Entitlement to directors’ and officers’ liability (D&O) policy proceeds will next be tested in the Great Southern action in the NSW Court of Appeal, with the Bridgecorp case in New Zealand now headed for the country’s highest court.

As widely expected, the receiver of the failed Bridgecorp property group last week sought leave to appeal to the Supreme Court of New Zealand after the Court of Appeal in December overturned the original Bridgecorp decision on D&O cover.

The Great Southern action, between a group of insurers led by Chubb and 2400 former cattle and woodlot owners, will be held in Sydney next month.

It will provide a ruling on whether a third-party claim on D&O policy proceeds can prevent directors and officers using the funds for defence costs.

The Australian action stems from a decision by the New Zealand High Court in 2011 that ruled D&O policy funds could not be applied to directors and officers facing action from creditors or investors where the third-party claims were likely to exceed the D&O cover.

The New Zealand decision affected Australian cases because of legislative similarities.