Foundation Life (NZ) Ltd - [2025] NZHC 1786

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2025-485-142

[2025] NZHC 1786

IN THE MATTER of a scheme of arrangement under pt 15 of the Companies Act 1993

RE

FOUNDATION LIFE (NZ) LIMITED

Applicant

Hearing: 25 June 2025

Appearances:

M Arthur and N Whittle for Applicant A Ross KC as Amicus Curiae

Judgment:

2 July 2025

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[Approval of Scheme of Arrangement]

Introduction

[1] Before me is an application for final orders for approval of a scheme of arrangement (the Scheme) under pt 15 of the Companies Act 1993. If approved, the Scheme will rearrange the rights of approximately 27,588 life insurance policyholders who hold one or more of the participating policies issued by Foundation Life (NZ) Ltd (Foundation Life), the applicant.1

[2]Foundation Life, in short, seeks approval of the Scheme to:

(a)convert the policy of each eligible policyholder resident in New Zealand into replacement cover provided by Chubb Life Insurance New Zealand Limited, cash, or a combination; and

1 This figure is an approximation as at 31 December 2024.

FOUNDATION LIFE (NZ) LIMITED [2025] NZHC 1786 [2 July 2025]

(b)provide eligible policyholders based overseas with the cash payment option automatically or, if selected within a certain period, the option to transfer ownership of their current policy.

[3]The application is unopposed.

Background

[4] Foundation Life is an insurance company that was previously known as Tower Life (N.Z.) Limited. Before its insurance policies were closed to new business and entered run-off in November 2000, its business focussed on the sale and management of life insurance policies. The relevant policies for the purpose of this proceeding (the Whole of Life and Endowment policies) provide both life insurance and an investment. Approximately 27,588 life insurance policyholders participate in Foundation Life’s insurance business profits, although not all will be eligible for the Scheme discussed below.

The Scheme

[5] The Scheme proposes to convert the current policy of each eligible policyholder resident in New Zealand into one of the following, at their choice:

(a)replacement cover provided by Chubb Life Insurance New Zealand Limited (with a guaranteed amount of life cover that will, at the relevant date, be five per cent higher than the current policy’s death benefit, for which no further premiums need to be paid);

(b)a cash payment that will, at the relevant date, be a minimum of five per cent higher than the current policy’s surrender value (capped at the current policy’s death benefit); or

(c)a combination of life cover and cash, in a one third to two thirds ratio either way (at the policyholder’s choice).

[6] Eligible policyholders based overseas will receive the cash payment option by default or can transfer ownership of the policy to a New Zealand resident before an allocated time, so the new policyholder can access the other options.

[7] I understand that the last date for policyholders to make their choice is currently estimated to be around 14 August 2025, assuming the Scheme…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Foundation Life (NZ) Ltd

Details

AGLC: Foundation Life (NZ) Ltd [2025] NZHC 1786
Case: [2025] NZHC 1786
Decision Date: 2 July 2025

CaseChat Overview and Summary

Foundation Life (NZ) Ltd, an insurance company previously known as Tower Life (N.Z.) Limited, sought the High Court's approval of a proposed scheme of arrangement under the Companies Act 1993. The Scheme aimed to restructure the rights of approximately 27,588 life insurance policyholders who hold participating policies. The applicant sought to convert the current policies of eligible policyholders in New Zealand into replacement cover provided by Chubb Life Insurance New Zealand Limited, cash, or a combination of both. Eligible policyholders based overseas would receive the cash payment option by default or could transfer ownership of the policy before an allocated time to access the other options. The application was unopposed.

The primary legal issues involved whether the Scheme was compliant with statutory provisions, whether it had been fairly presented to policyholders with sufficient information, and whether the Scheme was capable of acceptance and fair and equitable. The Court had to determine if the Scheme met the statutory requirements and the broader criteria for approving such arrangements under the Companies Act. The Court also had to assess whether policyholders had been adequately informed and whether the Scheme was reasonable and fair for policyholders.

Associate Judge Skelton found that the Scheme met all statutory and procedural requirements. The Court was satisfied with the compliance with the Initial Orders and the distribution of the necessary materials to policyholders. The Scheme was fairly presented, with comprehensive information provided to policyholders to enable them to make an informed decision. The Court accepted the submissions that the Scheme was capable of acceptance and was fair and equitable. The overwhelming support from the policyholders who voted and the actuarial analysis indicated that the Scheme was in the best interests of the policyholders.

The Court approved the Scheme and ordered that it be binding on Foundation Life and its eligible policyholders. The final orders were made with minor amendments to the draft final orders filed by counsel for the applicant. The Court emphasized that the Scheme would remain conditional on the finite pool of participating assets being sufficient to meet all obligations, including Chubb Life's premium, policyholders' payments, the shareholder's entitlement, and other liabilities.

Orders