ACN 074 971 109 (as trustee for the Argot Unit Trust) & Anor v The National Mutual Life Association of Australasia Limited

Eakin McCaffery Cox (Victorian Agents Oakley Thompson & Co Solicitors)

1. The appeal is allowed in part.
2. It is declared that the second paragraph of cl 1.8 of the Prosperity Bond policies entered into by the plaintiffs, upon its proper construction, means that:

1. A Coneview investor was entitled to give three days' notice of intention to switch at the buying and selling prices applicable on the date on which the notice was given;
2. The respondent was not permitted to effect the switch until the expiration of the notice;

1. The Coneview investor was entitled to revoke the notice at any time before its expiration;

1. If not so revoked, upon the expiration of the notice, the respondent was bound to give effect to the switch.

2 It is now further ordered and declared as follows:

1. It is further declared that the term 'unit price' in the second paragraph of cl 1.8 refers to both the buying price and the selling price such that, in the case of a switch, the buying and selling prices are those which apply at the date of giving the notice of intention to switch, as those prices are to be determined in accordance with the terms of the Prosperity Bond.

2. Paragraphs 4, 5 and 6 of the orders made on 15 December 2006 are set aside.

a) The plaintiffs' claims for a declaration that the defendant failed to act in the utmost good faith towards the plaintiffs is dismissed.

b) The plaintiffs' claims for orders that the defendant specifically perform the Prosperity Bond policies in accordance with the terms alleged by the plaintiffs is dismissed.

c) The plaintiffs' claims for orders that the defendant recalculate and maintain account balances of the plaintiffs' policies by giving effect to notices of intention to switch and cancellations of those notices after 16 October 2000 is dismissed.

d) The plaintiffs' claims for rectification of clause 1.8 of each plaintiff's policy and the Undertakings/Special Agreements letter to reflect the 21 June 1999 and No Advice letters is dismissed.

e) The plaintiffs' claim that the defendant repudiated the Prosperity Bond policies is dismissed.

4. The following questions are remitted to the trial judge or, if he not be available to consider the matter further, to another judge of the Trial Division, for determination according to law:

a) Whether the defendant committed any and what breach or breaches of clause 1.8 of the plaintiffs' Prosperity Bond policies.

b) In the case of any breach of clause 1.8, whether the plaintiff in question is entitled to damages for breach of contract in respect of the breach and, if so, the amount of those damages;

c) In the case of any breach of clause 1.8, whether the plaintiff in question is entitled to damages in lieu of specific performance in respect of the breach and, if so, the amount of those damages.

5. It is directed that the judge to whom the above questions are so remitted for determination shall:

a) determine in light of the evidence already adduced whether it is just and appropriate for the parties to be permitted to adduce any further evidence or should be confined to that already adduced;

b) determine whether any question should be referred to a special referee for decision or opinion and, if so, may refer the question accordingly.

6. In paragraph 8 of the orders on 15 December 2006, the words 'departure portfolio' shall be replaced with the words 'portfolio from which funds are to be switched'.

9. The respondent shall pay one quarter of the appellants' costs of the appeal.

10. The appellant shall pay three quarters of the respondent's costs of the appeal.

11. The respondent shall pay the appellants' costs of the cross-appeal.