Huon Valley Council unable to recoup $330K from insurer: Court

The saga of a previous Board of Inquiry into a southern Tasmania council continues to roll on six years after its conclusion, with a court now ruling in favour of the council’s insurer.

An embattled southern Tasmanian council faces a potential financial hit of more than $300,000 after the Federal Court ruled its insurance policy costs did not cover costs levied by the state government for a previous investigation into council dysfunction.

Then Local Government Minister Peter Gutwein called the Board of Inquiry into Huon Valley Council in September 2015 after receiving “a number of serious complaints from the mayor and the majority of councillors on the council”.

The complaints related, among other concerns, to a breakdown in key relationships following the 2014 local government elections, especially between former mayor Peter Coad and general manager Simone Watson, Chief Justice James Allsop noted in his judgment.

The BoI resulted in seven ministerial directions to council to restore its governance – the entire council was subsequently sacked – and on April 5, 2017, Mr Gutwein ordered costs of $336,230 be borne by the council, to be paid in three annual instalments of $112,007.

Sacked Huon Valley Council Mayor Peter Coad standing on the banks of the Huon River after the announcement that the Huon Valley Council has been sacked Picture: LUKE BOWDEN

Council’s insurer Swiss Re International SE denied indemnity for the BoI costs, which council took to the Federal Court.

Council advanced several arguments as to why it should be indemnified for those costs, including that there was an “obvious drafting error” in the policy wherein it was supposed to read payment of fees “paid by the insured”, rather than “paid by the insurer”.

However, Chief Justice Allsop gave short shrift to this line of argument.

Huon Valley Council meeting picture of Huon Valley Mayor Peter Coad with General Manager Simone Watson. Picture: File

“The BoI costs were not fees, costs and associated expenses incurred by the insurer; the costs were imposed upon the insured after the ministerial direction,” he said.

“This forced the council to contend that there is an obvious drafting error in the definition.”

Chief Justice Allsop ruled that the answer to the question posted by the case, whether the policy indemnified council for the costs imposed on Huon Valley Council by Mr Gutwein, was that it did not.

Simone Watson General Manager. What may be the last Huon Valley Council Meeting at the council chambers in Huonville. Picture: NIKKI DAVIS-JONES

Council and the insurer will now prepare additional submissions as to “the future conduct of the proceeding, including as to costs”.

The decision caps a woeful period for the council, with Mayor Bec Enders resigning in March following months of community backlash following a perceived conflict of interest in the appointment of a new GM.

Councillors Christine Campbell and Paul Gibson subsequently resigned in April.