Re: NM SUPERANNUATION PTY LTD
And: STEPHEN ELLIOTT YOUNG and GEOFFREY CHARLES BARRETT
No. S G41 of 1992
FED No. 138
Number of pages - 36
Bankruptcy - Life Insurance - Statutory Interpretation
(1993) 7 ANZ Insurance Cases 61-163
(1993) 113 ALR 39
(1993) 41 FCR 182
COURT
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Burchett(1), Hill(2) and O'Loughlin JJ.(3)
CATCHWORDS
Bankruptcy Life Insurance - protection of life insurance from claims of creditors under s. 116(2)(d) of the Bankruptcy Act - history and policy of this protection - whether moneys paid under a superannuation scheme were the proceeds of policies of life assurance or endowment assurance - whether the moneys were proceeds of policies of pure endowment - whether description of the policy as life insurance affects its character - meaning of "life assurance" and "endowment assurance" and "pure endowment" - whether provision for benefit representing a return of premiums plus interest upon early retirement deprives the policy of the nature of life assurance - whether there is a requirement that a policy of life assurance be uncertain as to both profit and loss to the insurer - whether benefits under the policy should be apportioned between those having the character of life insurance and other benefits, or whether those other benefits were merely incidental.
Statutory Interpretation - whether s. 116(2)(d) is remedial and beneficial legislation which, if ambiguous, should be construed liberally.
Bankruptcy Act 1966, s. 116(2)(d)
Re Lin; Law v. Lin (1960) 18 ABC 142
Wilson v. Wilson's Tile Works Proprietary Limited (1960) 104 CLR 328
The Commissioner of Stamp Duties of the State of New South Wales v. Jones (1971) 125 CLR 511
Prudential Insurance Company v. Commissioners of Inland Revenue (1904) 2 KB 658
Marac Life Assurance Ltd v. Commissioner of Inland Revenue (1986) 1 NZLR 694
In re Commonwealth Homes and Investment Company Ltd (1943) SASR 211
British India Steam Navigation Co v. Commissioner of Inland Revenue (1881) 7 QBD 165
Australian Mutual Provident Society v. Chaplin (1978) 18 ALR 385
HEARING
ADELAIDE, 10-11 November 1992
#DATE 12:3:1993
Counsel and Solicitors Mr S Faye QC with
for Applicant: Ms P Marzella instructed by Piper Alderman
Counsel and Solicitors Mr N Morecombe QC with
for Respondent: Ms C Mitchell instructed by Cowell Clarke
ORDER
1. The appeal be allowed.
2. The orders made at first instance be set aside, and in lieu thereof:
a. It be declared that the sum of $187,566.79 referred to in the proceedings is not property which vested in the applicant pursuant to s. 58 of the Bankruptcy Act 1966, and is not property which is divisible amongst the creditors of the bankrupt pursuant to s. 116 of that Act. b. It be ordered that the applicant pay the costs of the respondent to the application and the costs (if any) of the bankrupt.
3. The first respondent to the…
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- Case
- [1993] FCA 138
- Decision Date
CaseChat Overview and Summary
The central legal issues were whether the moneys paid under the superannuation scheme were the proceeds of policies of life assurance or endowment assurance, or whether they were the proceeds of policies of pure endowment. The court had to determine the meaning of "life assurance," "endowment assurance," and "pure endowment" and whether the description of the policy as life insurance affected its character. Additionally, the court considered whether a provision for benefit representing a return of premiums plus interest upon early retirement deprived the policy of the nature of life assurance. The court also examined whether there was a requirement that a policy of life assurance be uncertain as to both profit and loss to the insurer and whether benefits under the policy should be apportioned between those having the character of life insurance and other benefits, or whether those other benefits were merely incidental.
The court found that the sum of $187,566.79 referred to in the proceedings was not property that vested in the applicant pursuant to section 58 of the Bankruptcy Act 1966, and it was not property that was divisible amongst the creditors of the bankrupt pursuant to section 116 of that Act. The court held that the policy in question was a pure endowment policy, and therefore the moneys paid under the scheme were not protected from the claims of creditors. The court also found that the description of the policy as life insurance did not affect its character as a pure endowment policy. The court further held that there was no requirement that a policy of life assurance be uncertain as to both profit and loss to the insurer, and that benefits under the policy should not be apportioned between those having the character of life insurance and other benefits.
The court allowed the appeal, set aside the orders made at first instance, and declared that the sum of $187,566.79 was not property that vested in the applicant or divisible amongst the creditors of the bankrupt. The court ordered that the applicant pay the costs of the respondent to the application and the costs (if any) of the bankrupt. The first respondent to the appeal was ordered to pay the appellant's costs of the appeal, and there was no order as to the costs of the bankrupt of the appeal.
Orders
Orders of the court
1. The appeal be allowed.
2. The orders made at first instance be set aside, and in lieu thereof:
a. It be declared that the sum of $187,566.79 referred to in the proceedings is not property which vested in the applicant pursuant to s. 58 of the Bankruptcy Act 1966, and is not property which is divisible amongst the creditors of the bankrupt pursuant to s. 116 of that Act. b. It be ordered that the applicant pay the costs of the respondent to the application and the costs (if any) of the bankrupt.
3. The first respondent to the appeal pay the appellant's costs of the appeal.
4. There be no order as to the costs of the bankrupt of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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