FEDERAL COURT OF AUSTRALIA

MLC Ltd v Brooker [2001] FCA 845

Life Insurance Act 1995 s 215(1)

Federal Court of Australia Act 1976 (Cth) Order 23 rule 13(1)

HCF Life Insurance Co Pty Limited v Lamb 2000 FCA 573 followed

MLC LTD v SHARNAH RENEE BROOKER, HAYDEN RUSSELL BROOKER, KEITH ROYSTON BROOKER, HEATHER JUNE BROOKER AND NERISSA LEE BROOKER

N 267 OF 2001

HELY J

25 JUNE 2001

SYDNEY

THE COURT ORDERS THAT:

1.                  Nerissa Lee Brooker be appointed as tutor for the first and second respondents for the purposes of these proceedings.

2.                  Nerissa Lee Brooker and National Australia Trustees Limited be appointed joint trustees of the insurance monies in the sum of $205,928.15 paid into Court by the applicant pursuant to s 215(1) of the Life Insurance Act 1995.

3.                  The insurance monies be paid out of Court to the Trustees pursuant to Order 23 rule 13(1) to be held by the Trustees subject to these orders and the Trusts herein declared.

4.                  The Trustees:

(i)                  hold and mange the Insurance Monies on trust in equal share for the first and second respondents until the Children respectively attain the age of 18 years;

(ii)                invest the capital sum and interest of the Insurance Monies on behalf of the Children (“the Investment Monies”);

(iii)               apply the Investment Monies for the benefit of the Children during their minority as may be necessary and appropriate to the needs of the child or Children’s health, welfare, education or advancement in life, subject to the requirement that any such item of expenditure sought from the investment fund which is in excess of 10 percent of the investment fund available at that time shall require the approval of a court of appropriate jurisdiction and that not more than 10 percent per annum of the available investment funds shall be so applied during the period of either child’s minority without the approval of a court of appropriate jurisdiction.

5.                  The National Australia Trustee Limited, be entitled to the fees incurred in the management of the Insurance Monies in accordance with the schedule of fees from time to time in place by the aforesaid company in relation to the management of trusts on behalf of minors.

6.                  The costs of all parties to the proceedings, except insofar as they are of an unreasonable amount and except insofar as they have been unreasonably incurred, be assessed and paid out of the monies paid into Court.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 2 December 1997 the applicant issued a personal protection portfolio policy to Russell Leonard Brooker on his own life.  In the policy his two children, Sharnah Renee Brooker and Hayden Russell Brooker, were nominated to receive the benefits payable on the policy in the event of Mr Brooker's death.  On 4 November 2000, Mr Brooker died in a car accident.  By his will he appointed the third respondent to be his executor, and the fourth respondent, his sister, to be the guardian of his infant children.  On 19 February 2001, the executor requested the applicant to pay the amount of the policy to the estate.  The applicant then instituted proceedings under s 215(1) of the Life Insurance Act (“the Act”), seeking a declaration as to the persons entitled to the policy.  The infant children were named as first and second respondents to the proceedings

2                     At or about the time of the filing of that application, the sum of $205,928.51 was paid into Court pursuant to the Act.  When the matter came before me on 2 May 2001 application was made by Nerissa Lee Brooker, the children's mother, for her appointment as tutor for the infant children, and I gave directions necessary to secure that appointment, as well as to prepare the application for hearing.

3                     The documents necessary to have Mrs Brooker appointed tutor have been filed and I am satisfied that this is a proper case for her to be so appointed.  She is the children's mother, the children live with her, and she was effectively given custody of the children in the matrimonial causes proceedings between herself and her late husband.  All parties are agreed that it is appropriate that orders 1, 2, 3, 4 and 5, as sought in the Notice of Motion of 25 May 2001, should be made.

4                     Counsel for the third and fourth respondents submits that it would be appropriate for the costs of all parties to be paid out of the fund up to 3 May 2001, but thereafter there should be no order as to costs.  Counsel submits that this is the appropriate course, because the orders which are now sought are substantially the same orders that were proposed by the executor on 6 April 2001.  The only difference is the identity of the trustee.  Hence costs incurred after that date (except for the costs of the applicant), have been unnecessarily incurred and should be paid by the party who incurred them.

5                     I think that this submission overlooks three things.  First, it was necessary for a tutor to be appointed so far as the first and second respondent are concerned.  It was appropriate that the children's mother should take the necessary steps designed to bring about that result.  Second, there has been a change in the identity of the corporate trustee, apparently because the fees to be charged by National Australia Trustees Limited are less than those which would have been charged by the trustee nominated by the executor.  Third, the proposal is that there should be a joint trusteeship, Mrs Brooker and the National Australia Trustees Limited being joint trustees. 

6                     In HCF Life Insurance Co Pty Limited v Lamb 2000 FCA 573, Branson J considered the question of costs in cases such as the present.  Her Honour came to the conclusion that there is jurisdiction in the Court to make an order for payment of costs out of the fund.  I respectfully agree with her Honour's decision in that respect.

7                     For the reasons I have given, I make orders substantially in terms of pars 1 to 5 as sought in the Notice of Motion of 25 May 2001.  I order that the costs of all parties to the proceedings, except insofar as they are of an unreasonable amount and except insofar as they have been unreasonably incurred, be assessed and paid out of the monies paid into Court.

Associate:

Dated:              4 July 2001