Re Barrett, J.C.; Ex Parte Young, S.E. v N M Superannuation Pty Ltd

Re: JEFFREY CHARLES BARRETT Ex Parte STEPHEN ELLIOTT YOUNG
And: N M SUPERANNUATION PTY LTD
No. 1079 of 1987
FED No.90
Bankruptcy - Insurance
(1992) 106 ALR 549
(1992) 34 FCR 508

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIAN DISTRICT REGISTRY
GENERAL DIVISION
Von Doussa J.(1)

CATCHWORDS

Bankruptcy - property of the bankrupt divisible among creditors - whether amount payable to the bankrupt on the cessation of his employment by the Trustee of a superannuation fund was excluded from the divisible property - whether the amount payable was the proceeds of a policy of life assurance or endowment assurance - meaning of "policies of life assurance or endowment assurance" discussed - Trustee held a policy issued by a life insurance company described as "a life assurance policy" pursuant to which the Trustee was indemnified against benefits payable under the superannuation trust deed - trust deed provided for the payment on death, retirement or cessation of employment of the employee, of the employer's contributions together with interest accrued thereon at rates from time to time declared by the insurance company - whether there was a contingency of profit or loss to the insurance company sufficient to constitute the obligation one of insurance - whether a guarantee by the insurance company to repay nominal value of contributions together with interest thereon involved an element of insurance - whether there were transactions protected against "relation back" by s.123 of the Bankruptcy Act.

Insurance - meaning of policies of life assurance and endowment assurance - whether insurance requires a contingency of profit or loss to the insurer on the happening of the event on which payment depends - whether a guarantee by a financial institution to repay the nominal value of an investment made with it together with interest involves an element of insurance.

Bankruptcy Act 1924 (Cth), s.91

Bankruptcy Act 1966 (Cth), ss.5(1), 58(1), 115, 116, 123

Insurance Contracts Act 1984 (Cth), s.65

Life Insurance Act 1932 (Cth)

Life Insurance Act 1945 (Cth)
Cases referred to

Estate of Carter, Deceased (1962) 19 ABC 144

The National Mutual Life Association of Australasia Ltd v. Federal Commissioner of Taxation (1959) 102 CLR 29

In re Farley; Holden v. Johnson (1933) VLR 271

Re Packer (1958) 18 ABC 97

Trade Indemnity Co. Ltd v. Workington Harbour Dock Board (1937) AC 1

Re Australian and Overseas Insurance Co. Ltd (1988) 8 FLR 403

Prudential Insurance Company v. Commissioner of Inland Revenue (1904) 2 KB 658

Gould v. Curtis (1913) 3 KB 84

Department of Trade and Industry v. St Christopher Motorists' Association Ltd (1974) 1 WLR 99

Carter v. Boehm (1766) 3 Burr 1905, 1909; 97 ER 1162

Re Commonwealth Homes and Investment Co. Ltd (1943) SASR 211

Medical Defence Union Ltd v. Department of Trade (1979) 2 WLR 686

De Beers Consolidated Mines Ltd v. British South Africa Co. (1912) AC 52

British Eagle International Airlines Ltd v. Compagnie Nationale Air France (1975) 1 WLR 758

Horne v. Chester and Fein Property Developments Pty Ltd and Ors (1986) 11 ACLR 485.

HEARING

ADELAIDE

#DATE 6:3:1992

Counsel for the bankrupt : Mr N L Strawbridge

Solicitor for the bankrupt : Baker O'Loughlin

Counsel for the applicant : Mr N W Morcombe QC

Solicitor for the applicant: Cowell Clarke

Counsel for the respondent : Mr R J Whitington

Solicitor for the respondent: Piper Alderman

JUDGE1

The applicant as trustee of the bankrupt estate of Jeffrey Charles Barrett ("the bankrupt") seeks against N M Superannuation Pty Ltd ("the respondent") declarations of entitlement, and an order for payment of $187,566.79 ("the amount claimed"). The respondent is a wholly owned subsidiary of the National Mutual Life Association of Australasia Ltd ("National Mutual").

Prior to 30 June 1987 the bankrupt was an employee of J.C. Barrett Pty Ltd, and a member of the National Mutual Simple Superannuation Fund ("the Simple Super Fund"). The respondent was Trustee of that Fund, and J.C. Barrett Pty Ltd was a Participating Employer. On 30 June 1987 the bankrupt ceased employment with J.C. Barrett Pty Ltd, and the company lodged a Benefit Payment Request, in writing, with the respondent requesting the respondent to pay the bankrupt the whole Retirement Accumulation of the bankrupt in the Fund. The Benefit Payment Request was signed by the bankrupt in his capacity as the authorised officer of the employer. The amount payable pursuant to this request was the amount claimed. For taxation purposes this sum was an eligible termination payment.
On 2 July 1987 the bankrupt at a meeting with his major creditors gave notice that he had suspended payment of his debts and thereby committed an act of bankruptcy.
On 5 August 1987 the bankrupt signed and submitted a proposal in writing to National Mutual to "roll over" the amount claimed by investing it in the Managed Retirement Portfolio of a fund operated by National Mutual known as National Mutual SuperGuard. The proposal was accepted and the amount claimed was paid by the respondent to National Mutual on 7 August 1987. National Mutual issued a SuperGuard Insurance Policy on 27 August 1987, and posted it to the bankrupt. The policy commencement date was stated to be 5 August 1987. Pursuant to the "Fourteen Day Free Look" provision of the policy, and the right in that respect given to the bankrupt by s.64 of the Insurance Contracts Act 1984 (Cth), the bankrupt by letter dated 8 September 1987 cancelled the SuperGuard policy. Upon the cancellation of the policy, National Mutual became liable to repay to the bankrupt an amount equal to the amount claimed being the "single premium" paid at the inception of the policy.
On about 8 September 1987 the bankrupt also lodged with National Mutual a proposal to invest the amount claimed in a National Mutual Personal Super Bond. The proposal is undated but as a matter of probability I find that the proposal for the Personal Super Bond, and a request to apply the refund due on the cancellation of the SuperGuard policy to the Personal Super Bond was received by National Mutual on or shortly after 8 September 1987, that is within the "Fourteen Day Free Look" period, and before the sequestration order. I give my reasons for this finding later in this judgment. However, the bankrupt's letter to cancel the SuperGuard policy, and the proposal for the Personal Super Bond were not processed or acted on by National Mutual until 1988.
On 2 September 1987 a creditor's petition was issued against the bankrupt, and served on him on 21 September 1987. The sequestration order on the petition was made on 5 October 1987.
On 15 February 1988 the applicant advised the respondent by letter of the sequestration order and sought details of the bankrupt's superannuation moneys. There is no evidence that the respondent was aware of either the presentation of the petition against the bankrupt, or of the bankruptcy, before this date.
Sometime between 23 February 1988 at the earliest and 30 May 1988 National Mutual acted on the request to cancel the SuperGuard policy, and on the proposal for a Personal Super Bond. The Personal Super Bond was not issued until 1 July 1988. The SuperGuard policy was cancelled from inception (i.e. from 5 August 1987) and the Personal Super Bond, when issued, was stated to have a commencement date of 5 August 1987. The Personal Super Bond was issued to the respondent as Trustee of the National Mutual Retirement Fund ("the NM Retirement Fund") in which the bankrupt became a Member.
The applicant asserts entitlement to the amount claimed in the following way. Upon the making of the sequestration order the property of the bankrupt vested in the applicant: sub.s.58(1) of the Bankruptcy Act 1966 ("the Act"). The property of the bankrupt includes the property divisible among the bankrupt's creditors: sub.s.5(1). Property divisible among creditors is defined by s.116. Subject to the Act, all property that belonged to the bankrupt at the commencement of the bankruptcy is property divisible amongst the creditors: para.116(1)(a). The commencement of the bankruptcy was 2 July 1987 being the date of the relevant act of bankruptcy: s.115. At the commencement of the bankruptcy the amount claimed belonged to the bankrupt, and was held by the respondent. On the issue of the SuperGuard policy the respondent paid the amount claimed to National Mutual, but the benefit of that policy belonged to the bankrupt, as did the repayment due on the cancellation of the policy. When the cancellation was processed the amount claimed was repaid by National Mutual to the respondent. By that time the respondent was aware of the bankruptcy, and the purported transactions surrounding the issue of the Personal Super Bond are invalidated by the Act, and by the applicant's title to the amount claimed.
The respondent and the bankrupt dispute the applicant's entitlement to the amount claimed. Counsel for the respondent announced at trial that the respondent's opposition was not adversarial but was to assist the Court to reach a proper result. However the arguments advanced on the respondent's behalf traversed those of the applicant, and received the full endorsement of the bankrupt who adopted them.
The respondent first contends that the bankrupt's interest in the Simple Super Fund was property excluded from the definition of property divisible among creditors by the provisions of para.116(2)(d) which reads:

