Section 6 and defence costs – NZ Supreme Court overturns Bridgecorp

Explore:  Australia New Zealand

On 12 July, Flashlight reported on the NSW Court of Appeal’s unanimous decision that in circumstances where a section 6 charge had been asserted on insurance moneys, that charge did not extend to insurance moneys payable in respect of defence costs. The decision made sense, was consistent with the NZ Court of Appeal’s Bridgecorp decision and the pending appeal to the Australian High Court seemed not to have great prospects.

However, on 23 December 2013, the NZ Supreme Court (that country’s highest court) overturned the appeal court’s decision (read a copy of the decision (pdf) in BFSL 2007 Ltd & Ors (In Liquidation) v Steigrad).

In New Zealand, a section 6 charge will apply to defence costs in costs inclusive policies. The Moore v Chubb appeal now has our attention. If the Australian High Court agrees with New Zealand’s most superior court, pressure for legislative reform must intensify.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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