Federal Court of Australia Hannover Life Re of Australasia Ltd v Minister for Families and Communities [2023] FCA 80 File number: NSD 893 of 2022 Judgment of: ALLSOP CJ Date of judgment: 10 February 2023 Catchwords: INSURANCE – application by an insurer under s 215 of the Life Insurance Act 1995 (Cth) for discharge from liability under a policy of life insurance upon the payment of certain monies into Court – where surrounding circumstances involve the murder and suicide of a beneficiary and policyowner – where applicant seeks for its costs to be paid Legislation: Life Insurance Act 1995 (Cth), s 215 Children and Young Persons (Care and Protection) Act 1998 (NSW) Cases cited: Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 3) [2018] FCA 1918 Troja v Troja (1994) 33 NSWLR 269 Westpac Life Insurance Services Ltd v Mahony (No 3) [2020] FCA 285 Westpac Life Insurance Services Ltd v Mahony [2016] FCA 1071 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 27 Date of hearing: Determined on the papers Solicitor for the applicant: Turks Legal Solicitor for the respondent: NSW Crown Solicitor ORDERS NSD 893 of 2022 BETWEEN: HANNOVER LIFE RE OF AUSTRALASIA LTD (ABN 37 062 395 484) Applicant AND: THE MINISTER FOR FAMILIES AND COMMUNITIES Respondent order made by: ALLSOP CJ DATE OF ORDER: 10 February 2023 THE COURT ORDERS THAT: 1. Pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) there be no publication of any material that identifies the persons referred to in the Court's reasons for judgment dated 10 February 2023 as Aaron, Beth, Carol or Daphne or any of their relatives as specified in the findings of State Coroner Les Mabbutt in case numbers 2016/266463 and 2016/266462 in the State Coroners Court at Glebe dated 28 September 2018. 2. The proceedings be stood over for the making of further orders to 2:15pm on 16 February 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ALLSOP CJ: 1 Before the Court is an originating application seeking a declaration that, upon payment of certain monies, the applicant be discharged from any liability under a life insurance policy in relation to amounts that may have arisen in respect of the policy pursuant to s 215 of the Life Insurance Act 1995 (Cth) (the Act). 2 Section 215 of the Act is expressed in the following terms: Power to pay money into Court (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. 3 The originating application also contains a prayer for an order that the costs of the applicant in connection with the proceeding be paid in such a lump sum as the Court deems fit from the life insurance proceeds. 4 Relevant parties are anonymised in these reasons owing to the tragic circumstances attending this matter and related non-publication orders made by the New South Wales State Coroner on 28 September 2018. The relevant parties have been given wholly fictitious names. Relevant background 5 The factual background relevant to the present matter was summarised in an affidavit of Mr Ben Beeby, a Claims Assessor employed by the applicant. 6 The applicant carries on a life insurance business in Australia. Aaron (now deceased), and his estranged wife Beth, were insureds under a life insurance policy in respect of a Life Insurance Benefit Amount of $330,750. That life insurance policy, which commenced on 15 August 2009, contained the following terms: Life Insurance … 5. Life Insurance benefit payment We will pay the benefits explained below if the Life Insured suffers an insured event, namely death or Terminal illness, while covered under the Policy except in the circumstances explained in "Life Insurance exclusions" on page 9. Life Insurance We will pay the Life Insurance Benefit Amount as a lump sum on the death of a Life Insured. … 7. Life Insurance exclusions We will not pay a Life Insurance benefit in respect of a Life Insured, if the Life Insured dies … directly or indirectly as a result of a self-inflicted injury, within 13 months of…the Acceptance Date… General Information … 9. Benefit payments Unless a valid Nomination (explained below) applies: • we make all benefit payments to you, the Policyowner; or • if the Policyowner dies, the Insurance benefit will be paid to the Policyowner's legal personal representative, or other person that we are permitted to pay under the Life Insurance Act 1995. … Nominations As Policyowner, you can nominate beneficiaries to receive payment of the Life Insurance Benefit Amount on your death. … Conditions of Nominations The following conditions apply: … • if a nominee pre-deceases the Policyowner, that nominee's share is payable to the Policyowner's legal personal representative, or other person that we are permitted to pay under the Life Insurance Act 1995. The payment of the benefit in accordance with the above in respect of a Life Insured is full and final discharge of our liability under the Policy for that benefit. 7 The nominated beneficiaries under the policy were Carol (now deceased), Aaron's de facto partner, in respect of 70% of the Life Insurance Benefit Amount, and Beth, in respect of 30% of the Life Insurance Benefit Amount. 8 Aaron and Beth had two children, who were aged 19 and 17 at the time of Aaron's death. Aaron and Carol had a daughter, Daphne, who was at all relevant times, and is, a minor. 