The Federal Court has again struck down an application by class action plaintiffs to access confidential insurance documents held by a respondent.

Law firm Allens says the court’s recent decision, which involves a shareholder lawsuit against the company that owns the Dreamworld theme park in Queensland, showed such applications would be rejected if it is for the purpose of lining up a litigation strategy.

Allens says there is now “a growing body of case law that supports the proposition that class action applicants are unlikely to be able to obtain documents from a respondent (or insurer) concerning the respondent's insurance position for the purposes of informing litigation strategy, mediation or settlement”.

“Furthermore, a condition precedent in litigation funding arrangements requiring applicants to obtain access to a respondent's insurance policies, and the potential termination of litigation funding if access is not granted, will not hold sway with the courts when considering whether to grant access to a respondent's insurance policies.”

Shareholders in the Dreamworld class action had submitted to the court they needed access to the insurance documents of Ardent Leisure to decide if it was commercially viable for the lawsuit to proceed.

Access to the documents would also allow them to conduct the litigation in a proportionate and efficient manner, as well as enhance the prospects of a favourable settlement for plaintiffs.

The shareholders are suing Ardent Leisure as the owner of Dreamworld, alleging misleading or deceptive representations about safety standards caused them to suffer financially when the share price fell. Dreamworld remains closed, four years after an incident in one of its rides killed four patrons.

In April the Federal Court had struck down a similar application made by another class action involving customers who had bought motor warranty products from Davantage.

The plaintiffs also submitted they needed access to the insurance documents in order to assess if it made commercial sense for them to press on with the legal action.

Clyde and Co Partner Gareth Horne told insuranceNEWS.com.au the court has “effectively drawn a line in the sand” by rejecting the application.

“The decision levels the playing field somewhat, by limiting the ability of complainants to obtain an undue forensic advantage in litigation simply because the defendant has an insurance policy in place,” he said.