FEDERAL COURT OF AUSTRALIA HCF Life Insurance Co Pty Ltd v Lamb [2000] FCA 573 INSURANCE – Life Insurance – Life Insurance Act 1995 (Cth) s 215 – payment of policy moneys into Court where no sufficient discharge can be obtained – nature of jurisdiction of Court in determining persons to whom moneys are to be paid – whether Court may order costs to be paid out of moneys paid into Court Life Insurance Act 1995 (Cth) s 215 Life Insurance Act 1945 (Cth) s 105 Carter Bros v Renouf (1962) 111 CLR 140, followed Caboolture Park Shopping Centre Pty Ltd (in liq.) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224, cited National Mutual Life Association of Australasia Ltd v Dawbarn & Ors (1986) 4 ANZ Insurance Cases 60-746, noted HCF LIFE INSURANCE COMPANY PTY LIMITED v LAMB & ORS N 1052 of 1999 BRANSON J SYDNEY 5 MAY 2000 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1052 of 1999 BETWEEN: HCF LIFE INSURANCE COMPANY PTY LIMITED (ACN 001-831-250) Applicant AND: FARRAN GEORGE LAMB First Respondent BRADLEY RONALD LOWE Second Respondent EDITH LORRAINE URQUHART Third Respondent JUDGE: BRANSON J DATE OF ORDER: 5 MAY 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: The Third Respondent bring in minutes of order to reflect these reasons for judgment. 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 1052 of 1999 BETWEEN: HCF LIFE INSURANCE COMPANY PTY LIMITED (ACN 001-831-250) Applicant AND: FARRAN GEORGE LAMB First Respondent BRADLEY RONALD LOWE Second Respondent EDITH LORRAINE URQUHART Third Respondent JUDGE: BRANSON J DATE: 5 MAY 2000 PLACE: SYDNEY REASONS FOR JUDGMENT INTRODUCTION 1 The applicant, a company carrying on life insurance business in Australia, has paid into Court the moneys payable by it in respect of a contract of insurance that provides for the payment of money on the death of Karen Elizabeth Lowe, now deceased ("Ms Lowe"). The applicant has taken this step in reliance on s 215 of the Life Insurance Act 1995 (Cth) ("the Act") which provides as follows: "215 (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." 2 The Dictionary contained in the Schedule to the Act has the effect that "Court" in the above section means "the Federal Court of Australia" and "life company" means "a company that is carrying on life insurance business in Australia." 3 Order 65 r 2 of the Federal Court Rules provides as follows: "2 (1) A company which makes a payment into Court pursuant to subsection 202(3) or subsection 215(1) of the Life Insurance Act 1995 must, at the time of making such payment, commence proceedings in the Court for a declaration as to the persons entitled to the moneys so paid in. (2) An application for a declaration must be in accordance with Form 59 in the First Schedule. (3) An applicant must join as respondents to the application: (a) all persons in respect of whom it has received express notice in writing of any trust, right, equity or interest in the moneys paid into Court; and (b) all persons who may be affected by the declaration sought. (4) On the filing of an application, the applicant must also file the following documents: (a) an affidavit showing the nature of the claim for a declaration and the material facts on which the claim is based; (b) a notice of deposit in accordance with Form 31A in the First Schedule. 4 By an application dated 16 September 1999, the applicant sought a declaration as required by O 65 r 2(1) of the Federal Court Rules. By a notice of motion of the same date it also sought, and subsequently obtained, an order for substituted service of all documents on Bradley Ronald Lowe ("Mr Lowe"), a person who may be affected by the declaration sought by the applicant. I was satisfied that it is impractical to serve documents on Mr Lowe in the manner set out in the Federal Court Rules as his present whereabouts are unknown (O 7 r 9). When the matter came on for hearing the first and third respondents appeared by counsel. There was no appearance by the second respondent, nor has the second respondent responded to the advertisement placed in newspapers pursuant to orders of the Court advising of this proceeding. The hearing proceeded by leave in the absence of Mr Lowe. 5 I have concluded that the moneys paid into the Court under s 215 of the Act should be dealt with as follows: (a) by being applied, so far as is necessary, to meet the order or orders of the Court as to the costs of this proceeding; and (b) by all remaining moneys being paid to the third respondent. My reasons for reaching this conclusion are set out below. FINDINGS OF PRIMARY FACT 6 Mrs Edith Lorraine Urquhart ("Mrs Urquhart"), the third respondent, is the mother of Ms Lowe. On 22 September 1984, Ms Lowe married Mr Lowe. On 20 September 1991, the applicant received an application for life insurance from Ms Lowe. The application was approved on 1 November 1991 and a policy document and a certificate of insurance were issued to Ms Lowe ("the Certificate"). Ms Lowe and Mr Lowe separated in about 1994 but they were never divorced. On 18 August 1995, Mr Lowe signed a statutory declaration in which he declared as follows: "I will exchange one half of the belongings, previously the property of my wife Karen Elizebeth (sic) Lowe, and myself for the sum of one thousand dollars. I sware (sic) I will no longer ask my wife for any money or belongings previously owned by either party." 