Hill v Zuda Pty Ltd
[2021] WASCA 59
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: HILL -v- ZUDA PTY LTD [2021] WASCA 59
CORAM: BUSS P
MURPHY JA
MITCHELL JA
HEARD: 8 FEBRUARY 2021
DELIVERED : 23 APRIL 2021
FILE NO/S: CACV 49 of 2020
BETWEEN: CLAIRE ELIZABETH HILL
Appellant
AND
ZUDA PTY LTD (ACN 008 968 232) as trustee for THE HOLLY SUPERANNUATION FUND
First Respondent
JENNIFER PATRICIA MURRAY as executor of the estate of ALEC SODHY
Second Respondent
JENNIFER PATRICIA MURRAY
Third Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: HILL -v- ZUDA PTY LTD as trustee for THE HOLLY SUPERANNUATION FUND [2020] WASC 89
File Number : CIV 2767 of 2019
Catchwords:
Superannuation - Whether regulation prescribing standards for a valid binding death benefit nomination applies to self managed superannuation funds
Courts and judges - Precedent - When an intermediate appellate court can depart from construction of Commonwealth legislation adopted by another Australian intermediate appellate court - Whether construction of legislation adopted by another intermediate appellate court is plainly wrong
Legislation:
Superannuation Industry (Supervision) Act 1993 (Cth), s 31, s 34(1), s 55A, s 59
Superannuation Industry (Supervision) Regulations 1994 (Cth), reg 6.17A, reg 6.22
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | B W Ashdown |
| First Respondent | : | A P Hershowitz |
| Second Respondent | : | A P Hershowitz |
| Third Respondent | : | A P Hershowitz |
Solicitors:
| Appellant | : | Eastwood Law |
| First Respondent | : | Lawton Gillon |
| Second Respondent | : | Lawton Gillon |
| Third Respondent | : | Lawton Gillon |
Case(s) referred to in decision(s):
CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; (2009) 239 CLR 390
Cantor Management Services Pty Ltd v Booth [2017] SASCFC 122; (2017) 16 ASTLR 489
Casella v Hewitt (2008) 36 WAR 1; [2008] WASCA 13
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Munro v Munro [2015] QSC 61
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
R v Falzon [2018] HCA 29; (2018) 264 CLR 361
Re Narumon Pty Ltd [2018] QSC 185
Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121
Theseus Exploration NL v Foyster (1972) 126 CLR 507
JUDGMENT OF THE COURT:
Summary
The legal issue raised by this appeal is whether reg 6.17A(4), (6) and (7) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations) apply to self managed superannuation funds. Those regulations deal with the manner in which a member of a regulated superannuation fund may give notice requiring the trustee of the fund to pay a benefit of a member, on or after the member's death, to a nominated person.
The resolution of that question in the present case is complicated by the fact that this is an appeal against an award of summary judgment in favour of the respondents, who were the defendants in the primary proceedings. Ordinarily, the question on an appeal against summary judgment in favour of a defendant is whether the plaintiff's case is reasonably arguable. However, both parties invited this court to reach and apply its final view as to the proper construction of the legislation.[1] We are satisfied that this is a case where this court, on appeal from orders made in a summary judgment application, may properly take the anomalous course of ruling on the proper construction of the relevant provisions.[2] A final ruling can resolve the primary proceedings and the resolution of the question of statutory construction does not turn on any disputed question of fact.
[1] Appeal ts 14, 31.
[2] See Theseus Exploration NL v Foyster (1972) 126 CLR 507; Casella v Hewitt (2008) 36 WAR 1; [2008] WASCA 13 [36]; NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [36], [57], [121], [134].
In our view, this court is bound to hold that reg 6.17A(4), (6) and (7) do not apply to self managed superannuation funds. The master did not err in adopting that construction, and the appeal should be dismissed.
Factual and procedural background
The appellant, Ms Hill, is the only child of Alec Kumar Sodhy (the deceased) who died on 22 November 2016. Prior to his death, the deceased was in a de facto relationship with Jennifer Murray. Ms Murray is joined as the second respondent in her capacity as the executor of the deceased's estate and as third respondent in her personal capacity. Ms Murray in her personal capacity is the beneficiary of the deceased's estate. Ms Hill has made a claim under the Family Provision Act 1972 (WA) against the deceased's estate.
