RGA Reinsurance Company of Australia Ltd v Westpac Life Insurance Services Ltd

1. [1]

   The plaintiff, RGA Reinsurance Company of Australia Ltd, and the defendant, Westpac Life Insurance Services Ltd, are parties to a Life Reinsurance Treaty made on 26 October 2017 (“the Treaty”).

2. [2]

   Under the Treaty RGA reinsured certain policies of insurance including policies referred to as the “Reinsured Master Policies” (“the Policies”) that were issued by Westpac Life to various trustees (“the Trustees”).

3. [3]

   The Trustees [1] are part of the Westpac corporate group but, obviously, have independent obligations including to act in the best interests of the members of the funds operated by them.

4. [4]

   On 29 May 2020, Westpac Life informed RGA that:

   1. (1)

      the Trustees had given Westpac Life notice that they had:

   2. (2)

      accordingly, the Treaty automatically terminated in relation to those Policies by reason of Art 19.1 of the Treaty.

5. [5]

   I will return below to Westpac Life’s letter on 29 May 2020 and the correspondence that led to, and followed it.

6. [6]

   Article 1.5 of the Treaty provides that Westpac Life:

7. [7]

   RGA apprehends that Westpac Life may have acted in breach of this prohibition and accordingly seeks to exercise its right under Art 20.2 of the Treaty to obtain documents from Westpac Life.

8. [8]

   Article 20.2 Treaty provides:

9. [9]

   “Records” are defined very broadly to include:

10. [10]

    Alternatively, RGA seeks an order for preliminary discovery pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 5.3(1) of some, but not all of the documents sought under Art 20.2 of the Treaty.

Decision

1. [11]

   RGA has not established an entitlement to an order under Art 20.2 or to preliminary discovery.

The Records sought

1. [12]

   In its Summons, RGA sought a wide variety of documents.

2. [13]

   On 11 September 2020, two working days before the hearing, Westpac Life provided RGA with 11 documents.

3. [14]

   As a consequence, on 14 September 2020, the day before the hearing, RGA refined the documents sought to 12 categories.

4. [15]

   The documents provided by Westpac Life to RGA included 2 agreements dated 30 June 2020 being:

5. [16]

   Westpac Life’s solicitor had earlier annexed redacted copies of each of these agreements to an affidavit, showing only the clauses dealing with confidentiality. [4] Neither party tendered copies of the unredacted documents.

The correspondence between the parties

1. [17]

   On 25 March 2020 the Trustees wrote to Westpac Life.

2. [18]

   The Trustees contend that the contents of this letter are confidential. I am informed, however, that the Trustees do not object to me setting out its effect in these reasons.

3. [19]

   The effect of the 25 March 2020 letter was that the Trustees informed Westpac Life that:

4. [20]

   A later passage in the letter makes clear that the Trustees’ reference to “termination” was a reference to the termination of the Policies in accordance with the termination provisions within the Policies. Those provisions entitled the Trustees to terminate the Policies by giving various periods of notice ranging from 30 to 90 days.

5. [21]

   On 28 May 2020 the Trustees again wrote to Westpac Life.

6. [22]

   Mr McHugh SC, who appeared with Mr Knowles for Westpac Life, submitted that this letter comprised the operative letter of termination of Westpac Life’s appointment as insurer of the Policies.

7. [23]

   Again, because the Trustees’ contention that this letter is confidential, I will set out only its effect.

8. [24]

   The effect of this letter was that:

9. [25]

   The following day, 29 May 2020, Westpac Life notified RGA of the Trustees’ decision. This is the letter to which I referred at [4] above.

10. [26]

    The letter read:

11. [27]

    The Appendix to the letter was headed “Group Policies to be Terminated on 1 July 2020” and listed the Policies.

12. [28]

    Evidently, at around this time, RGA had received informal notice that Westpac Life might be removed as insurer.

13. [29]

    Thus, on 29 May 2020, RGA sent an email to Westpac Life [5] expressing concern about “how the business is being moved from” Westpac Life and questioning whether Westpac Life had acted in breach of Art 1.5.

14. [30]

    On 4 June 2020 RGA wrote to Westpac Life:

15. [31]

    Westpac Life replied on 11 June 2020 stating that:

16. [32]

    I read this as a denial, in terms, by Westpac Life that it had sold or transferred the Policies and thus a denial of any breach by it of Art 1.5 of the Treaty.

17. [33]

    Earlier in the letter, Westpac Life said that RGA:

18. [34]

    On 18 June 2020 RGA wrote to Westpac Life [6] stating that Westpac Life’s letter of 11 June 2020 had not addressed “the questions we have raised” [7] and requesting a copy of the “Trustee Termination Notice”.

