The Great Southern legal action that will determine whether directors’ and officers’ liability insurance (D&O) can be used to fund the defence of company officers and directors has been postponed till March.

The case, in the NSW Court of Appeal, was scheduled to begin at the end of January but Justice Robert McDougall has scheduled a directions hearing on February 27 and ordered the case begin on March 19 and run for three days.

The case stems from a class action being heard in the Victorian Supreme Court in which some 22,000 investors are seeking redress for the $1.8 billion collapse of the managed investment scheme that grew timber and raised cattle.

A group of 2400 former cattle and woodlot owners who had their investments converted into Great Southern shares just before the company collapsed took legal action to prevent Great Southern’s D&O insurers applying the policies to pay for the directors’ and officers’ defence in the larger class action.

A group of insurers including Chubb, the main policy provider, Allianz, Axis, Chartis, Liberty Mutual, Wesfarmers and QBE then took action in the NSW Supreme Court to clear up the issue of whether D&O can be applied to defence in such cases.

The waters around D&O were muddied by the 2011 Bridgecorp case, where the New Zealand High Court found D&O policy funds could not be applied to directors and officers facing action from creditors or investors where claims were likely to swamp the D&O cover.

That finding was overturned, but may face appeal. Either way insurers seem determined to use the NSW case to clarify the Australian situation.

Meanwhile, the Great Southern class action continues in Melbourne with more than 40 days of evidence already heard. The case will run till March 20 after which Justice Clyde Croft will prepare his judgement.