In the recent case of Re Legal and General Assurance Society Ltd and another company, the High Court of Justice of England and Wales granted an adjournment in respect of an application to sanction a scheme for the transfer of insurance business (Scheme) due to the effects of COVID-19 but refused to give a current indication as to whether it will sanction the Scheme.
Legal and General Assurance Society Limited (LGAS) and ReAssure Ltd (ReAssure) applied for sanction of a scheme to transfer LGAS’s insurance business to ReAssure. The applicants originally required the Court’s decision by 24 March 2020 with the transfer taking place in early April, but later applied for an adjournment because the challenges presented by COVID-19 meant that the mechanics of the migration may not proceed as planned. In addition, the applicants also sought an indication from the Court as to whether it was minded to sanction the Scheme save for the issues which had arisen due to COVID-19.
A policyholder objected to the Court giving judgment which would in effect, pre-approve the Scheme. The Financial Conduct Authority also noted that any judgment given now on the matters raised to date could not fetter the Court’s discretion at the adjourned hearing to determine the application by reference to the circumstances at that time.
The Court granted the adjournment but would not give an indication as to whether it would sanction the Scheme. It held that in granting sanction, the ultimate question is whether it is appropriate to do so in all the circumstances of the case. The circumstances must be those existing at the date the Court is asked to sanction the Scheme, namely the date of the adjourned hearing. Currently, it is impossible to know this. A judgment produced now may end up creating more work later with the need to compare the circumstances now and those at the adjourned hearing. Nevertheless, the Court noted that any potential waste of judicial time can be mitigated by reserving the matter to the same Judge and not requiring submissions on issues where there had been no change in circumstances.
This is an indication of the pragmatic approach that the Court is likely to take in relation to business disruption faced by enterprises in the current economic climate.