Subsection (1) does not extend to the following property: ...

"116(2)(d) policies of life assurance or endowment assurance (other than policies for pure endowment) in respect of the life of the bankrupt or the spouse of the bankrupt that have been in force for not less than 2 years before the commencement of the bankruptcy and the proceeds of such policies received on or after the date of the bankruptcy or not earlier than one year before that date;"

In particular, it is contended that the payment on the cessation of employment of the bankrupt's Retirement Accumulation was a payment of the proceeds of a policy of life assurance or endowment assurance which had been in force for more than two years received not earlier than one year before the date of the bankruptcy.

Further, it is contended that the investment by the bankrupt of the amount claimed in the Personal Super Bond took effect, at the latest, from 8 September 1987, that is before the sequestration order was made. The interest thereby purchased in the NM Retirement Fund was held by the respondent on certain trusts set forth in the Trust Deed establishing the Fund. The transactions associated with the purchase of the interest in the Fund were, on the part of the respondent, conducted in good faith and in the ordinary course of business, so as to attract protection against relation back under sub.s.123(1) which, relevantly, provides:

"123(1) Subject to sections 118 to 122 (inclusive), nothing in this Act invalidates, in any case where a debtor becomes a bankrupt:

(a) ...

(b) ...

(c) a contract, dealing or other transaction by or with the debtor for valuable consideration; or

(d) ...

if -

(e) the transaction took place before the day on which the debtor became a bankrupt;

(f) the person, other than the debtor, with whom it took place, did not, at the time of the transaction, have notice of the presentation of a petition against the debtor; and

(g) the transaction was in good faith and in the ordinary course of business."

It is contended that the investment of the amount claimed in the Personal Super Bond is therefore not rendered invalid by the Act, and any claim by the applicant to an interest in the Personal Super Bond is governed by the Trust Deed of the NM Retirement Fund. Clause 16 of the Trust Deed provides:

"16. If a Member or Undischarged Ex-Member:

(a) becomes bankrupt or insolvent, or

(b) does or attempts to do or suffers any act or thing or if any event happens whereby if his Benefit or any part thereof were payable to him absolutely he would be deprived of the right to receive it or any part of it or it would be disposed of or dealt with otherwise than in accordance with this Deed, or

(c) is or becomes of unsound mind or incapable of managing his own affairs or is suffering from any disability which in the opinion of the Trustee renders him unable to manage his own affairs or to receive the whole or any portion of his Benefit whether by his own acts operation of law or otherwise

he and his Dependants shall cease to be presently or presumptively entitled to his Benefit or any part thereof."

For these reasons the respondent contends that neither the proceeds of the realisation of the bankrupt's interest in the Simple Super Fund nor the Personal Super Bond held by the respondent as trustee of the N M Retirement Fund is property divisible amongst the creditors of the bankrupt.

Before considering these contentions I refer briefly to the evidence adduced by the applicant. Exhibit A1 comprises a book of documents which was tendered during the applicant's opening. The respondent at the time formerly objected, questioning the relevance of some of the documents in the exhibit. I deferred a ruling on that objection. I now indicate that I consider correspondence between the parties which appears from pp 27 to 39 to be irrelevant. It does not deal with questions of fact. I reject those pages but otherwise rule that the contents of the exhibit are admissible. The applicant also led evidence from Ron James Mahoney who was put forward as an expert in life insurance and superannuation practices. Whilst I accept the qualifications of Mr Mahoney, insofar as he gave evidence, which was received subject to objection, as to the usage within the insurance and superannuation industry of terms such as "term assurance", "whole of life assurance", and "endowment assurance" I rule that the evidence is inadmissible. The meaning of these terms, and more relevantly, the meaning of the expression "policies of life assurance or endowment assurance (other than policies for pure endowment)" in para 116(2)(d) of the Act is a matter of law to be determined by the Court.
Prior to trial the respondent filed affidavits from James Francis McCann who in 1987 and 1988 was the manager of the Investment Products Department of National Mutual stationed in Adelaide, and from Michael Winston Blyth who at all material times has been the assistant manager of the respondent, stationed in Melbourne. At trial their affidavits were tendered, and they were called, by the applicant. I accept their evidence about the events which occurred relating to the transactions in question insofar as they have personal knowledge of those events, and about the usual procedures of the companies by which they were employed. However, insofar as their evidence sought to express opinions on whether the obligations of the respondent or National Mutual under one or other of the transactions constituted life assurance I rule that their evidence is inadmissible for this purpose.
I give my reasons, at this point for finding that the bankrupt's letter cancelling the SuperGuard policy, and his proposal for the Personal Super Bond, were probably received by National Mutual on or shortly after 8 September 1987. I make this finding notwithstanding two documents which the applicant argued amounted to proof that the letter and the proposal were not given to National Mutual until sometime after 14 January 1988. This argument involved the proposition that the letter and proposal had been backdated, presumably in an attempt to defraud creditors. The two documents relied on are firstly, a nomination by the bankrupt of a beneficiary under the SuperGuard policy apparently signed by him on 15 December 1987, and secondly, the bankrupt's statement of affairs verified on oath on 14 January 1988 in which is included, under "other property", the statement:

"National Mutual Superguard Approved Deposit Fund (Proceeds of Superannuation Payout received 5/8/87 in respect of membership commenced 9/4/85). Exemption Claimed Pursuant to Section 116(2)(d)."