Ms Murray is also the sole director of the first respondent (Zuda), which is the trustee of the Holly Superannuation Fund (Fund). It is common ground that the Fund is a regulated superannuation fund and a self managed superannuation fund for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act). Prior to the death of the deceased, the deceased and Ms Murray were the only members of the Fund, which was created by Deed dated 14 June 2000. Since the deceased's death, Ms Murray has been the only member of the Fund.
The Deed creating the Fund was amended by a Deed dated 13 December 2011 (amending Deed), which replaced the original Trust Deed and the rules relating to the Fund. Clause 3 of the amending Deed provides that Zuda shall hold the assets of the Fund on trust and apply them in the manner set out in the rules attached to the amending Deed (Rules). Clauses 5 and 6 of the amending Deed provide:
5.Despite anything else in the trust deed or Rules, if either of Alec Kumar Sodhy or Jennifer Patricia Murray dies, then the Trustee must distribute the whole of the deceased Member's Account Balance to the other Member and may pay any part of the benefit as a lump sum or as a pension as the Trustee considers appropriate.
6.Clause 5 is a Binding Death Benefit Nomination for the purpose of the Rules.
Rule 5 of the Rules relevantly provides:
5.2 A Member may give the Trustee a Binding Death Benefit Nomination.
5.3 The Trustee may refuse to accept any Binding Death Benefit Nomination without giving any reason. When the Trustee accepts a Binding Death Benefit Nomination, any previous Binding Death Benefit Nomination from the Member is taken to have been revoked.
5.4If a Member dies the Trustee must pay a benefit equal to the Member's Account Balance.
5.5 If, in relation to any part of the benefit:
· the Trustee accepted a Binding Death Benefit Nomination;
· it has not been revoked; and
· it can be followed under Government Requirements
then the Trustee must follow the Binding Death Benefit Nomination in relation to that part of the benefit.
5.6 If in relation to any part of the benefit:
· the Trustee does not hold a current Binding Death Benefit Nomination; or
· the nomination cannot be followed for any reason
the Trustee must pay that part of the benefit to any or all of the Member's Dependants and legal personal representative in the proportions that the Trustee decides.
'Government Requirements' is defined in rule 1 to mean:
Any requirements under laws relating to superannuation funds:
(a)imposed on the Trustee; or
(b)that the Fund must satisfy to qualify for the most favourable taxation treatment available to superannuation funds.
Rule 1 defines a 'Dependant of a Member' to include a spouse and child of the Member. Ms Hill and Ms Murray are both Dependants of the deceased for the purposes of the Rules.
In the primary proceedings, Ms Hill contended that, at an unknown time, Zuda purported to transfer the balance of the deceased's member account to Ms Murray.[3] She contended that cl 5 and cl 6 of the amending Deed did not constitute a valid binding death benefit nomination, and are invalid and of no force and effect. She said that this arose by the operation of s 31 and s 55A of the SIS Act, and reg 6.17A(6)(b) and (c) and reg 6.17A(7)(a) of the SIS Regulations.[4] She said that s 31 and s 55A of the SIS Act and reg 6.17A and reg 6.22 of the SIS Regulations required Zuda to pay the balance of the deceased's member account to one or more of:[5]
(1)Ms Hill, as a child of the deceased;
(2)Ms Murray as executor of the deceased's Will and estate; and
(3)Ms Murray personally, if she was a dependant of the deceased.
[3] Statement of claim, par 12.
[4] Statement of claim, par 13.
[5] Statement of claim, par 15.
Ms Hill alleged that, in breach of certain duties, Zuda failed to make a determination as to the cashing of the deceased's member account, and Ms Murray, as executor, failed to seek payment to the deceased's estate.[6]
[6] Statement of claim, par 16 - 18.
Ms Hill sought various forms of declaratory relief and an order, in effect, directing Zuda to make a payment of the balance of the deceased's member account, with interest, in favour of her and/or Ms Murray as executor of the deceased's estate.[7]
[7] Prayer for relief.
