Municipal Mutual Insurance Limited, in the matter of Municipal Mutual Insurance Limited (No. 2)
[2009] FCA 382
•20 March 2009
FEDERAL COURT OF AUSTRALIA
Municipal Mutual Insurance Limited, in the matter of Municipal Mutual Insurance Limited (No. 2) [2009] FCA 382
Insurance Act 1973 (Cth)
MUNICIPAL MUTUAL INSURANCE LIMITED, IN THE MATTER OF MUTUAL INSURANCE LTD
NSD1874 of 2008
EMMETT J
20 MARCH 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD1874 of 2008
IN THE MATTER OF MUNICIPAL MUTUAL INSURANCE LTD
MUNICIPAL MUTUAL INSURANCE LIMITED
Plaintiff
JUDGE:
EMMETT J
DATE OF ORDER:
20 MARCH 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The “Transfer Date” for the purposes of the Scheme and the Deed of Transfer of Insurance Business dated 23 January 2009 between Municipal Mutual Insurance Limited as Transferor and Gordian Runoff Limited as Transferee be, and be deemed always to have been 20 March 2009 or any earlier date on which the Transferee receives the Transfer Sum from the Transferor.
2.The Applicant pay the costs of APRA as agreed, or, if agreement cannot be reached, as assessed.
3.The Applicant shall have liberty to apply on 24 hours notice.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD1874 of 2008
IN THE MATTER OF MUNICIPAL MUTUAL INSURANCE LIMITED
MUNICIPAL MUTUAL INSURANCE LIMITED
Plaintiff
JUDGE:
EMMETT J
DATE:
20 MARCH 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 27 February 2009 the Court made orders pursuant to s 17F of the Insurance Act 1973 (Cth) (the Insurance Act) that a scheme (the Scheme) for the transfer of the general insurance business of the Australian branch of Municipal Mutual Insurance Limited (MMI) to Gordion Run-Off Limited (Gordian) be confirmed. One of the terms of the Deed of Transfer of Insurance Business, which effected the Scheme, was that a sum be paid by MMI to Gordion on the Transfer Date, as defined. For reasons that are now of no particular significance, the sum in question was not transferred on the Transfer Date. The sum has now been paid and MMI has applied to the Court for an order that the Transfer Date be today or any earlier date on which the Transferee, as defined in the Scheme, received the Transfer Sum from the Transferor, as defined in the Scheme.
In the course of the hearing of the application for such an order, senior counsel for MMI informed the Court of a matter that should have been the subject of disclosure to the Court at or prior to the hearing on 27 February 2009. The matter in question is the intention of Gordion to apply for authorisation by the Australian Prudential Regulation Authority (APRA) to release capital in the sum of $80.7 million. That is not an insignificant sum. However, in the light of the material now placed before the Court concerning the financial position of Gordian, it is apparent that had the matter been disclosed to the Court it would not have had a material effect on the exercise of the Court’s discretion.
The Scheme was confirmed on the basis that, following the transfer of MMI’s business, there would have been solvency coverage in respect of the minimum capital requirement of APRA, as set out in my reasons of 27 February 2009. The material now before the Court indicates that, in the light of increase in the value of assets of Gordian up to 31 December 2008, the solvency coverage is in fact greater even after allowing for the release of capital than had been the basis upon which the Court exercised its discretion to confirm the Scheme. I am satisfied from the evidence now placed before the Court that counsel and the solicitors for MMI were unaware of the intention to seek approval for the release of capital. The failure to disclose the matter was the result of an oversight on the part of the chief financial officer of the holding company of Gordion.
While certain officers of APRA were aware of the proposal, the officers of APRA who were concerned with the Scheme had no knowledge of the proposal. I am satisfied that no sinister motive should be attributed to anybody in relation to the failure to disclose the matter. In the events that have occurred it was not material. Accordingly, had it been disclosed with all of the information now available to the Court, I would have confirmed the Scheme.
In the circumstances, since the Transfer Sum has now been paid, I see no objection to acceding to MMI’s application for an order confirming that the Transfer Date for the purposes of the Scheme be deemed to have been 20 March 2009 or any earlier date on which the Transferee received the Transfer Sum from the Transferor, as those terms are defined in the Scheme.
Accordingly, I propose to make an order in those terms. It is appropriate that MMI pay APRA’s costs of this application.
I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 21 April 2009
Counsel for the Plaintiff: JT Gleeson SC with NJ Owens Solicitor for the Plaintiff: Allens Arthur Robinson Solicitor for APRA: R Claxton
Date of Hearing: 20 March 2009 Date of Judgment: 20 March 2009
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