Application by BT Funds Management Ltd - [2017] NSWSC 45

Supreme Court

New South Wales

Medium Neutral Citation: Application by BT Funds Management Ltd [2017] NSWSC 45
Hearing dates: 3 February 2017
Decision date: 03 February 2017
Jurisdiction: Equity
Before: Stevenson J
Decision:
Advice given for the purpose of rules governing a superannuation fund that the trustee must treat a direction concerning the deceased’s death benefit in favour of his widow as a request because the trustee had actual knowledge that the deceased and his widow were permanently separated; trustee not compelled to pay all or any part of the death benefit to the deceased’s widow and may instead pay any remaining part of the death benefit to the deceased’s dependants and/or legal personal representative

Catchwords: TRUSTS AND TRUSTEES; JUDICIAL ADVICE – s 63 of the Trustee Act 1925 (NSW) – superannuation fund – conditional consent to non-lapsing direction revoked where trustee had actual knowledge that the deceased and his widow were permanently separated – trustee not compelled to pay death benefit to deceased’s widow as provided in the direction – direction then treated as a request
Legislation Cited: Succession Act 2006 (NSW)
Superannuation Industry (Supervision) Act 1993 (Cth)
Superannuation Industry (Supervision) Regulations 1994 (Cth)
Trustee Act 1925 (NSW)
Cases Cited: Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226
Category: Principal judgment
Parties: BT Funds Management Limited (Plaintiff)
Representation:
Counsel:
D Barlin (Plaintiff)
Solicitors:
Herbert Smith Freehills (Plaintiff)

File Number(s): SC 2016/335099

EX TEMPORE Judgment (REVISED)

The plaintiff (“the Trustee”) is the trustee of a regulated superannuation fund known as "BT Retirement Wrap" (“the Fund”).
The late Mr Kevin Jones was a member of the Fund.
On 25 August 2009, Mr Jones gave the Trustee a "Non-Lapsing Direction" (“the Direction”) that his "Death Benefit" (an amount in the order of $660,000) be paid to his wife, Grace Chin-Fong-Jones (“the Widow”).
Mr Jones died on 3 November 2012.
The Direction was thus given more than three years before Mr Jones’ death. However, I am satisfied that the Trustee would be justified in concluding that the Direction is governed by s 59(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) rather than s 59(1A) of that Act and that accordingly it is not subject to reg 6.17A(7) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (which provides that notices such as the Direction lapse after three years).
The "Rules for paying Death Benefits" are found in cl 5.3 of Sch 2 of the deed establishing the trust.
Clause 5.3(g)(iii) provides that the Trustee is "required" to accept a Non-Lapsing Direction (such as that with which this case is concerned) to which it has given conditional consent under cl 5.3(h).
In turn, cl 5.3(h) provides that the Trustee "must" give that conditional consent unless it has "actual knowledge" that, in this case Mr Jones, did not understand the consequences of making the Non-Lapsing Direction. There is no question of a Trustee having any such knowledge in this case.
The Trustee has thus given its conditional consent to the Direction.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Application by BT Funds Management Ltd

Details

AGLC: Application by BT Funds Management Ltd [2017] NSWSC 45
Case: [2017] NSWSC 45
Decision Date: 03 February 2017

CaseChat Overview and Summary

In the case of BT Funds Management Ltd, the applicant sought judicial advice under section 63 of the Trustee Act 1925 (NSW) concerning a superannuation fund. The dispute arose due to a conditional consent to a non-lapsing direction that was subsequently revoked. The applicant was concerned that it was compelled to pay a death benefit to the deceased's widow, despite the revocation of the consent and the trustee's knowledge of the separation between the deceased and his widow.

The court was required to determine whether the revocation of the conditional consent to the non-lapsing direction was valid given the trustee's knowledge of the separation. Additionally, the court needed to clarify whether the trustee was obligated to pay the death benefit to the deceased's widow as per the direction, or if the revocation rendered the direction a mere request.

The court found that the revocation of the conditional consent was valid because the trustee had actual knowledge that the deceased and his widow were permanently separated. The court held that the trustee was not compelled to pay the death benefit to the deceased's widow as provided in the direction. Instead, the direction was treated as a request, and the trustee was not obligated to follow it. The court emphasised that the trustee's decision to revoke the consent was valid and binding, and the direction could not be enforced against the trustee.

The court ordered that the revocation of the conditional consent to the non-lapsing direction was valid and that the trustee was not compelled to pay the death benefit to the deceased's widow. The direction was treated as a request, and the trustee was not obligated to follow it. The court further directed that the applicant could proceed with its application for judicial advice in light of the findings.

Orders