I accept the evidence of Mr McCann which explains that the first document was computer-generated, and was dispatched to the bankrupt in December 1987 because National Mutual had not by then processed the cancellation of the policy. It is hardly surprising that the bankrupt would complete such a document when received by him without considering the full implications. The Statement of Affairs is perplexing, but the relevant statement would appear to be drafted by someone other than the bankrupt. As the cancellation of the SuperGuard policy had still not been processed, whoever prepared the Statement of Affairs could well have worked from the most recent documents available to the bankrupt and assumed they were correct. Although the bankrupt has a very real interest in the outcome of these proceedings and appeared at the trial to support the arguments advanced by the respondent in opposition to the applicant's claim, he did not give evidence. It is probable that he could have explained the two documents relied on by the applicant, and could have verified the dates of the letter and proposal if they were as the respondent asserted. I have considered the applicant's argument that in the absence of evidence from the bankrupt I should draw inferences from the two documents adverse to the bankrupt. However, I am impressed by the evidence of Mr McCann that the letter of 8 September 1987 was probably received about that date, and that he was not party to any attempt to backdate a policy change. The other documents are at best ambiguous, and do not point with any persuasion in the direction contended for by the applicant. I therefore act on the evidence of Mr McCann.

It is convenient to consider first the contention that the payment which became due to the bankrupt on or about 30 June 1987 on the cessation of his employment from the respondent is the proceeds of a policy of life assurance or endowment assurance within the meaning of para.116(2)(d) of the Act. The applicant concedes that if this is so, the application must be dismissed, but contends that no part of the payment was the proceeds of a policy of life assurance or endowment assurance.
It is necessary to set out in some detail the contractual provisions which define the rights and obligations of the parties under the Simple Super Fund. The Trust Deed which constitutes the Fund was made by the respondent on 29 September 1978 and commenced on 1 October 1978. In the Deed the respondent is referred to as "the Trustee", and National Mutual is referred to as "National Mutual".
The third and fourth recitals read:

"C. National Mutual has decided to establish and maintain an indefinitely continuing fund to be known as the National Mutual Simple Superannuation Fund (hereinafter called 'the Fund') solely for the purpose of providing superannuation benefits by means of the Policy for Employees of such employers as may agree to participate in the Fund in the event of the retirement of those Employees or in the circumstance of their incapacity for work attributable to illness or accident as is approved by the Commissioner and in the event of the death of such Employees for their Dependants.

D. National Mutual has requested the Trustee to act as trustee of the Fund and the Trustee has agreed to do so as is witnessed by its execution of this Deed."

By clause 1 of the Deed the Fund is established. Clause 2 defines numerous terms used in the Deed, including:

"'Group Life Assurance' means in respect of a Member either

(1) the amount of assurance (if any) which would be payable on his death

or

(2) the amount of assurance (if any) which would be payable on his becoming Totally and Permanently Disabled under the Policy as purchased by the Group Life Assurance premium described in the Deed of Adoption.

'Guaranteed Retirement Portfolio' means the portion of the Fund arising directly or indirectly from amounts directed to such portfolio as indicated in Deeds of Adoption or pursuant to the provisions of this Deed.

'Participating Employer' means an employer whether a company firm or person who participates in the Fund as evidenced by execution of a Deed of Adoption by that Participating Employer. 'Policy' means the policy or policies other than an Annuity Policy issued by National Mutual and effected by the Trustee pursuant to paragraph (a) of Clause 20 of this Deed to secure to the Trustee subject to the terms and conditions thereof sums equal in amount to the benefits payable to or in respect of Members or to their Dependants.

'Retirement Accumulation' means in relation to a Member at any date whenever the same may be determined the total of the components thereof as set out in this definition. Each Retirement Accumulation shall consist of six such components respectively attributable to

(1) Member's Basic Contributions

and (2) Member's Special Contributions

and (3) Member's Transfer Contribution

and (4) Employer's Basic Contributions after deduction of the amounts required under the Policy to be paid to National Mutual for Group Life Assurance premiums (if any) and for administration charges and (5) Employer's Special Contributions and (6) Group Life Assurance.

Each of the first five such components shall be the sum of

(i) the aggregate of

contributions (if any) of the type specified in the description in this definition of such component which are directed to the Guaranteed Retirement Portfolio either as indicated in the Deed of Adoption executed by the Member's Participating Employer or...

together with interest thereon at a rate determined by National Mutual from time to time under the Policy... The sixth such component shall be the sum of

(i) the amount of Group Life Assurance (if any) credited to the Member's Retirement Accumulation and directed to the Guaranteed Retirement Portfolio pursuant to Clause 12 of this Deed together with interest thereon at a rate determined by National Mutual from time to time under the Policy

and (ii) ..."

Clause 20(a) provides:

"20.(a) The Trustee shall effect in its name a life assurance policy or policies with National Mutual and where the context so requires Annuity Policies to provide the benefits which become payable under this Deed and shall receive and give full and effectual receipts, releases and discharges in respect of payment of any moneys under the said policy or policies including any Annuity Policies as may be required of it and it may think proper having regard to the circumstances."

The Trustee, to discharge the obligation imposed under clause 20(a), proposed in writing to National Mutual for a Simple Superannuation Policy on 28 December 1978. The policy was issued on 21 August 1979 with a commencement date of 1 October 1978. The terms of the policy are silent as to the duration of the policy, and the proposal, which forms the basis of the contract contemplates that the policy will continue indefinitely. By its terms National Mutual agrees to grant to "the Assured", i.e. the respondent as Trustee of the Fund, the respective benefits more particularly referred to in the proposal insofar as they consist of payments of money, and to issue any individual policy required by the proposal. The stated considerations for the policy include "the payment of premiums as provided for in the said Proposal".

