The NSW Supreme Court has been told of fictitious policies and embezzlement from the trust account of All Class Insurance Brokers.

Justice Richard White says $367,094 was held in the trust account when Darren Vardy was appointed liquidator of the Sydney company in April last year.

“There should have been a lot more,” he said. “The liquidator’s investigation has disclosed that an employee of the company embezzled premium funds that were paid to the company.”

Mr Vardy applied to the court for directions and advice for how to use the trust funds. 

Insurers had made claims for $1.87 million and premium funders had claims of $168,593.

Hollard, GT Insurance, Wesfarmers Insurance Premium Funding and Wesfarmers General Insurance were listed as interested parties claiming a share of the money.

Justice White ordered the liquidator to deal with the account under Corporations Act provisions for how financial services licensees deal with clients’ money.

Preference is given to insureds, who are entitled to receive money held on their behalf before any other payments are made. Preference is also given to anyone whose money was paid into the account in error.

The remaining funds will be distributed to 27 eligible creditor insurers and premium funders, as requested by Mr Vardy.

Justice White says the liquidator found genuine premiums and funding payments had gone into the trust account but there were also premiums paid by premium funders “in respect of fictitious insurance policies”.

All Class Insurance Brokers had told clients and funders the insurance had been arranged when this was not the case. 

There were also commissions that insurers did not authorise the company to deduct from premiums because the insurers had paid them separately.

The company also did not keep proper accounting records, making it hard for the liquidator to reconcile payments into the trust account.