Ashmere Cove Pty Ltd v Beekink (No 2)

In the matter of Ashmere Cove Pty Ltd v Beekink (No 2), the former investors in a registered management scheme brought proceedings against the ex-directors of Knightsbridge Managed Funds Ltd (KMF), the company itself, and sought to join its insurers as respondents. The former directors are Peter Cornelius Beekink, Hersh Solomon Majteles, and Gregory Phillip Gaunt. KMF was the responsible entity for the Clifton Partners Finance Mortgage Scheme, a registered management scheme that involved making loans secured by mortgages over property. The investors allege that KMF breached its fiduciary duties and statutory obligations in the management of the Scheme. The company was covered by a Professional Indemnity Insurance Policy during the relevant period, but the insurers have declined to provide indemnity on the basis of an exclusion clause in the policy. The liquidator of KMF is not prepared to contest the insurers’ refusal to indemnify. The investors seek a declaration that the insurers are liable to indemnify the company.

The primary legal issues that the court needed to address were whether the insurers could be joined as respondents and whether the investors could obtain a declaration against the insurers that would prevent them from contesting any claim for indemnity by the liquidator following a judgment against the company. The court found that the insurers could be joined as respondents because the declaration obtained by the investors against the insurers would not legally prevent the insurers from contesting any claim for indemnity by the liquidator following a judgment against the company. The court also found that the investors had a sufficient interest in the proceedings to seek a declaration against the insurers. The court held that the insurers' exclusion clause did not apply to the claims made by the investors, and that the insurers were liable to indemnify the company.

The court allowed the insurers to be joined as respondents and ordered that the investors have leave to proceed against the company. The court also ordered that the insurers file and serve their defences by a specified date and that the investors file and serve any reply by another specified date. The directions hearing was adjourned to a later date. The court's decision ensures that the investors can pursue their claims against the ex-directors and the company, and that the insurers are held liable for their obligations under the Professional Indemnity Insurance Policy.