A company liquidator has failed to make a case that three Lloyd’s syndicates are liable for claims relating to an insolvency.

Simon Thorn, liquidator of Clear Skies Corporation, pursued the trio under the NSW Civil Liability (Third Party Claims Against Insurers) Act, which allows a claimant to recover from an insurer that stands in the place of an insured person.

The NSW Supreme Court must agree to the proceedings being brought and can refuse if the insurer can disclaim liability.  

The underwriters said their policy excluded any claim connected with the company’s insolvency, and breach of duty claims were not notified within the policy period.

The court this month refused the liquidator’s application to claim against Hardy Underwriting Agencies as managing agent for Syndicate HDU382, Liberty Managing Agency for Syndicate 4473, and Asta Managing Agency for Everest Syndicate 2768.

Mr Thorn originally named Dual Australia, as agent of the underwriters, and flagged a negligence claim against Gow-Gates as Clear Skies’ former insurance broker.

He sought to claim against the underwriters on a management liability policy in force from June 2019 to June 2020, saying Clear Skies director Robert Price and “shadow director” Charles Orren failed to stop the company trading while insolvent, incurring debts of $2.56 million, and that they breached their directors’ duties.  

Judge Scott Nixon agreed with the underwriters that the policy excluded claims connected with insolvency. He said even if breach of duty claims were made during the period of insurance, they would be excluded because they related to Clear Skies’ insolvency. 

Read the judgment here.