Nick Cooper.
There will be expressions of wrath, gnashing of teeth and beheading of slaves in the corridors of insurers this week after a judge ruled that two liquidators ordered to personally pay cost orders without recourse should be covered by their professional indemnity policies.
“On 22 December 2020, CGU formally declined to indemnify Messrs Cantone and Cooper.” Justice Jim Allsop.
The decision from Federal Court of Australia chief justice James Allsop means that unless their insurer appeals, South Australian-based liquidators Nick Cooper and Dominic Cantone won’t have to dig into their own pockets to pay 40 per cent of the legal expenses Adelaide Brighton Cement Limited (ABCL) incurred terminating a deed of company arrangement (DoCA) entered into by ABCL customer Concrete Supply Pty Ltd in late 2017.
It’s a matter of public record that over the nine year life of a Bulk Supply Agreement (BSA) between Concrete Supply and ABCL the former obtained approximately $32 million worth of concrete from ABCL and paid $20 million for it.
When ABCL discovered the discrepancy it immediately sought to recover what it deemed to be a debt.
Concrete Supply’s directors however informed ABCL that it constituted a rebate authorised by ABCL.
Ultimately it turned out that the difference was due to fraud by an employee of Adelaide Brighton (apparently without complicity of the Company).
In late 2017 Concrete Supply’s directors appointed Cantone and Cooper as voluntary administrators (VAs) and on December 21, 2017 a resolution was put at the second meeting that creditors execute a DoCA and appoint Cooper and Cantone as deed administrators.
At that meeting Cantone used his casting vote to push through the resolution despite ABCL’s opposition.
ABCL then commenced proceedings to have the DoCA terminated. Cooper and Cantone defended those proceedings, unsuccessfully as it turned out and ABCL then sought costs orders against them, specifying that Cooper and Cantone not be indemnified out of Concrete Supplies’ assets.
Justice Tony Besanko made orders in the form sought sought in July 2020 and Cooper and Cantone then turned to their professional indemnity insurer CGU, which advised them on December 22, 2020 that it had declined to indemnify them.
On April 1, 2021 Cooper and Cantone commenced the proceedings against their insurer that have culminated in the victory for insolvency practitioners outlined in Justice Allsop’s decision in Cantone v Insurance Australia Limited [2022] FCA 1009.
“It’s an important judgment for all Insolvency Practitioners,” Cooper said. “It’s good recognition that your professional indemnity policy covers you for adverse costs orders as well as straightforward negligence claims,” he said.
Further reading:
Worrells Duo Defending DoCA Decision
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