9 In 2018, a coronial inquest was conducted into the deaths of Aaron and Carol in 2016. The Coroner found that Aaron murdered Carol and thereafter took his own life. The Coroner's findings were exhibited to Mr Beeby's affidavit and described Aaron's conduct as "deplorable" and "horrific". 10 Pursuant to the Children and Young Persons (Care and Protection) Act 1998 (NSW), a Care Order was made in respect of Daphne (the minor daughter of Aaron and Carol). The Department of Communities and Justice notified the applicant that it represents the interests of Daphne. 11 In 2021, Beth (the estranged wife) submitted a claim to the applicant for payment of 30% of the Life Insurance Benefit Amount (being the sum of $99,225), which was accepted. 12 The applicant has made inquiries in respect of Aaron and Daphne in connection with its liability under the policy. Those inquiries may be summarised as follows: The applicant has undertaken a probate search for Aaron's legal personal representative or executor of his estate. The Supreme Court of New South Wales confirmed that it does not hold a deposited will or any application for probate in the name of Aaron. The applicant contacted Aaron's sister by letter at her last address known to the applicant on three occasions in 2021 and 2022 inquiring as to the contact details of Aaron's legal personal representative and providing the applicant's contact details. No response to those letters was received. At the request of the Department, claim forms for the purpose of making a claim on behalf of the minor daughter Daphne for the 70% of the Life Insurance Benefit Amount under the policy were sent to the Department. Mr Beeby telephoned a representative of the Department on seven occasions in connection with a potential claim on behalf of Daphne between December 2021 and June 2022. On 16 February 2022, he was advised that the Department had received the claim forms and was intending to lodge a claim on behalf of Daphne. However subsequent telephone calls following up with the Department in May and June 2022 went unanswered. The applicant has not received a completed claim form from the Department. 13 The Minister for Families and Communities is a respondent to the applicant's present application. At the time of the case management hearing on 6 December 2022, neither the Minister nor any representative had engaged with these proceedings. The Minister subsequently filed a Notice of Acting on 3 February 2023. 14 The unclaimed 70% of the Life Insurance Benefit Amount (Balance Life Benefit) totalling $231,525 under the life insurance policy remains outstanding. The applicant's position 15 The applicant makes two primary contentions. First, that no sufficient discharge of the Balance Life Benefit can be obtained and therefore that orders under s 215 of the Act are appropriate. Secondly, that an order for the payment of the applicant's costs should be made. The basis for the applicant's contentions are set out in the affidavit of Mr Beeby and the affidavit of Ms Fiona Hanlon, solicitor for the applicant, and were also explicated to some degree by Mr James Duncan of counsel, who appeared before me at a case management hearing in this matter on 6 December 2022. 16 That basis may be summarised as follows. Under the relevant policy pursuant to which Aaron was insured, Carol was a nominated beneficiary. Carol pre-deceased Aaron, and hence the Balance Life Benefit would ordinarily be payable to Aaron or his legal personal representative. However, the Coroner made findings that Aaron murdered Carol. In those circumstances, in addition to the silence on the part of the Minister and the Department, no sufficient discharge can be obtained by the applicant. As to the applicant's prayer for costs, costs are sought notwithstanding the applicant's awareness of the Court's previously expressed caution with respect to the awarding of legal costs in such cases (see, for example, Westpac Life Insurance Services Ltd v Mahony [2016] FCA 1071 at [31]–[35]) as the applicant has incurred legal costs in the bringing of the application before the Court. The applicant attests that those costs have been minimised, where possible, by appropriate delegation to junior solicitors and cost-consciousness on the part of the applicant. 17 Ms Hanlon's affidavit contains a particularised breakdown of the legal services provided and costs incurred, and disbursements made. Ms Hanlon deposes that $23,648 in legal costs have been incurred in connection with the provision of legal services including preparing the application and affidavit in support, briefing counsel, and court attendance. A total of $6,788.50 was incurred by the applicant in disbursements, including counsel's fees, Federal Court filing fees and service fees. 18 The applicant submits that a discount of 20% on the total costs as particularised in Ms Hanlon's affidavit "leaves a balance which properly reflects the costs of matters required to be undertaken to advance the interests of the recipient of the Balance Life Benefit Amount." With a 20% discount applied to the total legal costs incurred, the applicant seeks an order for the payment of costs of $18,947 plus disbursements of $6,788. Disposition 19 The affidavit evidence that was filed, including the record of factual findings of the Coroner as to the circumstances of the deaths of Aaron and Carol, satisfies me that the applicant