Steigrad v BFSL 2007 Ltd - [2013] NZCA 253

IN THE COURT OF APPEAL OF NEW ZEALAND

CA674/2011
[2013] NZCA 253

BETWEEN	PETER DAVID STEIGRAD Appellant
AND	BFSL 2007 LTD, BNL 2007 LTD, B2B BROKERS LTD, MONICE PROPERTIES LTD, BRIDGECORP CAPITAL LTD (ALL IN RECEIVERSHIP), BRIDGECORP INVESTMENTS LTD, POSEIDON LTD AND GOODMAN LTD (ALL IN LIQUIDATION) First Respondents
AND	BRIDGECORP LTD AND BRIDGECORP MANAGEMENT SERVICES LTD (BOTH IN RECEIVERSHIP AND LIQUIDATION) Second Respondents

CA842/2011
AND BETWEEN	CHARTIS INSURANCE NEW ZEALAND LTD First Appellant
AND	TIMOTHY ERNEST CORBETT SAUNDERS, SAMUEL JOHN MAGILL, JOHN MICHAEL FEENEY, PETER THOMAS, CRAIG EDGEWORTH HORROCKS AND PETER DAVID HUNTER Second Appellants
AND	ERIC MESERVE HOUGHTON Respondent

Hearing:	5 September 2012
Court:	O'Regan P, Arnold and Harrison JJ
Counsel:	B P Keene QC and J Anderson for Appellant in CA674/2011 M J Tingey and D J Friar for First and Second Respondents in CA674/2011 M G Ring QC and B J Burt for First Appellant in CA842/2011 A R Galbraith QC and A E Ferguson for Second Appellants in CA842/2011 A J Forbes QC and P A B Mills for Respondent in CA842/2011
Judgment:	20 December 2012 at 10 am
Reissued:	21 June 2013: see Minute (No. 2) of 15 March 2013
Effective date of Judgment:	20 December 2012

JUDGMENT OF THE COURT

CA674/2011
AThe appeal is allowed. The declaration made by the High Court is quashed.
BBridgecorp’s application for leave to adduce further evidence is dismissed.
CBridgecorp must pay costs to Mr Steigrad for a standard appeal on a band B basis together with an increase of 50 per cent to reflect the result of its application for leave and usual disbursements. We certify for two counsel.
CA842/2011
AThe following declaration is made:
Mr Houghton is not presently entitled pursuant to s 9 of the Law Reform Act 1936 to charge money payable by Chartis to Mr Saunders and his co-insured pursuant to a prospectus liability insurance policy in reimbursement of their defence costs incurred in defending a claim or claims brought against them by Mr Houghton and others.
BMr Houghton must pay costs to Chartis for a standard appeal on a band B basis together with usual disbursements. We certify for two counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Arnold and Harrison JJ)

Table of Contents

Para No
Introduction [1]
Background [2]

CA674/2011 [3]
CA842/2011  [7]
Section 9  [13]
Analysis  [18]
     (a)   Defence costs  [20]
(b)   Interference with contractual rights  [36]
     (c)   Conclusion  [43]
Application to adduce further evidence  [46]
Result  [54]

Introduction

These cases concern s 9 of the Law Reform Act 1936. Section 9(1) creates what it describes as a “charge” in favour of a third party on insurance monies paid or to be paid to indemnify an insured in respect of the insured’s liability to that third party. The two insurance policies in issue provide cover for liability incurred by the insured to third parties in specified circumstances and also provide for the reimbursement of the costs of defending any such third party claim. Both policies contain a single limit…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Steigrad v BFSL 2007 Ltd

Details

AGLC: Steigrad v BFSL 2007 Ltd [2013] NZCA 253
Case: [2013] NZCA 253
Decision Date: 20 December 2012 at 10 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard appeals in two related cases concerning the interpretation and application of Section 9 of the Law Reform Act 1936. The first case, Steigrad v BFSL 2007 Ltd, involved Peter Steigrad, a former director of Bridgecorp Ltd, appealing a High Court decision that prevented him from accessing insurance funds to cover his defence costs. The second case, Chartis Insurance New Zealand Ltd v Timothy Ernest Corbett Saunders, involved Chartis Insurance and several directors of Feltex Carpets Ltd challenging a similar High Court decision. The central issue in both cases was whether Section 9 of the Law Reform Act 1936, which creates a charge on insurance money payable to an insured party to satisfy their liability to a third party, also applies to insurance money used to cover the insured party's defence costs.

The Court of Appeal found that Section 9 does not apply to insurance monies payable for defence costs. The Court reasoned that the statutory charge is limited to money payable to discharge the insured's liability to a third party and does not extend to cover defence costs. Additionally, the Court held that Section 9 does not interfere with contractual rights, meaning that insurers are still obligated to reimburse insured parties for their defence costs as per the terms of their insurance policy.

In the Steigrad case, the Court of Appeal allowed the appeal, quashed the High Court's declaration, and dismissed Bridgecorp's application to adduce further evidence. Bridgecorp was ordered to pay costs to Mr. Steigrad for the appeal, with an increase of 50% to reflect the unsuccessful application for leave. In the Chartis case, the Court of Appeal made a declaration that Mr. Houghton was not entitled to charge money payable by Chartis to the directors in reimbursement of their defence costs. Chartis was ordered to pay costs to Mr. Saunders for the appeal, together with usual disbursements.

Orders