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In
relation to an application to the Court to sanction an Insurance Business
Transfer Scheme under the Financial Services and Markets Act 2000, the
Court resolved in favour of the applicant companies a number of objections
raised by policy holders and importantly an issue in respect of the
jurisdiction of the Court to make an Order in relation to supplemental
provisions.
In November
2004, as part of a programme to reorganise and simplify its world-wide
corporate structures resulting from the mergers of General Accident
plc and Commercial Union plc to form CGU plc, and the subsequent merger
of CGU plc and Norwich Union plc to form Aviva plc, Aviva sought Court
approval of a number of Insurance Business Transfers pursuant to Sections
107 and 111 of the Financial Services and Markets Act 2000 (FSMA). In
addition to dealing with a number of objections raised by policy holders,
the Court was required to determine the extent of its jurisdiction to
make an Order in relation to supplemental provisions. Section 112 of
FSMA provides that if the Court sanctions an Insurance Business Transfer
pursuant to Section 111, it may also make an Order with regard to any
"incidental, consequential and supplementary matters… necessary
to secure that the scheme is fully and effectively carried out."
The issue
before the Court was whether provisions in the scheme itself, which
did not provide for a transfer of business, could only be sanctioned
if they were necessary supplemental provisions in accordance with Section
112.
The Court
determined that so long as the scheme as a whole resulted in a transfer
there was no requirement that it should do nothing else. Lindsay J felt
it was unclear what "incidental or supplementary to or consequential
upon the transfer" provisions should be within the scheme itself
and which could only be authorised under Section 112. However, the predominant
purpose of the scheme should still be to result in a transfer. The Court
felt that there were distinct advantages to including relevant supplemental
provisions in the scheme itself. In that way the FSA and the independent
expert could comment on the provisions in addition to it being necessary
to obtain the Court's sanction. Anything outside the scheme only required
the Court 's sanction under Section 112. In the circumstances Lindsay
J held that the Court had jurisdiction because the supplemental provisions
were within the scheme and could be sanctioned as part of it, or were
"necessary" as provided under Section 112.
The Court
also considered a number of objections to the scheme but ultimately
determined that it was fair and that it was appropriate to sanction
it. The fact that one or more persons or classes of persons might be
adversely affected by it did not mean the scheme was unfair. The question
was whether the scheme as a whole was fair as between all those affected.
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