Whether a cover provider owes clients a duty of loyalty remained unresolved
The High Court of New Zealand dismissed a lawyer's claim against his insurer, finding he sued years after the deadline had passed.
In McGuire v AIG Insurance New Zealand Ltd [2026] NZHC 1955, the court granted AIG Insurance New Zealand Ltd (AIG) summary judgment, a ruling that ends a case without a full trial, after deciding that every claim was out of time.
The court said the claims, in negligence, breach of contract, and breach of fiduciary duty (a duty to act loyally in another's interests), all arose on February 17, 2010, the day the insurer stopped funding the man's defence in a disciplinary matter. Under s. 4(1) of the Limitation Act 1950, claims of that kind had to be brought within six years, giving him until February 17, 2016. He did not file until October 21, 2025, adding the contract claim in December 2025.
That Act did not directly cover the fiduciary claim, but the court held that a later statute, the Limitation Act 2010, allowed the same six-year cut-off to apply to it because it arose on the same date.
The insurer had also argued that the claims were hopeless regardless of timing, but the court rejected that argument. It said the relationship between insurer and insured was "not inherently fiduciary," yet the limited evidence before it could not rule out whether the insurer owed the man fiduciary, negligence, or contractual duties. Neither the insurance policy nor a December 20, 2011, settlement, in which he agreed to release the insurer for $5,000, gave a "complete answer" to his claims.
The dispute arose while the lawyer held professional indemnity insurance with the insurer covering 2009 and 2010. After a law society laid misconduct charges against the man before a disciplinary tribunal in late 2009, the insurer appointed a lawyer to run his defence in his name. When he rejected that lawyer's advice, the insurer told him on February 17, 2010, that it would "no longer fund the defence of this claim." He said the loss of funding forced him to pay for his own defence and led to the cancellation of his legal aid contract later that year. The misconduct charges were later withdrawn.
Satisfied that none of the claims could succeed, the court entered judgment for the insurer under the High Court Rules and treated its alternative request to strike out the case as unnecessary. It left the question of costs to be decided later, directing the insurer to file submissions within 10 working days if the parties could not agree.
