A decision for a case in which a former client sought to take action against insurers for failed financial advisers Vestar, has been reserved by a High court judge.
Compensation is being sought from QBE Insurance Ltd which provided Vestar's professional indemnity insurance by the former client, a trust, which invested an undisclosed sum with Vestar. The client appealed for it in a test case before the High Court at New Plymouth.
The court was informed by the trust that money had been lost by it which was invested by Vestar in a number of collapsed or troubled finance companies including Bridgecorp and Capital and Merchant.
Furthermore, the trust confirmed that it had requested Vestar for a secure and low-risk investment portfolio and QBE was accountable to pay compensation for Vestar’s careless management and advice.
It should be noted that Vestar, which is now known as FP North, is facing liquidation.
However, Associate Judge David Abbott was informed by lawyers for QBE that Vestar's insurance policy with QBE was never intended to cover such claims and QBE was not liable to pay the claim.
Thus the decision was reserved by Judge Abbott.
QBE will be added as a co-defendant with Vestar in civil cases, if the judge finds in favor of the trust.
However, a case could still go ahead against Vestar's directors and investment committee, if in case judge finds in favor of QBE.