MLC Limited v Insurance and Superannuation Commissioner

[1997] FCA 1626

JUDGMENT No. !UfefI

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 896 of 1996
)
GENERAL DIVISION	1

BETWEEN:	MLC LIMITED
First applicant
MLC LIFETIME COMPANY LIMITED
Second applicant

AND

INSURANCE AND SUPERANNUATION

COMMISSIONER

Respondent

CORAM:	BEAUMONT J.
PLACE:	SYDNEY
DATE:	28 FEBRUARY 1997

MINUTES OF ORDER

THE COURT ORDERS:

l . The scheme for the transfer of the part of the life insurance business of MLC Limited

to MLC Lifetime Company Limited in accordance with Section 194 of the Life Insurance Act in the form contained in Exhibit "MC 15" to the affidavit of Michael

Andrew Cameron dated 28 February 1997 is confirmed by the Court.

2. The first applicant, MLC Limited, is to pay the Insurance and Superannuation

Commissioner's costs of the application.

3. The court notes that MLC Limited undertakes to the Court to provide Messrs Baker

and Bray with copies of Exhibits A and B and of today's transcript.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 896 of 1996
GENERAL DIVISION

BETWEEN:	MLC LIMITED
First applicant
MLC LIFETIME COMPANY LIMITED
Second applicant

AND

INSURANCE AND SUPERANNUATION

COMMIS SIONER

Respondent

CORAM:	BEAUMONT J.
DATE:	28 FEBRUARY 1997

REASONS FOR JUDGMENT

INTRODUCTION

This is an application made under s.193 of the Life Insurance Act seeking the confirmation by the Court of a scheme under Part 9 of the Act for the transfer of part of the life insurance business of MLC Limited to MLC Lifetime Company Limited. The matter was

before me on 22 November 1996 for directions. On that occasion, I gave directions with a

view to notifying policy holders of the proposed scheme, and in my discretion, I dispensed with the need to comply with some of the requirements of the statutory regime for what I saw to be good cause.

The matter has come before me today for confirmation. Under the provisions of S. 194

I have a discretion to confirm the scheme, with or without modification, or to rehse to

confirm it. It is, however, clear from a well-settled line of authority that this discretion is not an unfettered judicial discretion. It is one that is to be exercised, as the cases say, on the evidence. It is also a discretion which depends very much upon the opinion of the Court as to the fairness of the proposal. As Brennan J. said in Wavde v NSW Rugby League Limited (1985) 180 CLR 459 at 469:

"[In this area] where the statute requires a decision [or proposal] to be confirmed by the court ... the court gives or withholds confirmation according to its opinion of the fairness of the decision [or proposal]. l"

His Honour then gave the example of a decision to reduce capital. In my view, that is a proper analogy for present purposes. I would only add what is obvious and that it is that, as the settled line of authority in this kind of case shows, there are two aspects to the concept of fairness here. First, there are the procedural aspects in which the Court is concerned to see

that the process undertaken has been properly executed; and secondly, there is the substantive aspect in which the Court is concerned to see that, on the whole, the proposal has merit and that no particular section of those affected by the scheme or decision has been the subject of any unreasonable discrimination.

As Sheppard J, said (at p.4) in The Application of Advance Life Insurance Limited, 18

February 1997, unreported, the Court has a duty to see that the proposed scheme is one that

appears to operate in the best interests of policy holders and that their position appears to be properly safeguarded. In that case, his Honour was concerned, as I am concerned here, to see

that on the actuarial evidence there are sufficient reserves available to ensure that policy

holders are not put at risk under the proposal. I have considered the actuarial evidence in this

matter at the earlier directions hearing, and at today's hearing. I am of the opinion that there is nothing in that evidence which would justifl the Court withholding its confirmation of the proposal. I am supported in this view by the circumstance that the Commissioner, who

appears before the Court today by his counsel, has indicated that he has no objection to the scheme. Further support for the approach I propose to take is to be found in the terms of Exhibit B which is a letter written by Mr Freney, First Assistant Commissioner, on behalf of

the Commission dated 27 February 1997 and to the same effect. It may be noted that Mr

Freney is, himself, an actuary.

Mr Baker has, in correspondence, raised some objections to the scheme. I have

considered them in the course of argument and submissions and propose to ensure that Mr

Baker will see a transcript of today's proceedings. In my view, for the reasons given in the

course of submissions, there is nothing in the matters raised by Mr Baker that would justi@ the Court withholding its confirmation of the proposal. Mr Bray has raised one matter which was

a point also mentioned by Mr Baker. Again, that has been considered in the course of

submissions and I will ensure that Mr Bray receives a copy of today's transcript.

On the evidence before me I am of the opinion that it is fair, both procedurally and

substantively, that the scheme should be confirmed, and I propose to so order.

I make the following orders:

1. Order 1 in terms of the short minutes which I have initialled, dated today and placed

with the papers, that is that:

"The Scheme for the transfer of the part of the life insurance business of MLC Limited to MLC Lifetime Company Limited in accordance with

section 194 of the Life Insurance Act in the form contained in exhibit "MC15" to the affidavit of Michael Andrew Cameron dated 28 February 1997 is confirmed by the Court."

2. Order that the first applicant pay the respondent's costs of the application; and

3. I note that the first applicant undertakes to the Court to provide Messrs Baker and

Bray with copies of Exhibits A and B and of today's transcript.

I certifl that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Beaumont.

Associate:

Dated: 24 March 1997 U

Counsel and Solicitors	Mr J D Heydon QC and Mr R A Dick
for the first applicant:	instructed by Freehill, Hollingdale & Page
Counsel and Solicitors	Mr J Gleeson
for the second applicant:	instructed by Freehill, Hollingdale & Page
Counsel and Solicitors	Mr J Renwick
for the respondent:	Australian Government Solicitor
Date of hearing:	28 February 1997
Date Judgment delivered:	28 February 1997