FEDERAL COURT OF AUSTRALIA
NobleOak Life Limited v Graham [2023] FCA 1127
File number: QUD 333 of 2023 Judgment of: DERRINGTON J Date of judgment: 25 August 2023 Date of publication of reasons: 21 September 2023 Catchwords: INSURANCE – life insurance – application by life company to pay benefit amount into court – whether life company can obtain sufficient discharge for policy – potential application of forfeiture rule – competing claims to benefit amount Legislation: Life Insurance Act 1995 (Cth)
Federal Court Rules 2011 (Cth)
Public Trustee Act 1978 (Qld)
Cases cited: HCF Life Insurance Co Pty Ltd v Lamb [2000] FCA 573
MLC Ltd v Crickitt [2017] FCA 898
MLC Ltd v Crickitt (No 2) [2017] FCA 937
Rostirolla v Fiakos [2002] FCA 1058
Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland [2017] FCA 963
Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 2) [2017] FCA 1146
Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 3) [2018] FCA 1918
Westpac Life Insurance Services Ltd v Estate of the Late Graham Brian Ugle [2019] FCA 1251
Westpac Life Insurance Services Ltd v Mahoney [2016] FCA 1071
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 25 Date of hearing: 25 August 2023 Counsel for the Applicant: Ms N Pearce Solicitor for the Applicant: Dentons Australia Counsel for the First Respondent: The First Respondent did not appear Solicitor for the Second Respondent: Ms L Salerno of the Official Solicitor Counsel for the Third Respondent: The Third Respondent did not appear ORDERS
QUD 333 of 2023 BETWEEN: NOBLEOAK LIFE LIMITED (ACN 087 648 708)
Applicant
AND: SHARON GRAHAM
First Respondent
THE PUBLIC TRUSTEE OF QUEENSLAND (IN ITS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF BRUCE JOHN SAUNDERS (DECEASED))
Second Respondent
BLAKE JAMES LACHLAN SAUNDERS
Third Respondent
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
25 AUGUST 2023
THE COURT DECLARES THAT:
1.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…
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- Case
- [2023] FCA 1127
- Decision Date
CaseChat Overview and Summary
The central legal issue was whether NobleOak could discharge its obligations under the life insurance policy by paying the benefit amount into court, as permitted by section 215(1) of the Life Insurance Act 1995 (Cth). The court needed to consider the competing claims to the benefit amount from Ms Graham and the Public Trustee, and assess whether these claims created a situation where NobleOak could not obtain a sufficient discharge for the policy. The court also had to evaluate the implications of the forfeiture rule, which could render Ms Graham's entitlement to the benefit amount null and void if she were convicted of murder.
The court found that NobleOak was indeed unable to obtain a sufficient discharge for the policy due to the competing claims and the uncertain legal status of Ms Graham. The potential for the forfeiture rule to apply if Ms Graham were convicted further complicated the situation. Given these circumstances, the court held that it was appropriate for NobleOak to pay the benefit amount into court under section 215 of the Life Insurance Act 1995 (Cth). This would discharge NobleOak from any liability under the policy and prevent it from becoming involved in disputes between the claimants. The court made orders allowing NobleOak to pay the benefit amount into court, discharging it from any liability under the policy, and holding the amount pending further orders of the court. The matter was listed for further review, and the respondents were granted liberty to apply.
The orders made by the court included allowing NobleOak to pay the benefit amount into court, discharging it from any liability under the policy, fixing the applicant’s costs, and holding the sum paid into court pending further orders. The matter was listed for further review, and the respondents were granted liberty to apply. This decision ensures that NobleOak is relieved of its obligations under the policy while the competing claims are resolved, preventing any risk of erroneous payments and ensuring that the benefit amount is managed according to the court’s future directions.
Orders
Orders of the court
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.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
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) 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. 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. 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. 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.