One
year after a two million dollar life policy was taken out on their joint lives,
Abdur Miah is bankrupt and his wife is dead; murdered. The High Court ruled Mr Miah could not
collect on the policy.
The court was told Mr Miah was bankrupted
in April 2007 on debts totalling $1.03 million. The following month his
wife was murdered in Bangladesh. Mr Miah
was charged with murder, but acquitted.
His brother was convicted.
Back in New Zealand, the Insolvency
Service took control of Mr Miah’s assets, including his interest in the two
million dollar National Mutual life policy.
National Mutual advised it would not be paying out. It alleges the Miahs misrepresented their
true financial position when taking out the policy, giving National Mutual grounds
to avoid the policy because of material non-disclosures. The Insolvency Service elected not to sue.
Once discharged from bankruptcy, Mr Miah
took steps to regain control over the National Mutual life policy. At issue was the question of who now “owns”
the policy and with it the right to sue.
Associate judge Doogue said the general
rule in insurance law is that there is a right of survivorship in life policies
held jointly by husband and wife. When
one dies, the survivor collects the full amount. Family circumstances might suggest a
different intent with the proceeds split 50/50 between the surviving spouse and
the estate of the deceased spouse, he said.
For example where the deceased spouse was committed financially to
caring for people outside the immediate family or where the deceased spouse had
substantial personal debts due to outsiders. There was no evidence of such circumstances in
the Miah family. At the time of his
wife’s death, Mr Miah became solely entitled to all rights under the life policy
as the survivor of the two. Since he was
bankrupt at the time of his wife’s death, these insurance rights passed
automatically to the Insolvency Service.
Judge Doogue ruled it was the Insolvency
Service that “owned” the policy. It had
not abandoned any right to sue, but had elected not to sue having determined
National Mutual had strong grounds for refusing to pay. Mr Miah could not claim any right to the
policy.
Miah
v. National Mutual – High Court (1.09.15)
15.099