DEFENDANT ALLEGES ASIC LACKS STANDING SEEKING DECLARATORY RELIEF FOR BREACHES OF THE DEFENDANT AGAINST ITS INSURED CUSTOMER
This is a case where the defendant asserts that even if it breached the Insurance Contracts Act, the plaintiff ASIC (Australian Securities and Investments Commission) does not have legal standing to seek for a declaratory relief for said breach.
Facts:
In this proceeding the Australian Securities and Investments Commission (ASIC) complains about the conduct of the respondent (TAL Life Limited) in the way in 2013 and 2014 it treated a person who had become an insured under an income protection policy.
The court held that TAL insurer breached S.14 of the Insurance Contracts Act 1984 by failing to act towards the Second Insured with the utmost good faith in failing to tell her of the investigation and in failing to afford her a proper opportunity to address TAL and any material it was relying on prior to any decision to avoid.
As between TAL and the Second Insured the policy stands avoided ab initio. As between them there is no controversy that there is no longer a contract of insurance and that it was avoided ab initio.
TAL submitted that the Court had no jurisdiction and no power to make a binding declaration of right about a breach of a contract that the parties agree is void ab initio. It was submitted that there is no justiciable matter.
Issue: Does the court have jurisdiction to make a binding declaration of a right about a breach of contract despite the fact that there is no longer a contract of insurance and that it was avoided ab initio?
Law:
- Insurance Contracts Act 1984 SS.13, 11A, 11B, 75A(1)
Analysis:
ASIC, for the purposes of general administration, has the power to do all things that are necessary or convenient in connection with the administration of the Act, with regard to S.11B of the Insurance Contracts Act., it has power to sue in its own name.
ASIC has a statutory duty in its general administration that includes a duty, as far as it is able, to bring about and oversee compliance with the Act, exacting or encouraging proper standards of contractual behaviour required by the Insurance Contracts Act by insurers lies at the heart of ASIC’s responsibility as a regulator with the general administration of the Insurance Contracts Act.
The regulator seeks a declaration that, when the contract was on foot and when TAL was considering and dealing with its position, that is when it was engaged in a matter in relation to the then extant contract (for the purposes of S.13(1)), TAL failed to comply with the term implied by S.13(1) in its then extant contract, and thereby breached S.13(2).
The conclusion that ASIC has standing may be drawn from an implication from S.11A, fortified by S.11B, that “general administration” includes taking such necessary and reasonable steps to administer the Act by supervising and regulating the conduct dealt with by the Act, including insurers’ conduct under S.13. This is the foundation for the existence of a controversy or matter between ASIC and TAL. ASIC wishes to assert and see publicly declared that TAL failed to meet the standard required of it by statute.
There is both jurisdiction and power to make the declarations sought. It was submitted that it was not appropriate, whether for the purposes of S.23 of the Federal Court of Australia Act or otherwise, to make them. The court rejects that submission. Properly framed, such declarations would assist the regulator in achieving or encouraging compliance with the Act by the formal recognition of the Court of the breach of duty involved. That the Second Insured has settled her differences with TAL does not remove TAL from the legitimate gaze of ASIC, as regulator, and of the Court, with a controversy before it, to vindicate a law of the Parliament in the public interest.
Conclusion: The court has jurisdiction to grant such relief sought by ASIC.