7 Mrs Urquhart paid the sum of $1,000 to Mr Lowe on a date which is not made clear by the evidence, but which I assume to be on or about 18 August 1995. 8 By 1997 Ms Lowe was extremely ill suffering from vasculitis, hepatitis C and lymphoma. In April 1997 Ms Lowe said to Mrs Urquhart words to the effect: "My insurance policy, I have changed it over to you, mum." 9 On the Certificate the name "Bradley Lowe", which appears beside the words "Nominated Beneficiary (if applicable)" has been crossed out by hand. Shaky handwriting, which could constitute the signature "K.E. Lowe", appears above the crossed out name. It appears that the same shaky hand has written the words "My Mother" along side the crossed out name of Bradley Lowe and beneath those words the date 20/9/1997 and what may well be the signature "K.E. Lowe". The Certificate also has "Mrs Edith L.Urquhart" typed under the words "Nominated Beneficiary (if applicable)". Mrs Urquhart gave evidence that Ms Lowe purchased a typewriter and that it was her (ie Mrs Urquhart's) belief that Ms Lowe typed Mrs Urquhart's name on the Certificate. 10 Ms Lowe died on 8 April 1998. At that time she was living in a de facto relationship with Farran George Lamb ("Mr Lamb"). Mr Lamb is the administrator of Ms Lowe's estate. On 6 July 1998, a deed of arrangement was entered into between Mr Lamb of the one part and Mrs Urquhart and her husband, Neville Alexander Urquhart, of the other. Pursuant to the deed of arrangement, the estate of Ms Lowe is to be distributed so that all monies remaining after the payment of certain debts are to be paid to Mrs Urquhart and her husband. Mr Lamb has filed an affidavit in this proceeding in which he indicates his wish that the proceeds of the policy be paid to Mrs Urquhart. THE POLICY 11 The conditions of the policy provide under the heading BENEFIT that: "Upon the death of the Certificate Holder HCF Life will pay the Benefit to the nominated beneficiary of the Certificate Holder, or if there be none, the legal personal representative of the Certificate Holder, subject to the conditions stated below." Under the heading NOTICE TO COMPANY the following condition appears: "HCF Life will not be affected by notice of any fact in any way relating to this Policy unless and until express notice in writing of such fact shall have been received by HCF Life at its principal office and no variation of the terms and conditions of this Policy will bind HCF Life unless it has been expressed in writing and signed by a duly authorised officer of HCF Life." No other conditions of the policy appear to have relevance to this application. CONSIDERATION 12 The High Court gave consideration to the predecessor provision of s 215 of the Act, namely s 105 of the Life Insurance Act 1945 (Cth), in Carter Bros v Renouf (1962) 111 CLR 140. Dixon CJ at first instance at 147 interpreted s 105 narrowly, concluding that it gave to the court: "a jurisdiction to determine what person or persons, if any, would, if the money had not been paid into court, have been entitled to receive payment of the policy moneys from the company." On appeal, the Full Court of the High Court concluded at 159-160 that s 105 gave the court: "… a clear jurisdiction to order that the moneys in question in this case be paid out to such person or persons and upon such terms as it considers appropriate in the circumstances, and to decide between competing claims in so far as to do so may be incidental to a due exercise of that jurisdiction." 13 I understand the Full Court of the High Court by the above passage to have given s 105 a significantly wider interpretation than that adopted by Dixon CJ at first instance. That is, that the Full Court of the High Court held that s 105 conferred a jurisdiction wider than that of merely determining strict legal entitlements under the policy. The jurisdiction identified by the Full Court extended, as I read the judgment, to determining the person or persons to whom in the circumstances it is appropriate that the proceeds of that policy be paid. In my view s 215 of the Act, which is in closely similar terms to the s 105 of the 1945 Act, is to be construed in the same way. 14 That does not mean that the Court has an unfettered jurisdiction with respect to the proceeds of the policy. The jurisdiction is to be exercised judicially having regard to all of the circumstances of the case. Should a person be able to demonstrate a clear legal entitlement to the proceeds of a policy, the Court would almost certainly make an order which reflects that entitlement. Such a case will, however, rarely, if ever, arise because of the terms of s 215(1). The more common case under s 215 is likely to be one in which competing arguable claims are asserted or in which no person with a clear entitlement to the policy proceeds can be identified. 