Federal Court hears Lehamn Bros appeal

By Staff Writer

Failed investment bank Lehman Brothers Australia will appeal against the Federal Court’s decision to allow a former council client to access the company’s insurance policies.

The matter will be heard before three judges in the Federal Court today.

Last week the court ruled that Wingiecarribee Shire Council was entitled to access the insurance policies of its former investment adviser Lehman Brothers.

The Council has been involved in a $4 million legal battle with Lehman Brother’s since 2007 over advice it received from Lehmans subsidiary, Grange Securities. Complications arose in September 2008, when the company went into voluntary administration.

In March 2009, Lehman’s administrators reported to creditors that there were three different insurers providing professional indemnity cover, which had the potential to provide a return to the Lehman Brother’s estate where claims of breach of professional duty fell within the terms of the cover.

The administrators did not provide detailed advice about which claims would be covered, prompting Wingecarribee to pursue the matter through the courts.

In his judgement Justice Rares said that as a litigant in the court, the council was entitled to know whether there was an insurance policy “to know in the interests of justice before it has to determine what it will do in Lehman Brothers’ second creditors meeting”.

“It is not the council’s fault that the accident of insolvency and administration has overtaken Lehman Brothers in the course of this litigation,” Justice Rares added.

Wingecarribee Shire Council is seeking to gain access to the contents of the insurance documents before the second creditors meeting, which is scheduled to be held on Wednesday.

Related Story: Win to Wingecarribee in battle against Lehman Bros

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