ACN 074 971 109 Pty Ltd (as trustee of the Argot Unit Trust) v The National Mutual Life Association of Australiasia Limited (ACN 004 020 437)

ACN 074 971 109 PTY LTD (AS TRUSTEE OF THE ARGOT UNIT TRUST)
v
THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALIASIA LIMITED (ACN 004 020 437)
[2014] HCASL 172
M1/2014

The applicant invested in a life insurance policy issued by the respondent ("the policy"). The policy provided for funds to be invested in a cash portfolio and a non-cash portfolio, and allowed the applicant to switch funds between them. A clause of the policy provided that the applicant could give the respondent three days' notice of its intention to switch funds between portfolios, after which the switch would be effected at the price for the day on which the notice was given. The applicant could cancel the switch at any time during the notice period without penalty.
After the respondent become aware that the applicant was using this clause to make arbitrage profits, the respondent adopted a practice of switching funds immediately after the applicant gave notice of an intention to switch. On 5 December 2008, the Court of Appeal of the Supreme Court of Victoria (Buchanan, Nettle and Dodds-Streeton JJA) held that the policy did not permit the respondent to effect a switch until the expiration of the notice period. The matter was remitted to the trial division to determine whether the respondent had breached the policy.
The respondent subsequently adopted a new practice of liquidating non‑cash assets immediately after receiving a notice of intention to switch ("the second practice"). On 25 November 2011, the Supreme Court (Croft J) held that the second practice did not breach the policy.
On 27 November 2013, the Court of Appeal (Nettle and Neave JJA, and Robson AJA) dismissed the applicant's appeal from the decision of Croft J. The Court of Appeal held that liquidating non-cash assets did not effect a switch between portfolios in contravention of the policy.
The applicant now seeks special leave to appeal to this Court. Although the facts of this case involve some complexity, the decision below concerned the interpretation of a contract and there is insufficient reason to doubt that decision. No issue arises regarding the partitioning of statutory funds. An appeal to this Court would enjoy insufficient prospects of success to warrant the grant of special leave. Special leave should be refused.
The applicant sought to draw the Court's attention to the recent decision of the New South Wales Court of Appeal in Allianz Australia Insurance Ltd v BlueScope Steel Ltd[1], which it suggested "contradicts" the decision of the Court of Appeal in this matter. In Allianz, the Court of Appeal held that the insurer's conduct, although not repudiatory, may nonetheless have intimated that it was unnecessary to comply with a contractual condition. Such a conclusion depended on the circumstances of the case, and the matter was remitted so that the necessary factual findings could be made. In the present case, the only basis for suggesting that the respondent's conduct intimated that it was unnecessary for the applicant to give notice of an intention to switch under the policy was if the second practice constituted a breach of the policy. The Court of Appeal concluded that it did not. Reliance on the Allianz case does not advance this application.
[1] [2014] NSWCA 276.
Pursuant to r 41.11.1 we direct the Registrar to draw up, sign and seal an order dismissing the application with costs.

S.M. Kiefel
11 September 2014 P.A. Keane

CaseChat Overview and Summary

In this case, the applicant, ACN 074 971 109 Pty Ltd (as trustee of the Argot Unit Trust), sought to appeal against a decision of the Court of Appeal of the Supreme Court of Victoria, which had dismissed an earlier appeal against a decision of the Supreme Court of Victoria. The applicant had invested in a life insurance policy issued by the respondent, The National Mutual Life Association of Australiasia Limited, which allowed the applicant to switch funds between a cash portfolio and a non-cash portfolio. After the respondent became aware that the applicant was using this clause to make arbitrage profits, it adopted a practice of switching funds immediately after the applicant gave notice of its intention to switch, which the Court of Appeal held did not breach the policy.

The legal issues before the court included the interpretation of the policy clause regarding the switching of funds and whether the respondent's practice of switching funds immediately after receiving notice of an intention to switch constituted a breach of the policy. The applicant argued that the respondent's conduct intimated that it was unnecessary for the applicant to give notice of an intention to switch under the policy, and that the Court of Appeal's decision was in error. The court considered whether there was sufficient reason to doubt the decision below, and whether an appeal to the High Court would enjoy sufficient prospects of success.

The court held that the decision of the Court of Appeal did not involve any partitioning of statutory funds, and that there was insufficient reason to doubt the decision. The court noted that the Court of Appeal had concluded that the respondent's second practice did not breach the policy, and that the only basis for suggesting that the respondent's conduct intimated that it was unnecessary for the applicant to give notice of an intention to switch was if the second practice constituted a breach of the policy. The court held that reliance on the Allianz case did not advance the application. The court ultimately dismissed the application for special leave to appeal, and directed the Registrar to draw up, sign and seal an order dismissing the application with costs.

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