Ms Hill also pleaded an alternative case alleging that cl 5 and cl 6 of the amending Deed were not accepted by Zuda pursuant to rule 5.5 of the Rules. As there is no challenge in this appeal to the master's conclusion that this case was not arguable, it is unnecessary to say anything further about this issue.
Following the commencement of the primary proceedings, the respondents sought and were granted summary judgment. In order to understand the basis on which summary judgment was granted, it is necessary to understand the relevant statutory provisions and the competing constructions of those provisions.
Statutory provisions
Section 31 of the SIS Act provides for regulations to prescribe standards applicable to the operation of regulated superannuation funds.
Section 34(1) of the SIS Act provides that a trustee of a superannuation entity must ensure that the prescribed standards applicable to the operation of the entity are complied with at all times. Section 34(2) creates an offence where a person intentionally or recklessly contravenes s 34(1). Section 34(3) provides that a contravention of s 34(1) 'does not affect the validity of a transaction'.
Section 55A of the SIS Act provides:
(1) The governing rules of a regulated superannuation fund must not permit a fund member's benefits to be cashed after the member's death otherwise than in accordance with standards prescribed for the purposes of section 31.
(2) If the governing rules of a fund are inconsistent with subsection (1):
(a) subsection (1) prevails; and
(b) the governing rules are invalid, to the extent of the inconsistency.
Section 59(1) of the SIS Act relevantly provides that:
Subject to subsection (1A), the governing rules of a superannuation entity other than a self managed superannuation fund must not permit a discretion under those rules that is exercisable by a person other than a trustee of the entity to be exercised unless:
(a) those rules require the consent of the trustee, or the trustees, of the entity to the exercise of that discretion
(emphasis added)
Section 59(1A) of the SIS Act, to which s 59(1) is subject, provides that:
Despite subsection (1), the governing rules of a superannuation entity may, subject to a trustee of the entity complying with any conditions contained in the regulations, permit a member of the entity, by notice given to a trustee of the entity in accordance with the regulations, to require a trustee of the entity to provide any benefits in respect of the member on or after the member’s death to a person or persons mentioned in the notice, being the legal personal representative or a dependant or dependants of the member.
Section 59(2) of the SIS Act provides that, if the governing rules of a superannuation entity are inconsistent with s 59(1), that subsection prevails, and the governing rules are, to the extent of the inconsistency, invalid.
As the construction of reg 6.17A of the SIS Regulations is critical to the determination of this appeal, it is set out in full below:
6.17A Payment of benefit on or after death of member (Act, s 59(1A))
(1) For subsections 31(1) and 32(1) of the Act, the standard set out in subregulation (4) is applicable to the operation of regulated superannuation funds and approved deposit funds.
(2) For subsection 59(1A) of the Act, the governing rules of a fund may permit a member of the fund to require the trustee to provide any benefits in respect of the member, on or after the death of the member, to the legal personal representative or a dependant of the member if the trustee gives to the member information under subregulation (3).
(3) The trustee must give to the member information that the trustee reasonably believes the member reasonably needs for the purpose of understanding the right of that member to require the trustee to provide the benefits.
(4) Subject to subregulation (4A), and regulations 6.17B, 7A.17 and 7A.18, if the governing rules of a fund permit a member of the fund to require the trustee to provide any benefits in accordance with subregulation (2), the trustee must pay a benefit in respect of the member, on or after the death of the member, to the person or persons mentioned in a notice given to the trustee by the member if:
(a) the person, or each of the persons, mentioned in the notice is the legal personal representative or a dependant of the member; and
(b) the proportion of the benefit that will be paid to that person, or to each of those persons, is certain or readily ascertainable from the notice; and
(c) the notice is in accordance with subregulation (6); and
(d) the notice is in effect.
(4A) The trustee is not required to comply with subregulation (4) if the trustee:
(a) is subject to a court order that has the effect of restraining or prohibiting the trustee from paying a benefit in respect of the member in accordance with a notice of the kind described in that subregulation; or
(b) is aware that the member of the fund is subject to a court order that:
(i) requires the member to amend or revoke a notice of that kind that the member has given the trustee; or
(ii) has the effect of restraining or prohibiting the member from giving a notice of that kind.
