CBL collapse: PwC tries to eject claims

Accounting firm fears total sought could hit hundreds of millions

Accounting firm PwC is attempting to strike out what it has described as “vexatious” claims potentially totalling hundreds of millions of dollars after being sued by CBL Insurance’s liquidators.

CBL Corporation collapsed in February 2018 with a market value of $747 million for the NZX-listed company, leading to litigation from creditors, regulators and shareholders.

CBL Corporation and CBL Insurance were both placed into liquidation by the High Court in 2018.

Liquidators Kare Johnstone and Andrew Grenfell, of specialist advisory and restructuring firm McGrathNicol, filed claims against several groups in December last year, including PricewaterhouseCoopers, and appointed actuaries Grant MacKay and Paul Rhodes.

The liquidators accuse MacKay and Rhodes, a partner at PwC, of breaching their contract and being careless in their duties to CBL.

Yesterday, Justice Ian Gault heard from Mark O’Brien QC, who is representing PwC, MacKay and Rhodes.

He said the liquidators’ claims against MacKay and Rhodes should be struck out because the contract between PwC and CBL Insurance had a clause not to sue individuals.

O’Brien also sought to strike out those claims against PwC which were above the contractual cap, which, he added, the liquidators were bound by.

He told Justice Gault if the judge didn’t do so then the liquidators would be “pursuing a claim . . . well into the hundreds of millions”.

“I’m not suggesting the claim is frivolous but it certainly is vexatious in the sense it’s contractually impermissible,” O’Brien said.

CBL Insurance’s former CEO and managing director Peter Harris is also a defendant in the claims by the liquidators.

The hearing is expected to continue today.

There are four sets of civil cases before the High Court over CBL’s collapse, including one brought by the Financial Markets Authority, the liquidators and two proceedings in the form of shareholder class actions.

The group of civil proceedings are also running concurrently to a criminal case being prosecuted by the Serious Fraud Office against Harris and a co-defendant, who has interim name suppression.