The New Zealand Court of Appeal has rejected a legal action targeting the professional indemnity (PI) insurance of the broker to failed financier Bridgecorp.

Bridgecorp’s receiver had argued a $NZ20 million ($18.39 million) PI claim against a Lloyd’s syndicate should be heard in New Zealand rather than England.

The three Court of Appeal judges last week dismissed the appeal.

Bridgecorp collapsed in 2008 and its broker, Herbert Insurance Group, failed in 2011, with founder Grant Herbert jailed in October for theft and paying secret commissions.

Herbert Insurance had arranged lenders’ mortgage insurance for Bridgecorp. When the insurers refused to pay, receiver PricewaterhouseCoopers (PWC) went to the High Court to recover under Herbert’s PI policy with Lloyd’s syndicate MSI Corporate Capital.

The High Court agreed with the syndicate that the underwriter is located in England and any debt against it must be pursued there.

The receiver then went to the Court of Appeal.

Murray Tingey, for PWC, argued the policy is the most useful indicator of location, “in particular its provision for payment of the amount insured in New Zealand and that any disputes are governed by New Zealand law and New Zealand courts have exclusive jurisdiction”.

But Mike Ring QC, for the underwriter, claimed “the controlling factor is that the insurer resides in London”.

The judges say Herbert Insurance could sue the Lloyd’s syndicate in New Zealand, but if it won it would have to apply to the UK for any debt to be paid. There is no reason why Bridgecorp should be placed in a better position than the insured party.