure priority for any resulting insurance payout for the Dick Smith bosses.
However, the NSW Supreme Court judged that the inclusion of the insurers in the proceedings “will not improve the position of DSHE, NAB, or HSBC in the event that there are competing claims for the fruits of these policies,” and that such a move would also clash with an impending class action by the collapsed company’s shareholders against the directors and executives.
“The first party to have its claim determined (whether by judgment, award or settlement) will prevail,” Justice James Stevenson was quoted as saying by
ARN.
The plaintiffs – Ferrier Hodgson, NAB, and HSBC – were also ordered by the court to pay the legal costs of the insurers’ representatives, the report said.
“In my opinion the appropriate order is that the plaintiffs pay the costs of each of the insurers in the usual way,” Stevenson said. “I will consider the question of indemnity costs once I have received submissions on that question.”
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