NZ High Court decision could test dishonesty exclusions

Directors and Officers

Mainzeal Property v. Yan & Ors

This week, the New Zealand High Court awarded $36m in damages against directors of Mainzeal, once one of New Zealand’s leading property and construction companies, including former Prime Minister Dame Jenny Shipley. The damages are the highest awarded for reckless trading in New Zealand’s history.

The case raises a number of insurance issues, including the extent to which insurance cover might be relevant to the assessment of damages for breaches of the Companies Act, whether liability could be treated as one insured event, whether the limits of the cover will be sufficient for the directors to meet the judgment and whether the facts of the case – combined with an express finding that that the directors did not know Mainzeal’s failure would occur – will test dishonesty exclusions.

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