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[2011] FCA 1230
Federal Court of Australia
2011-10-21
Rares J
Original judgment source is linked above.
REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 Asteron Life Limited and Suncorp Life and Superannuation Limited, both subsidiaries of Suncorp Group Limited, have applied for dispensations under s 191(5) of the Life Insurance Act 1995 (Cth) in respect of a scheme of arrangement for the transfer of Asteron Life's insurance business to Suncorp Life. An application for confirmation of a scheme cannot be made unless an approved summary of the scheme has been given to every affected policy owner (s 191(2)(c)). Earlier this week, on 19 October 2011, a notice of intention by the companies to make an application for confirmation of the scheme, in a form approved by the Australian Prudential Regulation Authority, was published in the Gazette and, on 20 October 2011, in a large number of national newspapers. 2 The policy behind the requirement in s 191(2)(c) of the Act for an approved summary of the scheme to be given to every affected policy owner on an application for a scheme's confirmation is to ensure that persons whose interests may be adversely affected have an opportunity to appreciate the impact of the scheme on them in a fully informed way, in order to decide whether they should oppose the scheme's confirmation having regard to their own best interests. The power to dispense with the need for compliance is conditioned in s 191(5). It requires that the Court be satisfied that, because of the nature of the scheme or the circumstances attending its preparation, it is not necessary that an approved summary be given to every affected policy owner.
ASTERON LIFE'S APPLICATION 3 There are three classes of Asteron Life's policy owners who are affected by the dispensations from compliance with s 191(2)(c), sought pursuant to s 191(5). First, Asteron Life has 7,165 policy owners for whom it has no record of a current mailing address. I am satisfied on the evidence that it is impracticable to give those persons notice in accordance with s 191(2)(c). The publication of the notice of intention ensures that, so far as is reasonably practicable, those persons who have no current mailing address to whom Asteron Life can send a summary of the scheme in accordance with the Act, will have been given what, in my opinion, amounts to a sufficient degree of notice. 4 Secondly, Asteron Life seeks dispensation in respect of its obligation to give an approved summary of the scheme to owners of its policies who change their addresses but fail to notify it of their new address between the time at which it despatches that summary to their previous address and the date on which the scheme is given effect. Such persons also fall into the class of uncontactable policy owners. I am satisfied that it is appropriate in the circumstances to give Asteron Life a dispensation from the requirement of s 191(2)(c) in respect of those persons. 5 Thirdly, Asteron Life seeks dispensation in respect of its obligation to give an approved summary of the scheme to persons who, in the future, will become owners of policies issued by Asteron Life in the period between less than 18 days prior to the hearing of the application for confirmation of the scheme and up to the effective time, being 1 January 2012, at which it is proposed that the scheme takes effect. Again, for reasons of practicality, it will be difficult to give all those persons a summary in accordance with s 191(2)(c). However, such new policy owners who are affected by the scheme will become aware of the change of their insurer to Suncorp Life. They will be afforded an extended cooling off period of either 30 or 28 days, depending on which of the three categories of policies in evidence they will have contracted to take from Asteron Life in that period. I am satisfied that what Asteron Life proposes by way of giving notice and affording an extended cooling off period for this particular class of policy owners justifies dispensing with the requirement of s 191(2)(c).
SUNCORP LIFE'S APPLICATION 6 Suncorp Life also seeks a dispensation from the requirement of s 191(2)(c) to give an approved summary to all of its affected policy owners. This is based, substantively, on the opinions of its actuary, Michael Lubke, and an independent actuary, Anton Kapel. They opine, in essence, that if the scheme were given effect: the scheme will have no adverse effect on Suncorp Life's policy owners' contractual benefits and their rights or benefit expectations; each of the statutory funds of Suncorp Life and that company as a whole will be in a sound financial position following the effecting of the scheme; and there will be no adverse effects on the benefit of security of existing Suncorp Life policy owners in any material respect. 7 Suncorp Life relies on the publication of the notice of intention to apply for confirmation of the scheme as a sufficient notification to its policy owners because, it contends, they are unlikely to have any basis, having regard to the actuaries' evidence, for advancing a ground of opposition to the scheme. The cost of Suncorp Life providing a summary of the scheme in accordance with s 191(2)(c) to the approximately 119,000 policy owners, is estimated by its chief financial officer, John O'Farrell, to be approximately $124,000. 8 Having regard to the evidence, particularly the actuaries' opinions, and the publication of the notice of intention to apply for the scheme in accordance with s 191(2)(b), I am satisfied that it is appropriate in all the circumstances to dispense with the requirement in s 191(2)(c) that Suncorp Life give notice by way of an approved summary to all affected policy owners.
CONCLUSION 9 For these reasons I will make the orders sought. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.