Mecon Winsure Insurance Group is defending a decision to decline a civil construction business theft claim in a NSW Supreme Court dispute that hinges on non-disclosure of financial problems and links to criminal organisations.

The insurer declined cover under a Contractors Machinery & Plant Equipment Policy for a number of items that Elite Plant Hire (EPH) says were stolen on February 19, 2014.

Mecon says in a March 10, 2015 letter that the insured should have known it was relevant to disclose that the firm and other insured companies were in financial difficulties and had been placed into administration in 2013.

The letter, under the heading moral hazard, also says affidavits attest to the family of the EPH company director having had links with known criminal organisations.

EPH liquidators Jason Tang and Ozem Kassem, appointed in 2014, began the legal proceedings in 2018. The placing of EPH into external administration in August 2013 is disputed and they are seeking to have the claim upheld. The case is listed for hearing over four days starting May 18.

Justice James Stevenson this month ruled against an application by Mecon to amend its February 21, 2019 commercial list response to the case, saying the proposed changes “expand, very substantially the ambit of the insurer’s case” and create problems for the liquidators for the May 18 date.

“My conclusion was that it would not be fair to the liquidators to force this position upon them,” he says in a judgment.

Letters sent from the insurer’s solicitor last year say EPH obtained finance and engaged in contracts for services and labour with known criminal individuals and enterprises and outlaw motorcycle gangs.

Proposed court response changes would have included expanding the allegation of “involvement with known criminal individuals and enterprises” to allegations that EPH was being “extorted” by “criminal individuals or enterprises thereby causing the company financial instability”.

The proposed changes would also have raised the non-disclosure issue in connection with “other named insureds to the policy” besides EPH.

Justice Stevenson ruled four subpoenas issued at Mecon’s request should be set aside, including one addressed to the Police Commissioner that asked for the criminal records of 11 individuals named as having had some connection with EPH.

“As was submitted on behalf of the liquidators, this subpoena has all the hallmarks of a ‘fishing expedition’,” Justice Stevenson said.

The case is available here.