(5) A member who gives notice under subregulation (4) may:
(a) confirm the notice by giving to the trustee a written notice, signed, and dated, by the member, to that effect; or
(b) amend, or revoke, the notice by giving to the trustee notice, in accordance with subregulation (6), of the amendment or revocation.
(6) For paragraphs (4)(c) and (5)(b), the notice:
(a) must be in writing; and
(b) must be signed, and dated, by the member in the presence of 2 witnesses, being persons:
(i) each of whom has turned 18; and
(ii) neither of whom is a person mentioned in the notice; and
(c) must contain a declaration signed, and dated, by the witnesses stating that the notice was signed by the member in their presence.
(7) Unless sooner revoked by the member, a notice under subregulation (4) ceases to have effect:
(a) at the end of the period of 3 years after the day it was first signed, or last confirmed or amended, by the member; or
(b) if the governing rules of the fund fix a shorter period—at the end of that period.
(emphasis added)
Regulation 6.22 of the SIS Regulations makes provision for the cashing of benefits to the member's legal personal representatives or dependants after the member's death.
The issue and the competing constructions
Ms Hill contends that cl 5 and cl 6 of the amending Deed did not constitute a valid binding death benefit nomination as:
(1)the amending Deed was not signed in the presence of two witnesses who signed a declaration that the Deed was signed by the deceased in their presence, as required by reg 6.17A(6)(b) and (c); and
(2)the amending Deed was signed more than three years prior to the deceased's death, and so had ceased to have effect under reg 6.17A(7)(a) of the SIS Regulations.
The question raised by the appeal, therefore, concerns the application of reg 6.17A(6) and (7) to a self managed superannuation fund.
Two competing constructions of the SIS Act and SIS Regulations are advanced.
On the respondents' construction, reg 6.17A(6) and (7) of the SIS Regulations do not apply to a self managed superannuation fund on the following basis:
(1)Section 59(1) of the SIS Act expressly excludes self managed superannuation funds from its application.
(2)Therefore, the proviso in s 59(1A) of the SIS Act does not apply to govern the way in which a member of a self managed superannuation fund may make a binding death benefit nomination.
(3)Regulation 6.17A operates only for the purpose of prescribing the form of a notice which may be given to a trustee, or conditions, for the purposes of s 59(1A) of the SIS Act.
(4)Because reg 6.17A operates only for the purposes of a proviso to a requirement that does not apply to self managed superannuation funds, those regulations do not apply to self managed superannuation funds.
On the appellant's construction, reg 6.17A(6) and (7) of the SIS Regulations do apply to a self managed superannuation fund on the following basis:
(1)Regulations 6.17A(6) and (7) do not operate only for the purpose of s 59(1A) of the SIS Act. Rather, they add content to the standard set out in reg 6.17A(4). By reg 6.17A(1), the standard set out in reg 6.17A(4) is relevantly prescribed for the purposes of s 31(1) of the SIS Act.
(2)The trustee of a self managed superannuation fund is prohibited by s 55A(1) of the SIS Act from permitting a fund member's benefits to be cashed after the member's death otherwise in accordance with standards prescribed for the purposes of s 31 of the SIS Act.
(3)The governing rules of a fund will be invalid to the extent of any inconsistency with s 55A(1).
The respondents' construction was adopted by Mullins J in Munro v Munro,[8] by Kourakis CJ (Peek and Nicholson JJ agreeing) in Cantor Management Services Pty Ltd v Booth,[9] and by Bowskill J in Re Narumon Pty Ltd.[10] Some support for the appellant's construction can be found in the reasons of Blue J in Retail Employees Superannuation Pty Ltd v Pain,[11] although his Honour did not finally decide the point.
[8] Munro v Munro [2015] QSC 61 [36].
[9] Cantor Management Services Pty Ltd v Booth [2017] SASCFC 122; (2017) 16 ASTLR 489 [29] - [31].
[10] Re Narumon Pty Ltd [2018] QSC 185 [35] - [36].
[11] Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121 [495] - [511].
