NobleOak Life Limited v Graham

Federal Court of Australia|2023-08-25|Before: Derrington J

THE COURT DECLARES THAT:

The sum of $500,000.00 represents the amount payable by the applicant in relation to the life insurance policy of Mr Bruce Saunders (Member number 110156080) (the Benefit Amount).

THE COURT ORDERS THAT: 2. The amount payable by the applicant under paragraph 1 of these orders, less the amount specified in paragraph 4 of these orders on account of the applicant's costs, may be paid into Court by the applicant under s 215(1) of the Life Insurance Act 1995 (Cth). 3. On payment of the amount contemplated by paragraph 2 of these orders, the applicant is discharged from any liability in respect of the life insurance policy it issued to Mr Bruce Saunders (deceased), in accordance with s 215(2) of the Life Insurance Act 1995 (Cth). 4. The applicant's costs of this application be fixed in the sum of $16,925.00 (exclusive of GST), to be paid to the applicant from the Benefit Amount prior to payment into Court. 5. The sum paid into Court in accordance with these orders be held pending any further order of this Court. 6. The applicant be excused from further attendance until further order of this Court. 7. The matter be listed for further review on a date to be fixed. 8. Each of the respondents has liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The application before the Court is made pursuant to s 215 of the Life Insurance Act 1995 (Cth). The applicant, NobleOak Life Ltd (NobleOak), is a company that carries on the business of, amongst other things, the provision of life insurance. It seeks orders to the effect that a certain amount of money relating to a policy of life insurance, less costs and disbursements of this application, be paid into Court in discharge of its liability pursuant to that policy. It contends that it is otherwise unable to obtain a sufficient discharge for the policy on account of the competing claims submitted to it for the money and the circumstances in which the person whose life was insured by the policy died. 2 The application has been advanced by NobleOak at the first case management hearing in this proceeding. That is not an unprecedented course in cases of this kind, where orders are sought in relation to the operation of s 215: see, eg, MLC Ltd v Crickitt [2017] FCA 898 [4]. Presently, there is no reason to refrain from considering and, if appropriate, granting the primary relief sought at this stage. Taking these steps early in the proceeding will work to keep costs to a minimum.

Background 3 The background to the matter can be stated briefly. 4 On 30 August 2017, NobleOak issued a policy of life insurance to Mr Bruce Saunders. The cover was taken out by Mr Saunders under NobleOak's "My Protection Plan" product. 5 Relevantly, Mr Saunders' life was insured to a sum of $500,000 (the Benefit Amount). The policy also contained provision for trauma cover, but that need not be considered further for the present purposes. 6 Upon Mr Saunders' death, the policy required NobleOak to pay the Benefit Amount to his sole nominated beneficiary: the first respondent, Ms Sharon Graham. Ms Graham and/or Mr Saunders' deceased estate would be entitled to submit a claim to NobleOak to be paid the Benefit Amount in accordance with the terms and conditions of the policy. 7 Mr Saunders died on 12 November 2017 in unusual circumstances. His death certificate, dated 6 December 2017, stated his cause of death as "not yet determined". 8 On 18 December 2017, solicitors acting for Ms Graham submitted a claim to NobleOak for payment of the Benefit Amount. 9 Shortly thereafter, on or about 15 February 2018, NobleOak was issued with a search warrant authorising the Queensland Police to search for all documentation relating to Mr Saunders' policy on the basis that it was connected to the offence of murder. 10 Subsequently, the police have charged Ms Graham, along with others, with the murder of Mr Saunders. Ms Graham's criminal trial is, according to the evidence before the Court on this application, listed for hearing over an estimated period of four weeks, commencing on 9 October 2023. 11 In the time since the claim for payment of the Benefit Amount was submitted on behalf of Ms Graham, there has been some indication that other claimants will contest her entitlement to that money. 12 On 28 November 2018, solicitors acting on behalf of the third respondent, Mr Blake Saunders, who is Mr Saunders' son, requested details of the policy terms from NobleOak. At the hearing of this application, there was no appearance on behalf of the third respondent, but a letter from his solicitors was produced to the Court, noting that he consented to the orders sought by NobleOak. That letter also made reference to "associated family provision proceedings". 13 On 5 August 2019, the Public Trustee of Queensland, acting pursuant to s 36 of the Public Trustee Act 1978 (Qld), submitted a claim to NobleOak for payment of the Benefit Amount on the basis of it being the administrator of Mr Saunders' estate. The Public Trustee was formally authorised to administer the estate by an order of the Supreme Court of Queensland dated 26 February 2020.

