In the Matter Of An Application BY Police Association Of South Australia

The Police Association of South Australia, an association registered under the Fair Work Act 1994 (SA), applied to the South Australian Supreme Court for directions regarding the distribution of insurance proceeds from a Group Life Insurance Scheme. The Association had entered into a contract with an insurer, under which the insurer was to pay $100,000 to the Association upon the death of a member. The Association had informed its members that, unless a "nomination form" was completed and submitted, the $100,000 would be paid to the deceased member's estate. Two members, Ms Faithfull and Mr Karpany, died intestate in a car crash, and the Association received the insurance proceeds from the insurer. The Association sought the Court's direction as to whether it was obliged to pay the money to the persons named in the nomination forms completed by the deceased members or to the Public Trustee as the administrator of their estates. Alternatively, if the Association had discretion as to whom the money should be paid, the Association sought the Court's direction on whether it would be a proper exercise of that discretion to pay the money to the Public Trustee or to the persons entitled to the estate of the deceased member.

The primary legal issue was whether the completion of a nomination form by a member constituted an assignment of a debt or other legal chose in action, and if so, whether it complied with the formalities imposed by the Wills Act 1936 (SA). Another legal issue was whether the Association held the money on trust for the nominees or if it had discretion as to whom the money should be paid, and if so, whether it would be a proper exercise of that discretion to pay the money to the persons entitled to the estate on intestacy.

The Court held that the nomination only took effect upon the death of a member, and no assignment of a debt or other legal chose in action occurred during the member's lifetime. The Court also held that the right of nomination was a power of appointment exercisable during a member's lifetime, and the exercise of that power only took effect upon the death of the member, thus not requiring compliance with the formalities imposed by the Wills Act. The Court found that based on an objective assessment of the Association's communications to members, the Association held the money on express trust for the nominees or, if no nominee, for the legal personal representative of the member. The Court further held that the nomination form completed by Ms Faithfull was to be construed objectively, and the provision for payment to her husband was conditional on the matrimonial relationship continuing at the time of death. The Court construed the nomination form so that the money payable would be for the benefit of those who succeed to the member's estate and family members.

The Court ordered that the monies paid to the Association upon the death of Ms Faithfull were payable to her child, Jadyn Milera, and the monies payable to the Association on the death of Mr Karpany were payable to his brother, Mr Laurence Karpany. The Court would hear the parties on the question of costs and on the formal orders that should be made.