Insurance no safety net

THREE layers of insurance protection for a lawyer who acted as a director for collapsed property-fund manager Equititrust have been rendered useless against any lawsuit, a court has heard.

The testimony about the lack of protection is an example of disputes that can emerge in insurance covering directors or lawyers.

David Tucker, a founding partner of Tucker and Cowen, has said he suspected liquidators for Equititrust, a former Gold Coast property fund manager overseeing $250 million, were considering suing him.

The liquidators have been examining Mr Tucker’s involvement in a lucrative deal to buy out part of Equititrust’s former loan book. The sale happened roughly nine months after Mr Tucker departed as a board member of the fund manager in October 2011. His firm also ceased work for Equititrust.

Mr Tucker told the Bulletin he would strenuously defend any lawsuit and had not misused any information.

Transcripts obtained by the Bulletin also show Mr Tucker told a recent Federal Court public examination that insurers for three different policies had said they would decline any claim.

Equititrust had a directors and officer’s insurance policy with Liberty Mutual Insurance, which expired in November 2011. “Plainly, no notification could have been given about the matters the subject of this inquiry,” Mr Tucker told the hearing. He said he had given notice anyway and “the insurer has declined”.

Further, the policy covered about $6 million and the insurer had already spent most of it on defence costs on other matters, Mr Tucker said.

Another policy for Tucker and Cowen was with Lexon, an insurer for solicitors. But Mr Tucker said a change to policy in 2016 meant solicitors acting as directors were no longer covered. “Lexon politely drew my attention to the exception and politely declined,” he said.

“They are not indemnifying me, they are not paying your (liquidator lawyer’s) bills and certainly not mine.”

There was another top-up insurer for $8 million for the firm, but they had the same terms in their policy and told Mr Tucker “there’s an exclusion”.

A related court judgment also states that Mr Tucker had said he would file for bankruptcy if liquidators successfully sued him for even “a fraction” of a potential $20 million claim and insurance did not cover the matter.

National Insurance Brokers Association chief executive Dallas Booth said in general, claims were increasing for directors and officers insurance.

Disputes can occur about when claims were made, he said. Mr Booth also said such insurance was not generic, and whether the policy kicks in depends on terms and conditions.

Lexon declined to comment and Liberty did not respond to queries.