The proposal runs into 16 pages. It commences:
"1. N.M. Superannuation Proprietary Limited (hereinafter called

'the Proposer') being the Trustee of the National Mutual Simple Superannuation Fund desires to contract with The National Mutual Life Association of Australasia Limited (hereinafter called 'National Mutual') for a Superannuation Policy (hereinafter called 'the Policy') securing to the Proposer in respect of those persons who become Members benefits in the amount and in accordance with the conditions set out in this Proposal and AGREES to do all things required of the Proposer hereunder to enable National Mutual to issue the Policy and to perform its part of the contract thereunder.

2. The basis of the contract in respect of the benefits secured

to the Proposer under the Policy in respect of any Member shall be

(1) this Proposal,

(2) the applications, certificates, statements, lists and information supplied by or on behalf of that Member and by or on behalf of his Participating Employer and the Proposer in respect of him pursuant to any of the provisions contained in this Proposal,

(3) the Trust Deed,

and (4) the Deed of Adoption executed by his Participating Employer.

3. ...

4. The benefits secured to the Proposer under the Policy in

respect of Members and the premiums to secure those benefits shall be in accordance with the Schedules to this Proposal PROVIDED THAT if at any time it shall appear that a mis-statement has been made in the age of any Member in respect of whom any benefit payable under the Policy is calculated the amount of that benefit shall be adjusted to the extent which National Mutual shall determine is appropriate to correct or adjust the error resulting therefrom.

..."

The Second Schedule to the proposal, in para.1, provides:

"1. Subject to the terms and conditions of the Policy if a

benefit becomes payable to or in respect of any Member in accordance with the Trust Deed National Mutual shall grant to the Proposer as soon as is practicable after such benefit becomes payable an amount equal to such benefit."

The Third Schedule provides that the premiums payable to National Mutual under the Policy shall be the contributions payable to the Fund by and on behalf of the Members and the Participating Employer.

The Fifth Schedule makes provision for National Mutual to accept a Member of the Fund for Group Life Assurance, and in that event a premium becomes payable which "shall be as recorded in the Deed of Adoption executed by his Participating Employer and be deducted from the Employer's Basic Contribution.
J.C. Barrett Pty Ltd became a Participating Employer in the Fund by executing a Deed of Adoption on 9 April 1985. By the Deed of Adoption the employer adopted the Fund as a superannuation fund for such of its employees as became Members of the Fund. The employer agreed to be bound by the terms and conditions of the Fund, and to make contributions as required under the Fund in respect of those of its employees who became Members. The participation of the employer and its employees who became Members was to be in accordance with particulars shown in a schedule to the Deed of Adoption.
The schedule to the Deed of Adoption took the form of a printed document filled in by the employer selecting from the range of benefits and options available through the Fund those which were to apply to nominated categories of employees. The schedule completed by J.C. Barrett Pty Ltd shows its Effective Date to be 9 April 1985. It provided for only one category of membership for employees of J.C. Barrett Pty Ltd. The Employer's Basic Contribution for a Member of the Fund in that category was to be the "Maximum", being a sum sufficient to provide approximately the maximum benefit allowed by the Commissioner of Taxation; and no contribution was required from the Member. The schedule nominated a retirement age of 65 years for Members, and as a Resignation Benefit the full release of benefit with immediate 100% vesting. The schedule selected "Pension Plan Type" and "Guaranteed Retirement Portfolio".
The printed document made provision for the selection of insurance cover. In answer to the question "Which INSURANCE COVER TYPE is required?" the employer was invited to select one of the following options:
STANDARD type of cover purchased by a percentage of the

TOTAL Basic Contributions

MAXIMUM cover to achieve maximum benefits allowed by

Commissioner of Taxation

GROUP LIFE ONLY cover

NO COVER required

LEVEL death and total and permanent disablement

benefit

DEATH ONLY cover

The selection made was for NO COVER.

The bankrupt signed an Application for Membership of the Simple Super Fund on 9 April 1985. The form recorded that the employer would make an initial contribution of $59,540.00 and thereafter contribute $4,961.70 per month. The bankrupt would contribute nothing. It has been accepted for the purpose of these proceedings that the Application for Membership was accepted by the respondent on 9 April 1985.
The Trust Deed provides for the payment of benefits to a Member in the following circumstances:
- on retirement on or after his Retirement Date (cl.11)
- on death while in the Service of the employer (cl.13)
- on death after leaving the Service of the employer (cl.14)
- on disablement whilst in the Service of the employer before age 65

(cl.16) and

- on leaving the Service of the employer before Retirement Date

(cl.17).

The clauses providing these benefits are complex, and too long to set out. They are drafted so as to cover a multitude of possibilities having regard to the options provided for in the Schedule to the Deed of Adoption. Several of the provisions in the clauses have no application to the membership of the bankrupt as the options to which they relate were not invoked. In particular, (a) the provisions relating to a member in respect of whom a "pension is being funded" have no application as no Annuity Policy was issued in respect of the bankrupt; (b) the provisions in relation to disablement apply only where disablement cover is required by the Deed of Adoption executed by the Participating Employer, and that did not occur in this case; and (c) the "death after leaving the Service" provisions apply only to a Former Member who was accepted for Group Life Assurance, and that did not occur either.