The master's approach
The master referred to the respondents' position at first instance in the following terms:[12]
The [respondents] say the position is quite clear. There are two first instance Queensland judgments which strongly support their position. Perhaps more importantly there is a decision of an intermediate Court of Appeal which also supports their position. That, they say, establishes the law as it stands at present. It is to be borne in mind the act and regulations under consideration here are Commonwealth laws. It is a well‑established principle that when interpreting Commonwealth legislation a court at first instance should not diverge from intermediate appellate authority unless there is extremely good reason for doing so.
[12] Primary decision [18].
The master also noted the appellant's position that the decisions in Munro, Narumon and Cantor Management were wrongly decided, and her reliance on the reasons of Blue J in Pain.[13]
[13] Primary decision [19].
The master then said:[14]
The difficulty for the [appellant] in placing reliance upon the Pain decision is that while the case sets out the arguments in favour of the [appellant's] position it is not actually a decision on point. That is made plain by [511]. Furthermore, the decision of the South Australian Full Court in Cantor Management was delivered some 12 months after Blue J's decision in Pain. There is no mention in the Cantor Management decision of the Pain decision. The case may or may not have been cited. It is difficult to imagine why it was not. Either way Blue J's reasoning was not adopted by the Full Court.
The position then is this: The authorities are all one way and favour the [respondents]. As the law stands in Australia at the moment, the [appellant's] claim cannot succeed. While the argument detailed in Blue J's judgment in Pain is of interest it cannot provide a basis upon which the [appellant's] action can succeed. Accordingly, the [respondents] are entitled to an order for summary judgment.
[14] Primary decision [21] - [22].
The master also made observations to the effect that a trial, rather than a summary judgment application, may have been a more efficient way of dealing with 'what is a crisp point'.[15]
[15] Primary decision [23] - [24].
The appeal to this court
The appellant appeals to this court on two grounds. Ground 1 in effect contends that the master erred in his construction of the SIS Act and SIS Regulations, and that reg 6.17A(4), (6) and (7) do apply to a self managed superannuation fund. Ground 2 contends that the master erred in finding that there was no serious question to be tried as to the application of reg 6.17A(4), (6) and (7) to a self managed superannuation fund. However, in oral submissions the appellant's counsel explained that ground 2 was included against the contingency that this court might consider it inappropriate to finally resolve the construction question on a summary judgment application. He accepts that, if this court adopts the respondents' construction as the correct construction, then the appeal should be dismissed.[16]
[16] Appeal ts 14 - 15.
The respondents' submissions support the master's reasoning, and invite this court to finally resolve the statutory construction question.
The significance of the decision in Cantor Management
The reasons of the Full Court of the Supreme Court of South Australia in Cantor Management dealt with an appeal from the determination of two preliminary questions. One of the questions was whether a binding death benefit nomination given by the deceased member of a self managed superannuation fund was valid and effective. The primary judge in that case had determined that it was. The question arose on an application by the executor of the deceased's estate (who was the subject of the nomination) for a declaration that the trustee of the superannuation fund held property on trust for the deceased's estate and was bound by the nomination.[17]
[17] Cantor Management [7] - [8].
On appeal, the trustee contended that the nomination was not effective because it had not been 'given' to the trustee in accordance with the superannuation fund deed.[18] The question was whether the nomination had been 'given' to the corporate trustee when it was left at the office of the trustee's accountants, which was the corporation's registered office. The relevant deed required that a notification be 'given' to the trustee in order to be effective.
[18] Cantor Management [10].
In the course of discussing the SIS Act, Kourakis CJ observed:[19]
Section 59 of the SIS Act and regulation 6.17A of the SIS Regulations prescribe the form of a death benefit nomination and provide that the trustee must pay a benefit to the person mentioned in the nominations and the notice given to the Trustee.
In [Munro], Mullins J held that those regulations do not apply to self managed superannuation funds. I respectfully agree with her Honour’s conclusion. Section 59(1) of the SIS Act prohibits, subject to s 59(1A), the exercise of any discretion affecting the superannuation fund by any person other than the trustee. However s 59(1) of the SIS Act expressly excludes self managed superannuation funds from its application. It follows that the proviso in s 59(1A) of the SIS Act which allows members to bind the trustee to pay a death benefit to a nominee if the prescribed form is followed, does not apply as a general rule governing the way in which a binding nomination may be given by a member of a [self managed superannuation fund].[20] The trust deed under which the [self managed superannuation fund] is constituted will govern the form in which a binding nomination may be given.