15 Having regard to the evidence before me, I am satisfied of the following matters: (a) that the applicant is of the opinion that it can obtain no sufficient discharge in respect of the policy without an order of the Court under s 215 of the Act; (b) that Ms Lowe intended her mother, Mrs Urquhart, to receive the proceeds of the policy, and to this end made the changes to the Certificate described above; (c) that neither Ms Lowe, nor any person on her behalf during her life, advised the applicant of Ms Lowe's intention that Mrs Urquhart receive the proceeds of the policy or of the changes made by Ms Lowe to the Certificate; (d) that Mr Lowe, by executing the statutory declaration dated 18 August 1995 and accepting the payment of one thousand dollars ($1,000) made to him by Mrs Urquhart, intended to relinquish all claims against Ms Lowe or her estate; (e) that Mr Lamb asserts no claim in respect of the proceeds of the policy either personally or as administrator of Ms Lowe's estate; (f) that Neville Alexander Urquhart asserts no claim in respect of the proceeds of the policy; and (g) that there is no person, other than those persons mentioned above, with an arguable legal or equitable claim to the proceeds of the policy. 16 I do not consider it appropriate in this case to express a concluded view of the proper construction of the condition of the policy headed NOTICE TO COMPANY. I did not hear full argument on this issue and its determination should, in my view, await a case in which such a determination is necessary. I note merely that there is at least doubt that, in the circumstances of this case, the condition would operate so as to give Mrs Urquhart a legal entitlement to the proceeds of the policy. 17 Nonetheless, in the circumstances, I conclude that it is appropriate, subject to the issue of costs which is considered below, to order that the moneys paid into Court, together with all interest accrued thereon, be paid to Mrs Urquhart. 18 As to orders for costs, Mrs Urquhart has consented to an order that the applicant recover from the moneys paid into Court its costs of this proceeding on an indemnity basis. Notwithstanding Mrs Urquhart's consent, it is necessary for me to be satisfied that I have the power to make such an order, and that it is an appropriate order in the circumstances. 19 Section 43(1) of the Federal Court of Australia Act 1976 (Cth) provides, so far as is here relevant: "… the Court or a Judge has jurisdiction to award costs in all proceedings before the Court … other than proceedings in respect of which any other Act provides that costs shall not be awarded." 20 No Act provides that costs shall not be awarded in a proceeding for a declaration as to the persons entitled to moneys paid into Court pursuant to s 215(1) of the Act. It is therefore within the jurisdiction of the Court to make an order or orders for costs in this proceeding. 21 In the ordinary course, orders for costs are made against a party to a proceeding (see generally O 62 of the Federal Court Rules). Nonetheless, unless a particular statute provides to the contrary (see for example, s 1335(2) of the Corporations Law), s 43 of the Federal Court of Australia Act 1976 (Cth) authorises the Court to make an order for costs against a third party (Caboolture Park Shopping Centre Pty Ltd (in liq.) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224). Section 43 is also sufficiently widely drawn to, in my view, allow the Court to order in an appropriate case that the costs of a party be paid from moneys paid into Court. It may also be thought that s 215(3) of the Act, which provides that any money paid into the Court under the section is to be dealt with according to the order of the Court, itself sufficiently authorises an order that the costs of a party be paid from such moneys. I note that in National Mutual Life Association of Australasia Ltd v Dawbarn & Ors (1986) 4 ANZ Insurance Cases 60-746, a case concerning moneys paid into court pursuant to s 105(1) of the Life Insurance Act 1945, Ryan J made by consent an order that the applicant recover its costs on a solicitor and client basis from the moneys paid into Court. His Honour expressed no unease as to the power of the Court to make such an order. 22 This is, in my view, an appropriate case for the applicant to recover all of its reasonable costs of the proceeding. The applicant has properly invoked the jurisdiction of the Court. The circumstances which have given rise to the need for it to do so have arisen through no fault of the applicant. No criticism of any conduct of the applicant has arisen in the proceeding. There will be an order that the applicant recover its costs of the proceeding, except so far as they are of an unreasonable amount or were unreasonably incurred, so that subject to such exceptions the applicant will be completely indemnified for its costs. I will hear counsel on any other question of costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 5 May 2000 Counsel for the Applicant: L.S. Einstein Solicitor for the Applicant: Middletons Moore & Bevins Counsel for the First and Third Respondent: K. Ottesen Solicitor for the First and Third Respondent: Tonkin Drysdale Partners Date of Hearing: 17 March 2000 Date of Judgment: 5 May 2000