Benefits were potentially payable to the bankrupt as a Member of the Fund, (i) in the event of retirement on or after the Retirement Date, (ii) on death while in the Service, or (iii) on leaving the Service before his Retirement Date.
Under the provisions of the Deed which could have application to this bankrupt, on the happening of the first of these events his entitlement, having regard to the positive selection of "Pension Plan Type" in the Schedule to the Deed of Adoption, would have been either the payment of his Retirement Accumulation, or the payment of a Pension. The mode of payment, whether as a lump sum or as a Pension (i.e. the amount payable under an Annuity Policy) would be a matter for determination when retirement on or after the Retirement Date happened. An Annuity Policy is by definition an annuity policy effected by the Trustee under cl.20(a) of the Deed in respect of a Member the terms of which are agreed between the Member and the Trustee. Retirement on or after the Retirement Date did not happen in this case. At no time was there an Annuity Policy effected in respect of the bankrupt and there might never have been one even if he had remained in the Service and retired on or after the Retirement Date. If the bankrupt died while still in Service, the benefit payable would be an amount equal to his Retirement Accumulation; and on leaving the Service before his Retirement Date, the benefit would also be an amount equal to the Retirement Accumulation. In some circumstances the Deed provides for the payment of a slightly lower amount arrived at by deducting from the Retirement Accumulation a factor to reflect the premature withdrawal of the Retirement Accumulation before the Retirement Date, but in view of the age of the bankrupt these provisions had no application to him.
The benefit payable to the bankrupt under the Deed on the happening of any of the contingencies which would have attracted a benefit was therefore the Retirement Accumulation. The bankrupt's Retirement Accumulation consisted of the employer's contributions, which had been directed to the Guaranteed Retirement Portfolio, together with interest thereon at a rate determined by National Mutual from time to time under the Policy. The definition of Retirement Accumulation includes, where applicable, the value of the amount of Group Life Assurance. However as no option for life, disability, or other insurance was selected by the employer in the Schedule to the Deed of Adoption the Retirement Accumulation could contain no such component.
As events turned out the bankrupt became eligible for a payment of a benefit when he left the Service before his Retirement Date. The payment which he received was in fact his Retirement Accumulation, being the realisation of the investment of his employer's contributions in the Guaranteed Retirement Portfolio, and accrued interest thereon.
In contending that the benefit received by the bankrupt from the Simple Super Fund was the proceeds of a policy of life assurance or endowment assurance counsel for the respondent stressed the nature of the legal obligations of the respondent which led to the payment. The contributions of the employer, on being received by the respondent were paid as a "premium" (see the Third Schedule to the Proposal) to National Mutual payable under the Simple Superannuation Policy. This policy had been effected by the respondent pursuant to cl.20(a) of the Deed which required it to effect in its name "a life assurance policy" to provide for the benefits payable by the respondent under the Deed to members of the Fund. The Deed was, by the terms of the Proposal, a basis of the contract between the respondent and National Mutual in respect of the bankrupt. The benefit paid to the bankrupt represented the proceeds of that contract being a "life assurance policy". As events happened the benefit became payable on the cessation of the bankrupt's employment, but under the policy benefits were payable in the event of death, or at retirement on or after the Retirement Date, being an event dependent on the survival of the bankrupt to the Retirement Date.
The Bankruptcy Act does not define the expression "policies of life assurance or endowment assurance". There is in sub.s.5(1) a definition of "policy for pure endowment", but that definition provides no assistance in determining the meaning of policies of life assurance or endowment assurance in para 116(2)(d).
The policy of Parliaments throughout Australia to give protection to policies of life insurance against claims of creditors found expression for many years in State legislation. The policy was embodied in the first Commonwealth Bankruptcy Act as sub.s.91(b) of the Bankruptcy Act 1924. In re Estate of Carter, Deceased (1962) 19 ABC 144 Gibbs J., as he then was, considered the meaning of "policies of life assurance" in that sub-section. The Court was referred in argument to certain definitions contained in s.4 of the Life Insurance Act 1945 although the expression "policies of life assurance" was not there defined. At p 150 Gibbs J. observed "It is quite impossible to attempt to discover the intention expressed in the Bankruptcy Act by having regard to the provisions of the Life Insurance Act, which was enacted some 20 years later." But the Bankruptcy Act 1966 was enacted after the Life Insurance Act 1945. The counterpart of sub.s.91(b) is para.116(2)(d). Whereas sub.s.91(b) excluded from property of the bankrupt divisible amongst creditors "policies of life assurance or endowment in respect of his own life" except to the extent of a charge on the policies for premiums paid during the two years preceding the date of the sequestration order, para.116(2)(d) removed the charge for such premiums, and, where policies had been in existence for not less than two years before the commencement of the bankruptcy, excluded them entirely. Paragraph 116(2)(d) was also extended to cover policies in respect of the life of the bankrupt's spouse. These changes in substance were recommended in the Report published in 1962 of the committee chaired by Sir Thomas Clyne which reviewed the bankruptcy law of the Commonwealth: see paras.155-157 of the Report. The Report did not recommend any other change to the exclusion from divisible property enacted in sub.s.91(b). Paragraph 116(2)(d), like its predecessor, uses the expressions "policies of life assurance" and "endowment", and those expressions should be taken to have the same meaning in both provisions.
In any event, it remains the case that the Life Insurance Act does not contain definitions of "policies of life assurance" or "endowment assurance". The Life Insurance Act contains definitions of "life insurance business" and "life policy" but these are wide definitions which embrace forms of insurance which would not otherwise be considered to be policies of life assurance or endowment. In particular the definition of life insurance business includes "sinking fund business", (sub.s.4(1)) and "superannuation business" (sub.s.4(3)), and both definitions include respectively continuous disability insurance business, and policies including a benefit under a continuous disability insurance contract: see The National Mutual Life Association of Australasia Ltd v. Federal Commissioner of Taxation (1959) 102 CLR 29 at 52. I have considered the Life Insurance Act, but I do not find it helpful in construing para.116(2)(d). In my opinion judicial pronouncements on the meaning of "policies of life assurance" in s.91(b) of the Bankruptcy Act 1924 remain applicable to para.116(2)(d): for those pronouncements see in particular, In re Farley; Holden v. Johnson (1933) VLR 271, re Packer (1958) 18 ABC 97 and re Estate of Carter, Deceased (supra).
In para.116(2)(d), policies of life assurance and endowment assurance have the meanings which are well established in common use: cf. re Packer at 103; The National Mutual Life Association of Australasia v. Federal Commissioner of Taxation (supra) at 42 per Windeyer J., with whom Dixon C.J., McTiernan and Kitto JJ. agreed. At p 43 of the latter case, Windeyer J., after pointing out that the expressions life "insurance" and life "assurance" bear the same meaning, said:

"In Bunyon on Life Insurance it is said that 'The contract of life insurance may be further defined to be that in which one party agrees to pay a given sum upon the happening of a particular event contingent upon the duration of human life in consideration of the immediate payment of a smaller sum or certain equivalent periodical payments by another'. This description covers the three forms which, historically, life insurance has taken, and which, single or in combination, are the essence of a life insurance policy. All such policies are basically either term policies, whole of life policies or endowment policies."

His Honour then gave a detailed description of the characteristics of each of these forms of policy. At pp 44-45 he said:

"As a rule an endowment policy at the present day provides for payment of the sum insured at some future date (either a particular date or the attainment of some selected age) called the maturity date, or earlier death...All forms of endowment policy clearly come within Bunyon's definition; for payment is to be made upon the happening of an event contingent upon the duration of human life - in the case of a pure endowment, survival until the maturity date - in the case of a modern endowment, survival till the maturity date or earlier death.

Marine, fire, burglary, personal accident, motor vehicle, and other miscellaneous insurances indemnify the insured against loss from events which may or may not occur. Life insurance on the other hand is related to a contingency, death, which must occur. It is not a risk, it is a certainty; the only uncertainty is when it will occur. This does not mean that the aim of the life policy-holder is always provision against the inevitable rather than precaution against the possible. He may wish to insure the life of a creditor for a term, or he may be concerned with the risk of death depriving dependants of support, or of the loss of income in old age; so that it has been said that a whole life policy is an insurance against dying too soon, an endowment policy an insurance against living too long. But they have a common difference from other forms of insurance; and endowment policies in various forms are today as properly called life insurances as are whole of life policies..."

