A question which Courts are often asked to consider is whether or not an insured should be compelled to produce its insurance policy. Sometimes a Court may direct production. Sometimes it may not.
The diagram below loosely places the types of applications for production against a scale of whether the application will succeed or not.
But nothing is set in concrete. Neither success nor failure should be taken for granted.
A recent decision of the NSW Supreme Court looked at this question in the context of a bank’s application for leave to proceed against an insured that had been placed into voluntary administration. The Bank’s claim against the insured was for slightly less than $100 million dollars.
Unsurprisingly, the Bank made a separate application for the production of that insured’s insurance policy. While the Court granted the bank leave to proceed against the insured, it did not give the bank access to the policy.
Why not? Here are some of the reasons.
Firstly the modern principles of case management did not necessarily extend to the production of an insurance policy where the policy was irrelevant to a question of fact in the proceedings.
Secondly, the production of the insurance policy gave the applicant bank a number of advantages outside the scope of the proceedings themselves and, consequently imposed a number of disadvantages upon the company in voluntary administration and its professional indemnity insurers.
Thirdly the production of the policy was relevant to the settlement of the case rather than its prosecution.
Sure, in the past Courts have directed that insurance policies be produced but, as this case demonstrates, any application for production has to link the need for production closely to the prosecution of the proceedings. Any connection beyond that may not be sufficient.
The name of the case is Commonwealth Bank of Australia v. ACN 076 848 112 Pty Limited [2015] NSW Supreme Court 666.