In the matter of Reed Constructions Australia Pty Ltd (in Liquidation) - Walley v Chubb Insurance Australia Ltd

In the matter of Reed Constructions Australia Pty Ltd (in Liquidation), liquidators acting on behalf of the insolvent company brought a claim against a director for insolvent trading. Chubb Insurance Australia Ltd, the director's Directors and Officers (D&O) insurer, was not joined to the proceedings. The director entered into a personal insolvency agreement, and the liquidators agreed to only enforce any judgment against the proceeds of the insurance policy. The insurer did not seek to intervene in the proceedings. The insurer argued that it should be joined to the proceedings pursuant to the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). The insurer also submitted that there was no evidence of a dispute between itself and the insured director, and that there were improved prospects of obtaining a costs order against the insurer. The court considered whether the insurer should be joined to the proceedings, and whether the liquidators should pay the costs of the insurer and the insured separately. The court held that the insurer should not be joined to the proceedings, as there was no evidence of a dispute between the insurer and the insured director, and it was foreign to the court's discretion to join the insurer. The court also held that the liquidators should only pay one set of costs, as there was no possibility of conflict between the successful separately represented parties. The court applied the principles set out in Opes Prime Stockbroking Ltd (in liq) v Stevens [2014] NSWSC 659 and DSHE Holdings v Abboud [2017] NSWSC 579, and Local Democracy Matters Inc v Infrastructure NSW (No 2) [2019] NSWCA 118. The application for the insurer to be joined to the proceedings was refused, and the liquidators were ordered to pay one set of costs.