The Simple Super Deed in its application to the bankrupt, prior to the cessation of his employment, provided for the payment of benefits relating to the contingency of death (death whilst in the Service of the employer), and the duration of human life to a nominated date (retirement on or after the Retirement Date), and those benefits were to be provided under a contract between National Mutual and the respondent called by those parties "a policy of life assurance". But in my opinion these matters fall far short of constituting the payment of the benefit which became due to the bankrupt on the cessation of his employment, proceeds of a policy of life assurance or endowment assurance within the meaning of para.116(2)(d).
It is well recognised that a policy document issued by an insurer may combine more than one type of insurance policy. It has been held in re Estate of Carter, Deceased, at 152 that a policy of life assurance in the Bankruptcy legislation describes those contractual provisions of a combined policy that embody the life insurance element but do not describe the policy as a whole. Paragraph 116(2)(d) will exclude from the divisible property of the bankrupt only those parts of the proceeds of a combined policy which are referrable to the life assurance or endowment assurance provisions. In the present case, the benefits which became payable under the Deed and the Simple Superannuation Policy were not benefits that became payable on the contingency of death, or the continuance of life to a nominated date. They were benefits that became payable on the happening of a separate event not premised on either of these contingencies. Even if the death and retirement benefits payable under the Policy were to be treated as a policy of life assurance or endowment assurance, the payment in the present case would be akin to the payment of the accident component of the combined policies under consideration in Re Estate of Carter, Deceased, and would not be within para.116(2)(d).
However, there is a more fundamental reason why para.116(2)(d) has no operation in the present case. The contractual obligations which are alleged to constitute a policy of life assurance or endowment assurance are those arising between the respondent and National Mutual under the Simple Superannuation Policy. It is the nature and content of those obligations which determine whether there is a policy of life assurance or endowment assurance, not the title given by the parties to the document which records the contractual terms, or the form of that document; Trade Indemnity Co. Ltd v. Workington Harbour and Dock Board (1937) AC 1 at 16-17; Re Australian and Overseas Insurance Co. Ltd (1988) 8 FLR 403 at 414. The adoption by the parties of the description "life assurance" policy in cl.20(a) of the Deed could be explained by the wide definition of "life insurance business" in the Life Insurance Act.
An essential characteristic of a policy of life insurance or endowment assurance is that it be a contract of insurance; Prudential Insurance Company v. Commissioners of Inland Revenue (1904) 2 KB 658 at 662. In the circumstances of a particular case the determination of whether a contract is properly to be characterised as a contract of insurance may not be easy. Many contracts provide for the payment of money on the happening of contingencies which are not contracts of insurance, for example those which are contracts of suretyship guaranteeing payment, and contracts warranting the quality or performance of a chattel supplied by the warrantor. In Prudential Insurance Company v. Commissioner of Inland Revenue, at 662-663 Channell J. said:

"The Attorney-General says that to constitute a contract of insurance it must be a provision against something - against some loss or disadvantageous event. Mr. Danckwerts says that may be true as regards marine and fire policies which are indemnities against loss, but it is not true as regards life policies, for a policy of life insurance is not a contract of indemnity. But the question is whether that makes any real difference, and it seems to me that we must inquire a little further into the nature of a contract of insurance. Where you insure a ship or a house you cannot insure that the ship shall not be lost or the house burnt, but what you do insure is that a sum of money shall be paid upon the happening of a certain event. That I think is the first requirement in a contract of insurance. It must be a contract whereby for some consideration, usually but not necessarily for periodical payments called premiums, you secure to yourself some benefit, usually but not necessarily the payment of a sum of money, upon the happening of some event. Then the next thing that is necessary is that the event should be one which involves some amount of uncertainty. There must be either uncertainty whether the event will ever happen or not, or if the event is one which must happen at some time there must be uncertainty as to the time at which it will happen. The remaining essential is that which was referred to by the Attorney-General when he said the insurance must be against something."

In Gould v. Curtis (1913) 3 KB 84 at 92 Cozens-Hardy M.R. disapproved the last sentence in a case concerning an endowment policy, but otherwise the statement of Channell J. has been applied in later decisions: see, for example, Department of Trade and Industry v. St Christopher Motorists' Association Ltd (1974) 1 WLR 99 and Medical Defence Union Ltd v. Department of Trade (1979) 2 WLR 686.

It is the requirement of the element of uncertainty which is important in this case. The element of uncertainty referred to by Channell J. concerned the happening of the event upon which the sum insured would become payable. That uncertainty gives rise to uncertainty as to both profit and loss to the insurer which is a distinguishing characteristic of a contract of insurance. Thus, contracts of insurance are said to be aleatory contracts: see Colinvaux's Law of Insurance 6th Ed. at p 1; MacGillivray and Parkington on Insurance Law 7th Ed.s at p 6.
A contract of insurance is a contract upon speculation; Carter v. Boehm (1766) 3 Burr 1905, 1909; 97 ER 1162 at 1164; In Re Commonwealth Homes and Investment Co. Ltd (1943) SASR 211, 231. It is a characteristic of a contract of insurance that the amount of the premium is not intended to be equivalent to the present value of the insurer's actual performance; MacGillivray and Parkington on Insurance Law 7th Ed. at p 3. And conversely the insurer's actual performance, the payment of the sum insured on the happening of the contingency, is not intended to be equivalent to the value of the moneys paid to the insurer by way of premium.
That a contract of insurance involves an element of speculation is not, of course, a sufficient criterion for distinguishing a contract of insurance for contracts of some other kind. There is an element of speculation in contracts of suretyship and in warranties as to the quality or performance of chattels, but the absence of an element of speculation which carries a risk to the putative insurer that the contract may be worth more or less than the value of the premiums received indicates that the contract is not one of insurance.
In the present case the obligation on National Mutual under the Policy upon the happening of any of the contingencies that attracted the payment of a benefit under the Deed required the payment only of the Retirement Accumulation. In its application to the bankrupt the Retirement Accumulation comprised the employer's contributions plus interest accrued thereon at rates from time to time determined by National Mutual under the Policy. In no relevant sense was National Mutual exposed to a risk that it might suffer a loss. The contract did not contemplate that at any time would there be a chance that National Mutual would benefit or lose according to when the death of the bankrupt occurred. The contract contemplated that money would be received by National Mutual in respect of the bankrupt's interest in the Fund, that the money would be invested by it, and that whenever the time for payment of a benefit arose the moneys received together with accrued interest would be repaid. This situation may be contrasted with that considered in re Commonwealth Homes and Investment Co., supra, where the company agreed not only to refund premiums paid on a bond in the event of death before maturity (an obligation which was held not to involve an element of life insurance), but to pay as well, in the event of death, the full reversionary value of bonuses which otherwise would have been paid at the maturity of the bond. The latter obligation was held to come within the definition of a life policy in the Insurance Act 1932 (Cth), viz. "a policy insuring payment of money on death...or the happening of any contingency dependent on the termination...of human life, and includes an instrument evidencing a contract which is subject to...the payment of premiums for a term dependent on the termination...of human life...". The obligation to pay the full reversionary value of bonuses on death introduced the element of speculation, and the chance of loss to the company, necessary to constitute the obligation as one of insurance.
Counsel for the respondent contended that an element of speculation sufficient to constitute an element of "insurance" in the obligations of National Mutual in relation to the bankrupt is to be found in the conditions implicit in the selection in the Schedule to the Deed of Adoption of the "Guaranteed Retirement Portfolio" option. It is necessary to go to the oral evidence of Mr Blythe to understand the significance of the selection of this option. The Trust Deed contains a definition of the Guaranteed Retirement Portfolio, and the direction of funds to that Portfolio is contemplated in the definition of Retirement Accumulation. But it is not apparent from the Deed that the Guaranteed Retirement Portfolio is in fact an investment fund maintained and administered by National Mutual.
In the case of contributions made by the employer in respect of the bankrupt, those contributions were paid by the respondent to National Mutual as "premiums" under the Simple Superannuation Policy, directed into the Guaranteed Retirement Portfolio, and credited to the bankrupt's Retirement Accumulation.
Paragraph 3 of the Second Schedule to the Proposal for the Simple Superannuation Policy provides:

