In the matter of Colonial Portfolio Services Ltd [1999] FCA 1779

FEDERAL COURT OF AUSTRALIA

In the matter of Colonial Portfolio Services Ltd [1999] FCA 1779

LIFE INSURANCE – transfer of life insurance businesses

Life Insurance Act 1995 (Cth) s194

COLONIAL PORTFOLIO SERVICES LIMITED & COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED v AUSTRALIA PRUDENTIAL REGULATION AUTHORITY & NATHAN CRAFTI N 809 of 1999 MATHEWS J 17 DECEMBER 1999 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 809 OF 1999

BETWEEN: COLONIAL PORTFOLIO SERVICES LIMITED

First Applicant

COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED

Second Applicant

AND: AUSTRALIA PRUDENTIAL REGULATION AUTHORITY

First Respondent

NATHAN CRAFTI

Second Respondent

JUDGE: MATHEWS J

DATE OF ORDER: 13 OCTOBER 1999

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The scheme be confirmed without modification. 2. The applicants to pay the costs of the Australia Prudential Regulation Authority. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 809 OF 1999

BETWEEN: COLONIAL PORTFOLIO SERVICES LIMITED

First Applicant

COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED

Second Applicant

AND: AUSTRALIA PRUDENTIAL REGULATION AUTHORITY

First Respondent

NATHAN CRAFTI

Second Respondent

JUDGE: MATHEWS J

DATE: 17 DECEMBER 1999

PLACE: SYDNEY

REASONS FOR JUDGMENT

Background 1 The applicants have sought the Court's confirmation pursuant to s 194 of the Life Insurance Act 1995 (Cth)("the Act") of a scheme whereby the life insurance business of the first applicant, Colonial Portfolio Services Limited (CPSL) was to be transferred to the second applicant, the Colonial Mutual Life Assurance Society Limited (CMLA). Both applicants are life companies within the meaning of the Act. As such, the transfer of the life insurance business from one to the other can be effected only under a scheme which is confirmed by the Court (s 190(1) of the Act). 2 The hearing of the application took place on 13 October 1999. The completion date for the scheme, subject to confirmation by the Court, had been set for 31 October 1999. At the end of the hearing I was satisfied that the scheme should be confirmed. I therefore made an order to that effect. However an issue having been raised relating to the court's discretion under the Act, I announced that I would give my reasons later. These are my reasons for making the order that the scheme be confirmed. 3 Part 9 of the Act, containing ss 189 to 197, deals with the preconditions and consequences of applications to the Court for confirmation of a scheme for transfer of life insurance business. The procedural preconditions are generally designed to ensure that interested members of the public, particularly policy owners, are informed of the proposed scheme, are given accurate information about it, and are afforded the opportunity to obtain more detailed particulars if they wish to do so. Compliance with these procedural requirements is the first matter which the Court must consider when it is asked to confirm a scheme under s 194. Indeed, unless otherwise stated in the legislation or the regulations, compliance with these requirements is an essential precondition to the confirmation of a scheme. 4 The second matter to be considered by the Court consists of what was described in this case as "discretionary considerations". In this regard, s 194 is in the broadest of terms. It provides as follows: "The Court may: (a) confirm a scheme without modification; or (b) confirm the scheme subject to such modifications as it thinks appropriate; or (c) refuse to confirm the scheme."