Be that as it may, the appellant does not rely on any non-compliance with the SIS Regulations other than with respect to the requirement to give notice of the [Death Benefit Beneficiary Nomination Form] to the trustee of the Superannuation Fund which is, in any event, a requirement under the Fund Deed.
[19] Cantor Management [29] - [30].
[20] SMSFD 2008/3 – Self Managed Superannuation Funds Determination: Self Managed Superannuation Funds: is there any restriction in the Superannuation Industry (Supervision) legislation on a self managed superannuation fund trustee accepting from a member a binding nomination of the recipients of any benefits payable in the event of the member’s death? at [15].
Kourakis CJ went on to conclude that the word 'given' in the relevant deed had its ordinary meaning, which encompassed leaving a document at the registered office of a corporation.[21]
[21] Cantor Management [45] - [48].
The significance of the decision in Cantor Management is that it is a decision of an Australian intermediate appellate court construing federal legislation. The precedential effect of such a decision was described in Farah Constructions Pty Ltd v Say-Dee Pty Ltd:[22]
Intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is plainly wrong. (citation omitted)
[22] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [135]. To the same effect, see also R v Falzon [2018] HCA 29; (2018) 264 CLR 361 [49].
That approach is designed to avoid undesirable disconformity between the views of different intermediate appellate courts as to the proper construction of national legislation and the common law of Australia (to which the principle also applies).[23]
[23] See CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; (2009) 239 CLR 390 [50] - [51].
There may be some debate as to whether Kourakis CJ's observations as to the application of reg 6.17A of the SIS Regulations form part of the ratio of Cantor Management. Arguably they do, because reg 6.17A(4) also refers to a 'notice given to the trustee by the member'. The reason that his Honour found it unnecessary to consider the meaning of 'given' in reg 6.17A(4) was his conclusion that the regulation did not apply to the self managed superannuation fund. However, regardless of whether the observations are part of the ratio, they are seriously considered dicta to which considerable weight must be given.[24]
[24] See Farah Constructions [134].
There was also debate between the parties in the present case as to precisely what was decided in Cantor Management. It is common ground that the court in Cantor Management did not address the argument that the application of reg 6.17A(4), (6) and (7) to self managed superannuation funds could be supported under s 31 and s 55A of the SIS Act. The appellant contended, in effect, that, because the decision in Cantor Management did not address this issue, it was not binding authority resolving the question. The appellant contended that the approach of Bowskill J in Narumon (decided after Cantor Management) supports the view that Cantor Management did not decide the point. This submission is made on the basis that her Honour considered the argument under s 31 and s 55A on its merits, and not on the basis that the question was foreclosed by the decision in Cantor Management.[25] While her Honour ultimately decided that reg 6.17A did not apply to self managed superannuation funds, the appellant points out that Bowskill J's decision on this point is not binding on this court and, as a decision of a single judge, does not attract the principle in Farah Constructions.
[25] Narumon [43] - [44], see appeal ts 19.
We do not accept the above submissions as to what Cantor Management decided. The construction of reg 6.17A adopted in Cantor Management was that the regulation as a whole did not apply to self managed superannuation funds. The parts of reg 6.17A which did not apply necessarily included reg 6.17A(4), which was the provision containing the relevant requirement in Cantor Management that the notice be 'given' to the trustee. The failure to consider s 31 and s 55A of the SIS Act may be a reason for contending that the court's construction of the provisions was wrong. However, that court's decision on the construction of the SIS Act and reg 6.17A of the SIS Regulations is most appropriately characterised as being that reg 6.17A as a whole does not, on a proper construction of the SIS Act and reg 6.17A, apply to self managed superannuation funds.
