20 In Mercedes Holdings (No 6) at [59], Jacobson J concluded that if the proceedings as against the then settling respondents were not discontinued, it seemed unlikely that any of the remaining funds under the directors’ and officers’ insurance policy would be available to meet a judgment in the applicants’ favour if they succeeded in these proceeding. That is the policy which covers Mr Kyling and Mr Price. The evidence before me supports a similar conclusion in relation to any judgment obtained against Mr Kyling and Mr Price.
21 In particular, I note the evidence that there have been and will continue to be multiple substantial claims upon the policy for defence costs, as a result of other litigation including proceedings brought by the Australian Securities and Investments Commission against former directors of MSFIM in the Supreme Court of Queensland. In short, there appears to be a very high risk that the applicants, if successful against Mr Kyling and Mr Price, will have a Pyrrhic victory.
22 There is a potential argument that the cover available under the policy is the subject of a statutory charge, with the effect that payment of defence costs should not reduce the pool of insurance funds that would otherwise have been available to meet claims in respect of which a charge has arisen: BFSL 2007 Limited v Steigrad [2013] NZSC 156. A similar argument was rejected by the New South Wales Court of Appeal in Chubb Insurance Co of Australia Ltd v Moore (2013) 302 ALR 101; [2013] NSWCA 212, albeit the Court of Appeal decision was delivered before that of the New Zealand Supreme Court. I accept the applicants’ submission that the prospects of this argument do not affect the reasonableness of the proposed discontinuance having regard to the likely expense of agitating it including, quite
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In a nut shell.. Nor
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