"National Mutual shall from time to time declare the rate per centum per annum which shall be the interest applicable to (the) Member's Retirement Accumulations...under the Policy...Each rate so declared shall apply until the date on which the next rate is to be effective."

There is no limitation imposed on the frequency with which the declared rate of interest may be changed. The declared rate is credited daily to the Member's Retirement Accumulation, and annually, at 30 September each year, the accrued interest is capitalised and credited to the member's Retirement Accumulation as if it were an employer's contribution.

The guarantee which attaches to the Guaranteed Retirement Portfolio is a guarantee by National Mutual to pay, when benefits become payable, the amount credited as contributions to the Member's Retirement Accumulation (including capitalised interest) less administration expenses.
The guarantee is in effect to ensure the return of capital which has been credited to a member's Retirement Accumulation.
Counsel for the respondent argues that by giving this guarantee National Mutual has shouldered the risks of poor investment decisions which could see the nominal value of investments into which the funds are placed being diminished. Hence, it is said, National Mutual "insures" the repayment of the Retirement Accumulation.
A capital guaranteed investment, offered for example by a bank or other financial institution to its clients, would not normally be considered to involve a contract of insurance with the client. The financial institution provides to its clients an investment service. The provision of a "capital guaranteed" investment would be akin to the provider of some other service, or the provider of goods, guaranteeing that the service or goods supplied are of a particular quality, or will perform to a particular standard. In these situations the happening of the event which would require the provider to meet the guarantee would usually be uncertain, yet the contract would not be one of insurance as the event is not one outside the control of the provider. In both Department of Trade and Industry v. St. Christopher Motorists' Association Ltd (supra) and Medical Defence Union Ltd v. Department of Trade, supra, it was argued that a characteristic or requirement of a contract of insurance is that the insured event must be one outside the control of the insurer. In each case the point was expressly left undecided ((1974) 1 WLR at 106, (1979) 2 WLR 691). That there is such a requirement has the support of the authors of MacGillivray and Parkington on Insurance Law, 7th Ed. at p 5, and Tarr, Australian Insurance Law, at 12.
In a case where the obligation under consideration is one which arises on the failure of goods or a service provided under a contract to meet a standard or to have the characteristics specified by that contract, and where the obligation is to make good that failure, in my opinion there is no element of insurance involved. It can be said in such a case that the happening of the event on which the performance of the obligation depends is not outside the control of the provider, and is not, therefore, insurance.
In the present case the "event" guaranteed by National Mutual, i.e. the repayment of the amount credited as contributions (including capitalised interest) was one which lay within the control of National Mutual. The performance of the obligation imposed by the guarantee could theoretically have been met by National Mutual depositing the money with a bank, thereby securing repayment of the nominal value of the investment, or even locking the contributions in a safe. These options no doubt were not followed as the service offered by National Mutual included the prospect of higher returns to those "investing" in National Mutual products. Members were offered the investment skills of National Mutual, and in return paid administration charges for that service. Whilst the return of capital was guaranteed, it will be noted that the interest to accrue thereon could be varied at will by National Mutual. The investments made, and the returns thereon, were matters entirely for National Mutual, and were an integral part of the service provided.
In any event, even if there is an element of insurance in the obligations arising under the Guaranteed Retirement Portfolio, the uncertain event which enlivens that obligation is not one contingent upon death or the duration of human life. The element of insurance would not make the payment of the Retirement Accumulation the proceeds of a policy of life assurance or endowment assurance.
In my opinion the payment of the amount claimed to the bankrupt from the Simple Super Fund on the cessation of his employment does not represent the proceeds of a policy of life assurance or endowment assurance, and the payment is not excluded by para.116(2)(d) from the bankrupt's property divisible amongst his creditors.
I turn to the further ground of defence raised by the respondent and the bankrupt, that the transactions in connection with the investment of the amount claimed in the Personal Super Bond are protected by s.123, and that in consequence the applicant, by virtue of the provisions of cl.16 of the National Mutual Retirement Fund, has no interest in the Bond.
It is not contested that there were dealings between the respondent and National Mutual on the one hand and the bankrupt on the other hand for valuable consideration. I have already given reasons for my finding that the request to cancel the SuperGuard Policy, and the proposal for the Personal Super Bond were received by National Mutual on about 8 September 1988, and I have accepted Mr McCann's evidence that he was not a party to backdating documents. In light of these findings, it is not proved that the respondent or National Mutual had notice of the presentation of the creditor's petition before the sequestration order was made. Further, it was not disputed by the applicant that if National Mutual were unaware of the presentation of the bankruptcy petition any "transaction" in relation to the Personal Super Bond before the sequestration order was made, if one occurred, was one entered into by the respondent or National Mutual as the case may be in good faith and in the ordinary course of business. It should be said that the bankrupt's dealings with the respondent and National Mutual occurred through brokers. It is difficult to avoid suspecting that the brokers were aware of the bankrupt's pending bankruptcy, but there is no evidence to suggest that their knowledge was passed on.
The issue arising under s.123(1) which remains, is whether the transactions resulting in the issue of the Personal Super Bond "took place before the day on which the debtor became a bankrupt": para.123(1)(e).
The proposal lodged by the bankrupt with National Mutual "to invest" the amount claimed in the Personal Super Bond recorded that the bankrupt understood the Bond would "be issued pursuant to the provisions of the Trust Deed, by which the relevant Fund is governed, and of the Super Bond Policy". Forming part of the written proposal was an application for membership of the NM Retirement Fund addressed to the respondent as Trustee of the Fund. At least twice in the printed form on which the application for membership is made appears the statement in relation to questions asked in the form: "If the information is not provided the Trustee is not allowed to accept your Application". The proposal and the application for membership, were offers by the bankrupt. Neither document had any legal consequence until the offer contained in it was accepted. The Trust Deed constituting the NM Retirement Fund, and the terms of the Personal Super Bond, contemplate that the application for membership of the Fund will be considered by the respondent before the proposal made by the applicant to National Mutual for a Personal Super Bond can be accepted. If and when the applicant becomes a member of the Fund, the proposal addressed to National Mutual is then considered by National Mutual as a proposal in which the respondent is the "Proposer" and the applicant is "Life to be Insured". If accepted, the Personal Super Bond is then issued in the name of National Mutual as the policyholder, the "life insured" being the applicant (now a member of the fund).
The Trust Deed defines Member as "A person who has been accepted as a Member of the Fund pursuant to clause 3 of this Deed...". Clause 3 of the Deed provides:

