Hill v Zuda Pty Ltd

Case [2022] HCA 21


HIGH COURT OF AUSTRALIA

KIEFEL CJ,
GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ

CLAIRE ELIZABETH HILL  APPELLANT

AND

ZUDA PTY LTD AS TRUSTEE FOR THE HOLLY
SUPERANNUATION FUND & ORS  RESPONDENTS

Hill v Zuda Pty Ltd

[2022] HCA 21

Date of Hearing: 5 April 2022
Date of Judgment: 15 June 2022

P48/2021

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of Western Australia

Representation

B W Ashdown for the appellant (instructed by Eastwood Law)

M D Cuerden SC with A P Hershowitz for the respondents (instructed by Lawton Gillon)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Hill v Zuda Pty Ltd

Superannuation – Self managed superannuation fund – Binding death benefit nomination – Where reg 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (Cth) prescribed standards for, relevantly, regulated superannuation funds for payment of member's superannuation benefits to nominated person on or after member's death – Where trust deed for self managed superannuation fund amended to insert "binding death benefit nomination" clause directing trustee as to payment of member's benefits upon member's death – Where appellant challenged validity of binding death benefit nomination clause on basis it did not comply with requirements of reg 6.17A – Whether reg 6.17A applied to self managed superannuation funds.

Precedent – Intermediate appellate courts – Obiter dicta of intermediate appellate courts – Decision-making principles in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89.

Words and phrases – "binding death benefit nomination", "compelling reason", "intermediate appellate court", "obiter dicta", "plainly wrong", "regulated superannuation fund", "self managed superannuation fund", "seriously considered dicta", "SMSF", "superannuation".

Superannuation Industry (Supervision) Act 1993 (Cth), ss 31(1), 32(1), 34, 55A, 59, 353.
Superannuation Industry (Supervision) Regulations 1994 (Cth), regs 6.17, 6.17A, 6.21, 6.22.

  1. KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ.   This appeal is from a judgment of the Court of Appeal of the Supreme Court of Western Australia (Buss P, Murphy and Mitchell JJA)[1] on appeal from a decision of a Master of that Court (Sanderson M)[2]. It concerns the scope of the operation of a provision of the Superannuation Industry(Supervision)Regulations 1994 (Cth) ("the Regulations") made under the Superannuation Industry(Supervision)Act 1993 (Cth) ("the Act").

  2. The substantive question on which the appeal turns is whether the Court of Appeal was correct to conclude that reg 6.17A of the Regulations has no application to a superannuation fund referred to in the Act as a "self managed superannuation fund" ("an SMSF"). The question is one of statutory construction.

  3. The Court of Appeal reached that conclusion by adopting the construction of reg 6.17A previously expressed in the Full Court of the Supreme Court of South Australia in what the Court of Appeal characterised as at least "seriously considered dicta". The Court of Appeal…

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Details
AGLC
Hill v Zuda Pty Ltd [2022] HCA 21
Case
[2022] HCA 21
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal by Ms Claire Elizabeth Hill against Zuda Pty Ltd, the trustee of the Holly Superannuation Fund, an SMSF. The dispute concerned the validity of a "binding death benefit nomination" (BDBN) clause inserted into the trust deed, which directed the trustee to distribute a deceased member's benefit to the surviving member. Ms Hill challenged the BDBN, arguing it failed to comply with specific requirements of regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (Cth). The central issue was whether regulation 6.17A applied to self-managed superannuation funds.

The legal issue before the High Court was whether regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (Cth) applied to self-managed superannuation funds (SMSFs). Ms Hill contended that the BDBN was invalid because it did not comply with the form and timing requirements stipulated by regulation 6.17A, assuming the regulation was applicable. Conversely, Zuda argued that regulation 6.17A did not govern SMSFs.