19. [35]

    In response, on 22 June 2020 Westpac Life provided RGA with what it described as a letter from the Trustees “confirming cancellation of the group life insurance policies”.

20. [36]

    That letter was dated 12 June 2020 and read:

21. [37]

    The Appendix listed the same Policies as in the Appendix to Westpac Life’s letter of 29 May 2020.

22. [38]

    The evidence does not reveal why Westpac Life at this stage chose to provide RGA with this letter, rather than the operative letter of 28 May 2020 referred to at [21]-[24] above; nor how it came about that the Trustees provided Westpac Life with the “confirmation” in the letter. It may be, as was put by Mr Braham SC, who appeared with Mr Dooley for RGA, that it was created for the purpose of provision to RGA, although I cannot see what inference I should draw from that. I see no inconsistency between this letter and the Trustees’ letter of 28 May 2020.

23. [39]

    On 30 June 2020, Westpac Life, one of the Trustees and AIA executed the Group Insurance Takeover Deed and Group Insurance Transition Services Agreement to which I referred at [15] above.

24. [40]

    It appears very likely, if not certain, that these Deeds record the arrangements made between Westpac Life, the Trustees and AIA following the Trustees’ decision communicated to Westpac Life on 28 May 2020. Indeed, as I set out below at [56], Mr McHugh confirmed that these were his instructions.

25. [41]

    As I have mentioned, heavily redacted copies of these Deeds are in evidence. Those copies reveal nothing of the substance of the arrangements evidently recorded in them. Unredacted copies of these documents were provided to RGA on 11 September 2020. Neither party tendered them. More particularly, RGA did not tender them; a matter emphasised by Mr McHugh on several occasions during the hearing.

Issues in relation to application under Article 20.2

1. [42]

   A number of issues arise in relation to RGA’s application under Art 20.2.

2. [43]

   However, the overriding question is whether RGA’s request is, in all the circumstances, reasonable. I will turn first to that question.

The Reasonableness issue

1. [44]

   The request for “Records” under Art 20.2 must be “reasonable”.

2. [45]

   As I have set out, “Records” is defined to include records “necessary or desirable to record and explain all transactions in relation to” the Policies.

3. [46]

   The “transaction” that is the object of RGA’s request under Art 20.2 was described by Mr Braham as the cancellation or “possible” sale or transfer of the Policies.

4. [47]

   Thus Mr Braham and I had this exchange:

5. [48]

   In the course of addressing one of the categories of documents sought by RGA, Mr Braham said that that document:

6. [49]

   It is not part of my task on this application to reach any conclusion as to whether Westpac Life sold or transferred the Policies in breach of Art 1.5.

7. [50]

   However, I have to consider the reasonableness of the request for documents by RGA and, in that context, record that I have seen no documents that suggest that Westpac Life did sell or transfer the Policies to AIA or any other party.

8. [51]

   In particular,

9. [52]

   The 12 categories of documents sought by RGA are set out in the Appendix to this judgment. Ten of those categories are directed to the Trustees’ decision to appoint a new insurer in place of Westpac Life. They are said to be likely to cast light on whether the Trustees have appointed a new insurer in place of Westpac Life and cancelled the Policies or, whether, as RGA evidently suspects, Westpac Life has in breach of its obligations under Art 1.5 of the Treaty sold or transferred the Policies to, presumably, AIA. The other two categories [10] are related to re-pricing, a matter said only to be relevant because of Westpac Life’s comment recorded at [33] above concerning “premium increases”, and thus in effect directed to the same question.

10. [53]

    Westpac Life has provided RGA with the Group Insurance Takeover Deed and Transitional Services Agreement executed on 30 June 2020.

11. [54]

    Save in the heavily redacted form to which I have referred, [11] those documents are not before me.

12. [55]

    In the course of argument, I asked Mr McHugh whether Westpac Life had in its possession any documents other than the Group Insurance Takeover Deed and the Transitional Service Agreement recording the transaction referred to in the Trustees’ letter of 28 May 2020.

13. [56]

    Mr McHugh, after taking instructions, gave this response:

14. [57]

    Thus Mr McHugh said that his instructions were that the transaction involving the cancellation of the Policies was fully recorded in those two documents.

15. [58]

    In that regard, Mr Braham said in reply submissions:

16. [59]

    Earlier, Mr Braham submitted:

17. [60]

    There is a serious implication within that statement, namely, that Westpac may have knowingly provided RGA with what it knows to be incomplete record of the transaction.

