The NSW Supreme Court has rejected a bank’s request for access to the professional indemnity (PI) policy of a company it is suing.

The court says it is not in the interests of justice for the confidential document to be disclosed.

Commonwealth Bank sought details of the policy so it could decide whether legal action is worth pursuing. It argued access is in the public interest.

Justice Michael Ball says although this may help the bank consider whether to sue, it is more likely to assist in settlement negotiations.

The bank would not have to discount the amount it will settle for to take account of the possibility it will receive less from a court judgement, because any judgement would not be recoverable.

Commonwealth Bank would enjoy a tactical advantage from knowing about the insurance and the defendant and its insurers would suffer a corresponding disadvantage.

“It is for reasons such as this that the insurance arrangements of a defendant are generally regarded as confidential,” the judge said.

In the case of Commonwealth Bank v ACN 076 848 112, formerly known as Colliers International Consultancy and Valuation, the bank alleges the company and its employee Andrew Willsford were negligent and engaged in misleading and deceptive conduct over the valuation in 2006 of a residential development in Airlie Beach, Queensland.

The bank is claiming a $98 million shortfall on loans after receivers sold the development in 2010.

ACN 076 848 112 has a deed of company arrangement with its creditors under which the bank is limited to recovering its loss from the proceeds of any PI policy held by the company.

The company’s legal defence costs will be paid under the policy and its (unnamed) insurers are defending the claim.