reasonably formed the opinion that no sufficient discharge could be obtained otherwise than paying money into the Court and that the declarations sought by the applicant pursuant to s 215 of the Act should be made. 20 Aaron's murder of Carol raises the question of the so-called "forfeiture rule" that has been discussed in the context of life insurance cases such as Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland (No 3) [2018] FCA 1918 at [19]–[24] and Westpac Life Insurance Services Ltd v Mahony (No 3) [2020] FCA 285 at [11]. In summary, if a person murders another person, the murderer is precluded from receiving a financial benefit from the victim's death, including the benefit of life insurance proceeds. The application of the forfeiture rule in circumstances of murder was described by Meagher JA in Troja v Troja (1994) 33 NSWLR 269 thus (at 299): The basis of the doctrine is public policy, an abhorrence of the notion that one may profit from killing another…It is absolute and inflexible. 21 It is not necessary, for present purposes, to determine precisely whether, or if so, how, the rule applies in this case. It is sufficient that there is potential for it to apply, given the Coroner's findings, and it is a factor supporting the legitimacy of the applicant's invocation of s 215 of the Act. 22 I further note in this regard the applicant's unsuccessful attempts to locate the legal personal representative of Aaron through communication with Aaron's relatives and the Department. An additional layer of complexity in the present case is presented by the potentially conflicting interests of minor daughter Daphne and the adult children of Aaron and his estranged wife Beth and the lack of engagement to date of the Department and the Minister. 23 I have given consideration as to costs, including the assessment of costs and the proposed 20% discount set out in Ms Hanlon's affidavit. I have examined the costs incurred and disbursements made. It is important that applications such as these are conducted both efficiently, and properly. That said, there is involved in these applications a balance between the bringing of the matter before the Court with appropriate information and ensuring that often modest insurance policies sometimes of people with little sophistication or means are not burdened with professional costs for the protection of the insurer's interests and position. A reduction in the solicitors' costs claimable from the balance does not necessarily reflect (and does not in this case reflect) a view of any inappropriate level of charging. Rather, it reflects an assessment as to the appropriate balance of interests and the appropriate imposition upon the beneficiary of a modest insurance policy. Applications of this kind may be seen as "[p]art of the cost of doing business as a life insurer": see Westpac Life Insurance Services Ltd v Mahony [2016] FCA 1071 at [34]. 24 In the circumstances of this case, in my view, after carefully considering the evidence as a whole, the insurer should be entitled to take from the Balance Life Benefit the disbursements set out in Ms Hanlon's affidavit totalling $6,788, together with solicitors' costs of $15,000. 25 I would make the following orders: (1) The applicant's costs be fixed in the amount of $15,000 plus disbursements of $6,788, such payment to be made out of the Balance Life Benefit Amount payable by the applicant under policy number 350005102 (the Policy), before the payment into Court referred to in order 2. (2) Declaration that the Balance Life Benefit Amount, being the sum of $231,525, is the amount payable by the applicant under the Policy. (3) Declaration that the amount payable referred to in order 2, less the amount of costs required to be paid under order 1, when paid into the Court by the applicant is a payment under s 215(1) of the Life Insurance Act 1995 (Cth), and on such payment, the applicant be discharged from any liability in relation to that amount that may have arisen in respect of the Policy pursuant to s 215(2) of the Life Insurance Act. 26 It seems to me that those orders should be made. I note that the Minister has now filed a Notice of Acting. I do not consider that the Minister has any real standing to oppose that course, save perhaps on the question of the costs to burden the funds available. The Minister should have been present at the case management hearing conducted in December, the preparation of my reasons for decision was substantially complete when the Notice of Acting was filed and I am reluctant to put the insurer to any further cost. Nonetheless, I will stand the matter over for the making of orders to give the Minister an opportunity to be heard before the proposed orders are made. 27 Finally, by way of completeness, I note that on 6 December 2022 I made orders referring this proceeding to Registrar Priestley for the appraisal of the Minister as to issues of the rights of the parties in and flowing from these proceedings. As a Notice of Acting has now been filed, the matter will be brought back before the Court at the earliest available opportunity to ascertain the Minister's views as to how the matter should proceed, including as to the disposition of the monies to be paid into Court. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop. Associate: Dated: 10 February 2023