Hanover insurer files appeal to adjourn September trial date

Mark Hotchin. Photo / NZPA

An insurance company in a $2 million stoush with Hanover Group is attempting to appeal a High Court decision.

Hanover, which failed in 2008, causing substantial losses to depositors, is fighting to get $2 million out of QBE Insurance International.

The company had an insurance policy with QBE to cover some legal costs, including those incurred while Hanover was being investigated by regulators such as the Securities Commission (which became the Financial Markets Authority).

While Hanover is making a claim against QBE for the $2 million, the insurer says it is not liable, because the company did not disclose to QBE that two Hanover directors - Mark Hotchin and former chief executive Kerry Finnigan - were personally duped by a Ponzi scheme in 2002.

Hanover, in turn, is arguing it was not required to disclose this because it was not "material".

Both sides are set to argue this issue in court during a week-long trial in September.

However, lawyers for both parties appeared before Justice Forrest Miller in Auckland last week where QBE was given leave to file an amended statement of defence.

In this amended statement, QBE argues it is not liable for Hanover's claim because the company did not disclose "that it was in financial difficulties" when it renewed the insurance policy in 2007, Justice Miller said.

QBE says this amounts to a material non-disclosure and according to Justice Miller the allegations are understood to mirror those made by the FMA in its proceedings against Hanover.

However, Justice Miller declined the insurer's application to adjourn the September trial so both sets of arguments could be heard at the same time.

The judge said it was important that Hanover knew as soon as possible what its position was with respect to insurance cover. As it stands, the second set of arguments are expected to be heard sometime next year.

But QBE's lawyer, Michael Ring, QC, told the Herald on Friday he had filed leave to appeal this decision, which the High Court confirmed.

If leave to appeal is granted, QBE will have a chance to re-argue that the September trial should be adjourned.