"3.(a) Any Eligible Person who has not attained the age of 70 years may apply for membership of the Fund.

(b) Any Eligible Person desirous of becoming a Member shall apply to the Trustee in writing on the form prescribed from time to time by the Trustee wherein the applicant shall inter alia agree to be bound by the provisions of this Deed and make contributions to the Fund.

(c) The Trustee may in its absolute discretion accept or reject any such application.

(d) ..."

Whilst the bankrupt lodged with National Mutual the request to cancel the SuperGuard Policy, and the proposal with attached application for membership of the Retirement Fund on about 8 September 1987, none of these documents was processed until, at the earliest, 23 February 1988, and probably not until the end of May 1988. When the Personal Super Bond was issued on 1 July 1988, it was stated to have the commencement date of 5 August 1987 that being the date on which the bankrupt had proposed for the SuperGuard Policy which he later cancelled.

The delay in processing these documents was explained by Mr McCann as due to the pressure of business within the Investments Products Department of National Mutual in South Australia at the time. When the papers relating to the bankrupt were received (presumed to be about 8 September 1987), they were placed at the bottom of a pile of other requests and documents awaiting attention in a manila folder. Documents in the pile were then processed in the order in which they had been received. It took several months to reach the documents relating to the bankrupt.
The respondent and the bankrupt contend that the Personal Super Bond "took effect" from either 5 August 1987 or 8 September 1987, and since then the respondent has held the amount claimed on the trusts set forth in the NM Retirement Fund Trust Deed. The difficulty with this contention is that it flies in the face of the facts that at all times up to the making of the sequestration order, and well beyond, the bankrupt was not a member of the NM Retirement Fund, that the respondent had not proposed for the Personal Super Bond, and that National Mutual had not accepted the proposal for the Personal Super Bond.
The respondent and the bankrupt seek to avoid this difficulty by calling in aid the equitable maxim that equity looks on that as done which ought to be done. This maxim has application in the case of contracts. Equity treats a contract to do a thing as if the thing were already done, though only in favour of the person entitled to enforce the contract specifically and not in favour of volunteers. In Halsbury's Laws of England, 4th Ed., vol.16 para.1306 it is said:

"Thus, where the obligation arises from contract, that which ought to be done is only treated as done in favour of some person entitled to enforce the contract as against the person liable to perform it. The true meaning of the maxim is that equity will treat the subject matter, as to collateral consequences and incidents, in the same manner as if the final acts contemplated by the parties had been done exactly as they ought to have been, but the contract itself is not varied. The doctrine does not make for the parties contracts different from those they have made for themselves."

The last sentence of this passage summarises the statement of principle made by Lord Atkinson in De Beers Consolidated Mines Ltd v. British South Africa Co. (1912) AC 52 at 65-66:

"That doctrine cannot, in its application to contracts, however, be permitted to turn the conditional into the absolute, the optional into the obligatory, or to make for the parties contracts different from those they have made for themselves. What a party to a contract ought to do, within the true meaning of this doctrine, is what he has contracted to do, and nothing more and nothing less is to be taken, in equity, to be done."

In my opinion the equitable doctrine can have no application in this case.

There was a contractual obligation resting on National Mutual under the SuperGuard Policy to cancel that policy on receiving a written request to do so within the 14 day free look period. National Mutual failed to take any action until well after the sequestration order was made, but there is no need to resort to equitable principles to assert that the SuperGuard Policy should be treated as cancelled on about 8 September 1987. The bankrupt's letter achieved that result, and the premium paid thereunder became repayable to him at the time his letter of cancellation was received by National Mutual, by force of s.64 of the Insurance Contracts Act.
On the cancellation of the SuperGuard Policy there was no contract in force between the bankrupt and either the respondent or National Mutual, nor could there be until the application for membership of the Retirement Fund, and the proposal for the Personal Super Bond, were accepted. In the meantime there were no obligations between the parties arising from the delivery of those documents to National Mutual. Neither company was bound to accept the offer made to it by the bankrupt. Equity will not make a contract for the parties which the parties had not made for themselves. The acceptance of those offers was no mere formality. The acceptance of the application for membership of the NM Retirement Fund was dependent on the respondent being satisfied that the bankrupt qualified according to the taxation laws for the benefits which he sought to acquire through the NM Retirement Fund.
In my opinion the equitable doctrine cannot be invoked to establish the proposition that the Personal Super Bond was, or is to be treated as, in effect from 5 August 1987, or from some other date prior to the making of the sequestration order on 5 October 1987. On the making of the sequestration order the property of the bankrupt divisible among creditors vested in the applicant. That property included the amount claimed which at the commencement of the relation back period was held by the respondent. The applicant is entitled to an order that the respondent pay the amount claimed and interest thereon to the applicant. The subsequent transactions do not alter the applicant's entitlement. The SuperGuard policy acquired by the bankrupt was cancelled on about 8 September 1987. As a matter of fact there were no dealings or transactions between the cancellation of the SuperGuard policy and the sequestration order to which sub.s.123(1) of the Act can apply. The dealings with the amount claimed by the respondent and National Mutual following the sequestration order are not valid as against the applicant.
As s.123 has no application to the facts of this case, it is not necessary to consider the further argument of the applicant that cl.16 of the NM Retirement Fund Trust Deed cannot operate so as to defeat the provisions of the Bankruptcy Act: cf. British Eagle International Airlines Ltd v. Compagnie Nationale Air France (1975) 1 WLR 758, Horne v. Chester and Fein Property Developments Pty Ltd and Ors (1986) 11 ACLR 485.
I direct the applicant to bring into Court short minutes reflecting these reasons for judgment and I will hear the parties further as to the terms of the order which should now be made.

[1992] FCA 90

06 MARCH 1992