The need for an order in relation to the operation of s 215 of the Life Insurance Act 1995 (Cth) 14 In the circumstances, NobleOak has very properly formed the view that it is unable to obtain a sufficient discharge for the policy. It has received competing claims to the Benefit Amount from Ms Graham and the Public Trustee. There is reason to believe that the third respondent, Mr Blake Saunders, will also assert some entitlement to the money. If NobleOak was to pay the sole named beneficiary, Ms Graham, that payment might prove to have been made in error if she is subsequently convicted of Mr Saunders' murder. In that instance, there is some potential for the "forfeiture rule" to apply with the result that she will have had no entitlement to the money: see, generally, Westpac Life Insurance Services Ltd v Mahoney [2016] FCA 1071 [20] (Westpac Life v Mahoney); Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 3) [2018] FCA 1918 [19]. On the other hand, NobleOak cannot pay the money to the Public Trustee as administrator of Mr Saunders' estate, since it may not be entitled to receive it if Ms Graham is not convicted. 15 NobleOak relies on s 215 of the Life Insurance Act 1995 (Cth), which provides: 215 Power to pay money into Court (1) A life company may pay into the Court any money payable by the company in respect of a policy for which, in the company's opinion, no sufficient discharge can otherwise be obtained. (2) Payment of the money into the Court discharges the company from any liability under the policy in relation to the money. (3) Any money paid into the Court under this section is to be dealt with according to the order of the Court. (4) This section has effect subject to the Rules of the Court. 16 Although it is not entirely clear from the terms of the Life Insurance Act 1995 (Cth) or the Federal Court Rules 2011 (Cth), to which s 215(4) refers, that an application of the present kind must be brought in order to give effect to s 215(1), it has been accepted that "money being paid into Court is to be accompanied by a form of proceeding which gives judicial context to the payment into Court": Westpac Life v Mahoney [26]. From a practical perspective, there is also utility in ensuring that the money paid into Court is tied to an active proceeding within which orders can later be sought for payment of the funds to particular persons. 17 NobleOak has, for legitimate reasons, formed the view that it is unable to obtain a sufficient discharge for Mr Saunders' policy. Any discharge would be contingent, and may prove in time to have been erroneous. There is no reason why it should take the risk of becoming involved in any disputation between the actual and potential claimants to the Benefit Amount. The existence of competing claims is a typical circumstance in which resort to s 215(1) may be appropriate: HCF Life Insurance Co Pty Ltd v Lamb [2000] FCA 573 [14]; Rostirolla v Fiakos [2002] FCA 1058 [9]. Upon the making of orders in relation to the operation of s 215, and the payment of the Benefit Amount into Court, NobleOak will have fully discharged its obligations under the policy and will be relieved of any further participation in the matter. 18 The circumstances of the present case satisfy the condition on which the power in s 215(1) may be exercised. Orders should be made to allow NobleOak to take the benefit that the operation of the section provides. 19 NobleOak also seeks a declaration that the sum of $500,000 represents the total amount payable under the policy. There is no reason why such a declaration should not be made. It is apparent that $500,000 is the limit of NobleOak's liability on the policy in connection with the cover of Mr Saunders' life. So much is uncontroversial. The declaration sought will, as a matter of convenience, ensure that NobleOak is liberated from the need for any further involvement in the proceeding.

Costs and other orders 20 NobleOak seeks a further order that the final amount that it pays into Court should be the $500,000 Benefit Amount less its costs and disbursements incurred in connection with this application. 21 This Court has historically expressed some concern about the costs incurred by insurers in bringing applications in relation to the operation of s 215(1), recognising that the funds paid into Court on such applications are often modest and ought not to be depleted by supererogation or overcharging on the part of the insurer or its lawyers: Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 2) [2017] FCA 1146 [30]. In some respects, the costs can be seen as "an aspect of doing business as a life insurer": MLC Ltd v Crickitt (No 2) [2017] FCA 937 [12]. However, the "usual order" is nevertheless that the insurer obtains its reasonable and appropriate costs from the funds in question: Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland [2017] FCA 963 [16]; Westpac Life Insurance Services Ltd v Estate of the Late Graham Brian Ugle [2019] FCA 1251 [15]. 22 In the present case, the solicitors acting for NobleOak have put on affidavit evidence explaining the costs incurred. There is no reason to believe that those costs are anything other than reasonable and appropriate in the circumstances. NobleOak has advanced the present application on the basis of a relatively short "summary affidavit", setting out the relevant circumstances, and has since supplemented that affidavit with only a small amount of additional material: cf Westpac Life v Mahoney [31]. The order sought by NobleOak should therefore be made, given that the costs that it has incurred are justifiable and it has been required to bring the present application through no fault of its own. 23 Finally, a series of orders is sought that will have the effect of keeping the proceeding on foot without the need for action to be taken by any party, pending any application for further orders in relation to the money paid into Court. It is appropriate that those further orders be made in the present circumstances. They will avoid the costs associated with the commencement of new proceedings, which would inevitably diminish the funds available for payment under the policy. 24 Ms Salerno of the Official Solicitor, who acts for the Public Trustee, provided her client's consent to the orders sought by NobleOak. Ms Salerno also tendered the letter from the solicitors acting on behalf of Mr Blake Saunders, to which reference is made above, noting that he likewise agrees to the orders sought. 25 In those circumstances, the orders should be made. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.

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