Counsel for the appellant also submitted that, if the court in Cantor Management is to be regarded as determining that reg 6.17A does not apply to self managed superannuation funds, then that decision was plainly wrong.[26] We do not accept this submission. There is force in the appellant's argument in favour of its construction of the SIS Act and the SIS Regulations. However, in our view, the competing construction is also reasonably open, essentially for the reasons explained by Bowskill J in Narumon.
[26] Appeal ts 24.
Regulation 6.17A(4) only applies on its terms:
if the governing rules of a fund permit a member of the fund to require the trustee to provide any benefits in accordance with subregulation (2) (emphasis added)
Therefore, a reasonable reading of reg 6.17A(4) is that it only operates where reg 6.17A(2) applies. Regulation 6.17A(2), as the appellant now accepts,[27] only applies for the purposes of s 59(1A) of the SIS Act, and so it does not apply to self managed superannuation funds. We accept that reg 6.17A(1) provides for reg 6.17A(4) to operate as a prescribed standard under s 31(1) of the SIS Act, and that such standards may apply to self managed superannuation funds as well as other regulated superannuation funds. However, it is reasonably arguable that the particular prescribed standard in reg 6.17A(4) does not operate on its terms in relation to self managed superannuation funds. This is by reason of the reference in reg 6.17A(4) to reg 6.17A(2), in the words which identify when reg 6.17A(4) applies. Regulation 6.17A(6) and (7) merely expand upon the operation of reg 6.17A(4), and have no independent operation. On that basis, it is reasonably arguable that the operation of the whole of reg 6.17A depends on the application of reg 6.17A(2), which does not apply to self managed superannuation funds.
[27] See appeal ts 18, 21 - 23.
That operation of the SIS Act and Regulations does not demand rejection of the respondents' construction on the basis that it produces outcomes which are so absurd, unfair or impractical that they could not have objectively been intended. We note that the appellant submits that if reg 6.17A(4), (6) and (7) of the SIS Act do not apply, there would be no prescribed standards permitting death benefit nominations for self managed superannuation funds. This is on the basis that s 55A of the SIS Act would require the cashing of a member's benefits after death to be in accordance with the standard prescribed in reg 6.22.[28] However, at least arguably, reg 6.22 of the SIS Regulations only limits the persons to whom a member's benefit may be 'cashed', and does not affect when a binding death benefit nomination may be made in favour of such a person. If there are no relevant standards prescribed for the purposes of s 31 of the SIS Act, then s 55A at least arguably does not restrict the cashing of a fund member's benefits. The operation of reg 6.22 does not produce any absurd results if reg 6.17A does not apply to self managed superannuation funds.
[28] Appellant's submissions, par 42 - 45; appeal ts 15 - 16, 19 - 20.
Therefore, in our view, the construction adopted in Cantor Management, that reg 6.17A does not apply to self managed superannuation funds, is not plainly wrong.
In our view, the principle in Farah Constructions applies in this case. The Full Court of the Supreme Court of South Australia has expressed its (at least seriously considered) opinion as to whether reg 6.17A applies to self managed superannuation funds. If this court were to adopt a contrary position merely because it prefers one of two reasonably available constructional choices, it would result in confusion for other courts. It would also produce uncertainty for those involved in the establishment, management and operation of self managed superannuation funds and their advisers. Given the popularity of self managed superannuation funds as investment vehicles, the confusion and uncertainty would likely affect the positions adopted by a broad range of people. In our view, the decision in Cantor Management should be taken as settling the question of whether reg 6.17A of the SIS Regulations applies to self managed superannuation funds until such time as it is overruled by the High Court.
Conclusion
Putting aside intermediate appellate court authority to the contrary, the construction advanced by the appellant appears to us to be reasonably arguable. However, in our view, this court should accept the construction adopted in Cantor Management until such time as the decision is overruled by the High Court. On that basis, we regard ourselves as bound to construe reg 6.17A of the SIS Regulations as not applying to self managed superannuation funds. The master did not err in proceeding on that basis. As the appellant's cause of action in the primary proceedings depended on reg 6.17A(4), (6) and (7) applying to self managed superannuation funds, the appeal against the entry of summary judgment should be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MT
Associate to the Honourable Justice Mitchell
23 APRIL 2021
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