18. [61]

    The question of whether RGA’s request for documents is reasonable must be considered in the context of all these matters.

19. [62]

    It was for RGA to show that its request was reasonable and for it to place before the Court all documents that would enable a sensible assessment to be made of that question.

20. [63]

    Such documents included the two 30 June 2020 agreements especially in the context where:

    1. (1)

       nothing in the evidence suggests that the commercial arrangements between the trustees and Westpac Life involved a sale or transfer by Westpac Life of the Policies to another insurer;

    2. (2)

       Mr McHugh informed me that his instructions were that those commercial arrangements were given effect to by those two agreements and no other documents; and

    3. (3)

       Mr McHugh repeatedly referred to the fact that RGA had unredacted copies of the deeds, but RGA without explanation failed to tender them.

21. [64]

    In those circumstances, my conclusion is that the reasonableness of RGA’s request cannot sensibly be assessed without seeing the two deeds.

22. [65]

    For that reason, I am not prepared to order Westpac Life to produce any of the documents sought by RGA.

23. [66]

    It is accordingly unnecessary for me to deal with the other bases on which Westpac life resisted RGA’s claim. However, in deference to the detailed arguments put, I will do so, albeit briefly.

The Specific Document issue

1. [67]

   Article 20.2 of the Treaty obliges each party to provide the other with “copies of any Records”.

2. [68]

   Mr McHugh submitted that, on the proper construction of Art 20.2, the obligation to provide copies of Records was an obligation to provide a copy of a specific document of the kind that could be clearly identified; and that the obligation did not extend to require the producing party to undertake a process in the nature of discovery requiring searches to be performed over a potentially large number of documents for the purpose of locating documents within a generally described category.

3. [69]

   However, as Mr Braham pointed out, Art 20.2 obliges each party to do two things: permit access to Records and, on reasonable request, produce copies of Records.

4. [70]

   The article thus contemplates each party having an opportunity to inspect the other’s Records as well as an entitlement to seek copies of Records.

5. [71]

   RGA did not seek access to Westpac Life’s premises to inspect its Records and Mr McHugh did not submit that RGA’s entitlement to see copies of Records was conditional on an anterior inspection.

6. [72]

   Thus, the parties must have contemplated that either of them might seek copies of Records without having first inspected them. It must follow that the parties contemplated that either could seek copies of Records without knowing, precisely or at all, what Records the other kept.

7. [73]

   In my opinion, on the proper construction of Art 20.2 the touchstone is not whether specific documents can be clearly identified. Rather, it is whether the request is, overall, reasonable.

The Article 20.6 Issue

1. [74]

   Next, Mr McHugh submitted that the scope of permissible requests under Art 20.2 was informed by Westpac Life’s obligations under Art 20.6 which provides:

2. [75]

   The Reinsurance Schedules create an obligation to provide information in relation to the reinsured policies, the policy holders and the claims made under the policy. The evident purpose of Art 20.6 is to permit RGA to obtain information relevant to the assessment of the reinsured risks.

3. [76]

   In those circumstances, Mr McHugh submitted that the obligation in Art 20.2 should be read down as permitting access only to documents necessary to determine the risks the subject of the Treaty.

4. [77]

   I see no reason to so read down Art 20.2.

5. [78]

   As Mr Braham submitted, the evident purpose of Art 20.6 is to impose on Westpac Life a discrete obligation, namely to provide information relevant to risk.

6. [79]

   I do not see it as a reason to confine parties’ entitlement to access to, and copies of, Records relating to such matters.

The Confidence Issue

1. [80]

   The parties’ obligations under Art 20.2 to provide copies of any Records are expressed to be “subject to any legal obligations to the contrary”.

2. [81]

   Mr McHugh submitted that such a “legal obligation” included an obligation of confidence and that, in this case, Westpac Life owed an obligation of confidence to the Trustees.

3. [82]

   I am satisfied that Westpac Life did owe a duty of confidentiality to the Trustees.

4. [83]

   This is illustrated by an exchange of correspondence between Westpac Life’s solicitors, MinterEllison, and the Trustees’ solicitors, Allens, on 10 and 11 September 2020.

5. [84]

   On 10 September 2020 MinterEllison wrote:

6. [85]

   Allens replied:

7. [86]

   Mr Braham drew attention to Art 22 which, relevantly, provides:

8. [87]

   Mr Braham submitted that, by these provisions, the parties had in effect agreed to a code dealing with confidentiality and thus bespoke their intention that the qualification in Art 20.2 concerning “any legal obligation to the contrary” should not include any obligation of confidence.

