Mainzeal & Ors v QBE - [2026] NZHC 2716

Dispute between liquidators of Mainzeal and insurer QBE as to insurance monies payable under D&O policy for damages for directors’ breach of duties (ordered by SC in 2023). Issue one whether $1M payable under extension (for Mr Yan as non-executive director) excluded by personal profit exclusion. Issue two whether QBE must indemnify Mainzeal for GST payable on receipt under s 5(13) GST Act and whether Mainzeal must structure its receipt so as not to incur GST liability.

Held: $1M under extension not within exclusion clause because of prescriptive and narrow requirements of clause; Mainzeal not indemnified for GST payable on receipt of insurance monies. Exclusion requires final judgment ‘determining’ insured committed wrongful act (breach of duty) intended to gain personal profit/advantage not legally entitled to and in fact gained which must be material to cause of action adjudicated – acts material to breach must intend to and in fact result in personal profit/advantage. SC judgment ‘final’ but HC and CA findings relevant if unchallenged, ‘in fact’ means evidentiary threshold not equivocal findings. No finding of personal profit/advantage in relevant breach period;  material to breach was directors’ failure to recognise risk without binding support/capital; limited actions to reduce risk; and obligations entered with no reasonable grounds of being honoured. HC held Yan benefitted from funds extracted but that state of affairs occurred prior to breach date, acts/omissions required under exclusion are distinct from existing state of affairs. GST indemnity only applies to ‘the insured’ meaning the insured claiming cover under policy, Mainzeal received payment as third-party claimant not as an ‘insured’. No duty to structure payment in tax-efficient manner, indemnity triggered by GST liability incurred by ‘the insured’ on receipt. Whether proposed two-step process realistic unnecessary to determine.