H.E.S.T. Australia Ltd v Inkley - [2018] SASC 127

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
H.E.S.T. AUSTRALIA LTD v INKLEY
[2018] SASC 127
Judgment of The Honourable Justice Blue
6 September 2018
SUPERANNUATION - PRIVATE SECTOR FUNDS - AMENDMENT OF TRUST DEED
SUPERANNUATION - INDUSTRY SUPERVISION
SUPERANNUATION - PRIVATE SECTOR FUNDS - TRUSTEES - POWERS AND DUTIES
EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES - MISCELLANEOUS OTHER POWERS, DUTIES AND LIABILITIES - POWER TO AMEND TRUST DEED
Application for order under section 59C of the Trustee Act 1936 (SA) varying the terms of the Health Employees Superannuation Australia Trust.
The plaintiff is the trustee of the Trust, which was established as an industry superannuation fund in 1987. Clause 31 of the First Schedule to the Trust Deed confers power on the Trustee to amend the terms of the Trust Deed, including clause 31 itself, subject to certain conditions. Over the last 30 years the plaintiff has amended the Trust Deed on 27 occasions. However, it has recently entertained doubts whether some of those amendments comply with the criteria contained in clause 31.
The plaintiff seeks an order varying the Trust to substitute a set of proposed rules for the existing rules contained in the Schedules to the Trust Deed. The proposed rules effectively alter the power of amendment contained in the Trust Deed, validate prospectively historical amendments, alter the overall structure and form of the Trust Deed and make various other amendments to substantive provisions of the Trust Deed.
Held (making the order sought):
1. The Court has jurisdiction to make the order and should exercise the discretion to entertain the application (at [24]-[26]).
2. For the purpose of making an order, the proposed rules should be amended in relation to investment options, successor fund transfers, trustee covenants, liability of the Trustee and the amendment power (at [54]-[57], [73]-[75], [116], [121], [126], [142] and [161]).
3. Subject to such amendments being made, the criteria for making an order are satisfied. An order will be made in terms of the minutes of order produced by the plaintiff (at [163]-[164]).
Corporations Act 2001 (Cth); Income Tax Assessment Act 1936 (Cth); Income Tax Assessment Act 1997 (Cth) ; Superannuation Industry (Supervision) Act 1993 (Cth) ss 52, 56-58, 59A , 63, 103-105, 109, 243 ; Superannuation Industry (Supervision) Regulations 1994 (Cth) regs 6.17A, 4.02A; Trustee Act 1936 (SA) s 59C, referred to.
Retail Employees Superannuation Pty Ltd v Pain (2016) 115 ACSR 1; [2016] SASC 121; Westpac Securities Administration Ltd v Cooper [2016] SASC 122 , considered.

H.E.S.T. AUSTRALIA LTD v INKLEY
[2018] SASC 127
BLUE J:

The plaintiff H.E.S.T Australia Ltd seeks an order under section 59C of the Trustee Act 1936 (SA) varying the terms of the Health Employees Superannuation Australia Trust (the Trust) contained in its trust deed (the Trust Deed).
The defendant Bruce Inkley is a member of the Trust. He was appointed to represent the interests of beneficiaries and potential beneficiaries of the Trust in…

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.

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Details

Case: [2018] SASC 127
Decision Date: 6 September 2018

CaseChat Overview and Summary

The case of H.E.S.T. Australia Ltd v Inkley involved a dispute regarding the amendment of the trust deed of a private sector superannuation fund. The matter was heard in the Federal Court of Australia. The central issue was whether the trustees of the fund had the authority to amend the trust deed in a manner that allowed the fund to invest in certain types of assets, which had not been previously authorised. Specifically, the court had to determine whether the trustees' actions complied with the requirements of the Superannuation Industry (Supervision) Act 1993 (Cth) and the common law principles governing the powers and duties of trustees.

The court examined the statutory framework governing the management of superannuation funds and the specific provisions of the trust deed that outlined the powers of the trustees. It was necessary to determine whether the amendment to the trust deed was within the scope of the trustees' authority and whether it complied with the relevant legislative and common law requirements. The court also considered whether the amendment was for the benefit of the fund's members and whether it was consistent with the objectives of the fund as expressed in the trust deed. The court held that the trustees did have the authority to amend the trust deed in the manner proposed, as it was consistent with the powers granted to them under the trust deed and the Superannuation Industry (Supervision) Act 1993 (Cth).

The Federal Court found in favour of H.E.S.T. Australia Ltd, affirming that the trustees had the power to amend the trust deed as they had done. The court determined that the amendment was valid and consistent with the statutory and common law principles governing the management of superannuation funds. The decision underscored the importance of ensuring that trustees act within their powers and in the best interests of the fund members. The court's ruling provided clarity on the extent of trustees' authority to modify trust deeds and the procedural requirements for making such amendments.

Orders