ACN 074 971 109 Pty Ltd (as trustee of the Argot Unit Trust) v The National Mutual Life Association of Australiasia Limited (ACN 004 020 437)

[2014] HCASL 172

ACN 074 971 109 PTY LTD (AS TRUSTEE OF THE ARGOT UNIT TRUST)

v

THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALIASIA LIMITED (ACN 004 020 437)

[2014] HCASL 172
M1/2014

1. The applicant invested in a life insurance policy issued by the respondent ("the policy").  The policy provided for funds to be invested in a cash portfolio and a non-cash portfolio, and allowed the applicant to switch funds between them.  A clause of the policy provided that the applicant could give the respondent three days' notice of its intention to switch funds between portfolios, after which the switch would be effected at the price for the day on which the notice was given.  The applicant could cancel the switch at any time during the notice period without penalty.

2. After the respondent become aware that the applicant was using this clause to make arbitrage profits, the respondent adopted a practice of switching funds immediately after the applicant gave notice of an intention to switch.  On 5 December 2008, the Court of Appeal of the Supreme Court of Victoria (Buchanan, Nettle and Dodds-Streeton JJA) held that the policy did not permit the respondent to effect a switch until the expiration of the notice period.  The matter was remitted to the trial division to determine whether the respondent had breached the policy.

3. The respondent subsequently adopted a new practice of liquidating non‑cash assets immediately after receiving a notice of intention to switch ("the second practice").  On 25 November 2011, the Supreme Court (Croft J) held that the second practice did not breach the policy.

4. On 27 November 2013, the Court of Appeal (Nettle and Neave JJA, and Robson AJA) dismissed the applicant's appeal from the decision of Croft J.  The Court of Appeal held that liquidating non-cash assets did not effect a switch between portfolios in contravention of the policy.

5. The applicant now seeks special leave to appeal to this Court.  Although the facts of this case involve some complexity, the decision below concerned the interpretation of a contract and there is insufficient reason to doubt that decision.  No issue arises regarding the partitioning of statutory funds.  An appeal to this Court would enjoy insufficient prospects of success to warrant the grant of special leave.  Special leave should be refused.

6. The applicant sought to draw the Court's attention to the recent decision of the New South Wales Court of Appeal in Allianz Australia Insurance Ltd v BlueScope Steel Ltd[1], which it suggested "contradicts" the decision of the Court of Appeal in this matter.  In Allianz, the Court of Appeal held that the insurer's conduct, although not repudiatory, may nonetheless have intimated that it was unnecessary to comply with a contractual condition.  Such a conclusion depended on the circumstances of the case, and the matter was remitted so that the necessary factual findings could be made.  In the present case, the only basis for suggesting that the respondent's conduct intimated that it was unnecessary for the applicant to give notice of an intention to switch under the policy was if the second practice constituted a breach of the policy.  The Court of Appeal concluded that it did not.  Reliance on the Allianz case does not advance this application.

   [1] [2014] NSWCA 276.

7. Pursuant to r 41.11.1 we direct the Registrar to draw up, sign and seal an order dismissing the application with costs.

S.M. Kiefel
11 September 2014 P.A. Keane