9. [88]

   I do not think this is correct. Article 22 is directed to confidentiality of RGA and Westpac Life, as parties to the Treaty.

10. [89]

    The qualification in Art 20.2 is directed to a different matter, namely legal obligations by one or other of the parties to the Treaty to third parties.

11. [90]

    In my opinion, the reference in Art 20.2 to “any legal obligation to the contrary” is apt to include any obligation of confidence and, accordingly, Westpac Life’s obligation to provide RGA with copies of its Records was subject to that obligation.

12. [91]

    Article 20.2 does not specify precisely how contrary legal obligations might impact on a party’s obligations to produce documents.

13. [92]

    However, in my opinion, the existence of such contrary legal obligations is a matter relevant to the reasonableness of the request and to be taken into account when considering that aspect of the matter

The accrued rights point

1. [93]

   Mr McHugh submitted that the effect of Westpac Life’s letter of 29 May 2020 is that the Treaty is now at an end and that it follows that RGA no longer has an entitlement under Art 20.2 to make a request for documents.

2. [94]

   I do not accept that submission.

3. [95]

   Article 19 of the Treaty deals with its termination.

4. [96]

   Article 19.1 provides that the Treaty terminates automatically in relation to the Policies when the Policies are “cancelled”.

5. [97]

   Article 19.10 then makes detailed provision for the consequences of the Treaty terminating. There is not included in that detailed list of consequences any reference to Art 20.2.

6. [98]

   That suggests that the parties did not intend that their entitlement to inspection and production of Records would cease upon termination of the Treaty.

7. [99]

   It appears to me unlikely that the parties would have so intended. The consequence would be that where, as here, there is a controversy concerning termination of the Treaty, a party’s entitlement to inspect or seek Records relevant to that matter would be eliminated.

8. [100]

   In any event, if the Treaty has been terminated, it is only in respect of the Policies.

The Discretion point

1. [101]

   Mr McHugh submitted that, in any event, the Court would not order production of documents under Art 20.2 as this would involve making an order for specific performance or an order in the nature of a mandatory injunction requiring ongoing curial supervision and creating a sanction of contempt.

2. [102]

   But the parties must have contemplated that they be able to enforce the promises made in Art 20.2. Enforcement of those promises could only come about as a result of an order that the promises be fulfilled. A claim for damages would be impossible to sustain as, on the hypothesis that documents had been sought but not produced, the party claiming production of documents could not know what damage it had thereby sustained.

3. [103]

   The Court regularly makes orders requiring parties to produce categories of documents when it issues a subpoena or makes an order for discovery.

4. [104]

   Were Mr McHugh’s submissions to be correct, it would in effect render Art 20.2 unenforceable.

5. [105]

   I turn now to RGA’s alternative claim for preliminary discovery.

Preliminary discovery

1. [106]

   UCPR r 5.3(1) provides:

2. [107]

   Each of the elements in subparagraphs (a), (b) and (c) must be made out before preliminary discovery will be ordered; and the Court must also be satisfied that an order is appropriate as a matter of discretion. [15]

3. [108]

   Here, the question is whether the requirements of r 5.3(1)(a) have been satisfied, namely:

Does it appear that RGA may be entitled to make a claim for relief?

1. [109]

   The claim for relief is in relation to a contravention by Westpac Life of Art 1.5 and would, presumably, be a claim for damages.

2. [110]

   Satisfaction of this requirement requires more than mere assertion and more than suspicion or conjecture. [16]

3. [111]

   I am not satisfied that this has been established.

4. [112]

   As I have set out above, there is no hint in the documents before me that Westpac Life has contravened Art 1.5.

5. [113]

   In my opinion it is a matter of pure speculation that Westpac Life may have done so.

Has RGA made reasonable enquiries?

1. [114]

   The next question is whether RGA has made reasonable inquiries but is unable to obtain sufficient information to decide whether to commence proceedings.

2. [115]

   In my opinion this requirement has also not been established.

3. [116]

   Glencore International AG v Selwyn Mine Ltd [17] Lindgren J said:

4. [117]

   RGA has not placed before the Court the 30 June 2020 Group Insurance Takeover Deed and Transitional Services Agreement

5. [118]

   Without seeing those documents, I am not in a position to say whether RGA has made reasonable enquiries or that it is unable to obtain sufficient information to make a decision to commence proceedings.

Preliminary discovery should be refused

1. [119]

   For those reasons, I refuse to order preliminary discovery.

Conclusion

1. [120]

   RGA’s Summons should be dismissed with costs.

2. [121]

   Annexure A (84482, pdf)