The High Court affirmed the decisions of the lower courts, holding that regulation 6.17A did not apply to SMSFs. The Court noted that the heading to regulation 6.17A indicated its purpose was the payment of benefits on or after the death of a member, referencing section 59(1A) of the relevant Act. However, the Court found that neither subregulation 6.17A(2) nor 6.17A(3) had any application to SMSFs. This conclusion aligned with previous judicial interpretations, including observations from intermediate appellate courts, which had consistently held that regulation 6.17A was not intended to apply to SMSFs.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

The heading to reg 6.17A is "Payment of benefit on or after death of member (Act, s 59(1A))". There is no dispute that reg 6.17A(2) is referable solely to s 59(1A) and that neither reg 6.17A(2) nor reg 6.17A(3) has application to an SMSF.The facts and procedural history Zuda Pty Ltd ("Zuda") is the trustee of an SMSF known as the Holly Superannuation Fund ("the Fund") which was created by a deed dated 14 June 2000 ("the Trust Deed"). Mr Alec Kumar Sodhy and his de facto partner Ms Jennifer Patricia Murray were each a member of the Fund and a director of Zuda. Ms Claire Elizabeth Hill is the only child of Mr Sodhy. On 13 December 2011, the Trust Deed was amended to insert a clause described as a "binding death benefit nomination" ("BDBN") according to which, if either Mr Sodhy or Ms Murray died, Zuda was required to distribute the whole of the deceased member's balance in the Fund to the surviving member. Mr Sodhy died on 22 November 2016. Ms Hill subsequently commenced a proceeding in the Supreme Court of Western Australia seeking declaratory and injunctive relief against Zuda and Ms Murray. Ms Hill sought that relief on the basis that the BDBN was of no force and effect by reason of the BDBN having been a notice given to Zuda by each of Mr Sodhy and Ms Murray for the purpose of reg 6.17A(4) which failed to comply with either reg 6.17A(6)(b) or (c) (as to its form) or reg 6.17A(7)(a) (as to its timing). That the BDBN was a notice given to Zuda by each of Mr Sodhy and Ms Murray was undisputed before the Master and the Court of Appeal, and (notwithstanding an attempt by Zuda and Ms Murray to resile from what had been common ground manifested in an application for revocation of special leave to appeal, which is refused) remains undisputed on the appeal. That the notice was not in accordance with reg 6.17A(6)(b) or (c) or reg 6.17A(7)(a) was, and remains, similarly undisputed. The sole issue before the Master and the Court of Appeal was, and the sole substantive issue on the appeal remains, whether reg 6.17A applied to the Fund as an SMSF. Holding that reg 6.17A had no application to an SMSF, the Master summarily dismissed the proceeding[13]. The Court of Appeal concluded that there was no error in that holding and so dismissed an appeal from that order for summary dismissal. [13]Hill v Zuda Pty Ltd [2020] WASC 89 at [22]. In reasoning to that conclusion, the Court of Appeal acknowledged[14] that the view that reg 6.17A had no application to an SMSF had first been expressed by a single judge of the Supreme Court of Queensland[15]. The Court of Appeal noted that, despite a tentative expression of opinion in the interim by a single judge of Supreme Court of South Australia which it interpreted as having been to the contrary[16], the view that reg 6.17A had no application to an SMSF had subsequently been accepted sequentially in an observation in the Full Court of the Supreme Court of South Australia[17] and by another single judge of the Supreme Court of Queensland[18].[14]Hill v Zuda Pty Ltd [2021] WASCA 59 at [28].[15]Munro v Munro (2015) 306 FLR 93 at 100 [36].[16]Retail Employees Superannuation Pty Ltd v Pain (2016) 115 ACSR 1 at 89-93 [495]-[511].[17]Cantor Management Services Pty Ltd v Booth (2017) 16 ASTLR 489 at 495-496 [29]-[31].[18]Re Narumon Pty Ltd [2019] 2 Qd R 247 at 258 [35]-[36].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ

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Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ

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