Perpetual Trustees Australia Ltd v Wallace

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FEDERAL COURT OF AUSTRALIA

Perpetual Trustees Australia Ltd v Wallace [2007] FCA 527

ADMINISTRATIVE LAW – review of determination of Superannuation Complaints Tribunal – jurisdiction of Superannuation Complaints Tribunal under s 37 of Superannuation (Resolution of Complaints) Act 1993 (Cth) – whether power conferred on Trustee by trust deed to ‘compromise’ claims is confined to a claim against the fund and not against the trustee – but if it extends to the latter, whether exercise of the power is reviewable under s 37 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) – relevance of right of trustee to be indemnified out of trust fund – apprehension of bias – denial of procedural fairness – miscarriage of statutory function of Superannuation Complaints Tribunal

Corporations Act 2001 (Cth) s 124
Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 9, 14, 37, 46, 62, 63, 64, 64A
Superannuation Industry (Supervision) Act 1993 (Cth) ss 52, 55
Superannuation Industry (Supervision) Regulations 1994 regs 7.04(1C), 4.15  

Attorney-General v Breckler (1999) 197 CLR 83 followed
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 followed
R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 cited
Kioa v West (1985) 159 CLR 550 cited
Laws v Australian Broadcasting Tribunal (1990) 93 ALR 435 cited
Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381 cited
Muin v Refugee Review Tribunal (2002) 76 ALJR 966 cited
Re Earl of Strafford deceased; Royal Bank of Scotland Ltd v Byng [1980] Ch 28 disapproved
Re Irismay Holdings Pty Ltd [1996] 1 Qd R 172 approved
Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359 distinguished
Smits v Roach (2006) 228 ALR 262 cited
VFAB v Minister for Immigration & Multicultural & Indigenous Affairs  (2003) 131 FCR 102 cited

PERPETUAL TRUSTEES AUSTRALIA LIMITED v HARRY WALLACE
NSD 583 OF 2006

EDMONDS J
18 APRIL 2007
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 583 OF 2006
ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL CONSTITUTED BY MARITA WALL AND COLIN GRENFELL

BETWEEN:

PERPETUAL TRUSTEES AUSTRALIA LIMITED
Applicant

AND:

HARRY WALLACE
Respondent

JUDGE:

EDMONDS J

DATE OF ORDER:

18 APRIL 2007

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The determination of the Superannuation Complaints Tribunal dated 20 February 2006 be set aside and, in lieu thereof, the respondent’s complaint to that Tribunal be dismissed.

2.The applicant pay the costs of the Superannuation Complaints Tribunal’s motion of 18 August 2006.

3.Otherwise, no order as to costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 583 OF 2006
ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL CONSTITUTED BY MARITA WALL AND COLIN GRENFELL

BETWEEN:

PERPETUAL TRUSTEES AUSTRALIA LIMITED
Applicant

AND:

HARRY WALLACE
Respondent

JUDGE:

EDMONDS J

DATE:

18 APRIL 2007

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. This is an appeal, pursuant to s 46 of the Superannuation (Resolution of Complaints) Act

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Details
Case
[2007] FCA 527
Decision Date

CaseChat Overview and Summary

The case of Perpetual Trustees Australia Ltd v Wallace involved a dispute between the trustee of a superannuation fund and the fund's sole member, who lodged a complaint with the Superannuation Complaints Tribunal. The dispute centred on the respondent's allegations that the trustee had failed to act on his requests to change the investment strategy of the fund, which led to his financial ruin and bankruptcy. The trustee rejected the respondent's claims that it had breached its fiduciary duty by not converting the investments as requested and that the investment strategy was unfair or unreasonable.

The primary legal issues the court had to address were whether the trustee had indeed failed to act on the respondent's requests to change the investment strategy and whether the investment strategy was fair and reasonable. The court needed to determine if the trustee had breached its duty by not following the respondent's instructions and if the chosen investment strategy was justifiable. Additionally, the court examined the evidence regarding the respondent's requests and the actions taken by the trustee.

In its reasoning, the court analysed the evidence presented by both parties. It noted that while the respondent claimed to have made specific requests for investment changes, there was no concrete evidence that the trustee had received or acted on these requests. The court also examined the application forms signed by the respondent, which did not align with his claims. Based on this analysis, the court found that the trustee had not breached its fiduciary duty and that the investment strategy was reasonable. Consequently, the court set aside the Tribunal's determination and dismissed the respondent's complaint. The court ordered the respondent to pay the costs of the Tribunal's motion.

Orders

Orders of the court

1. The determination of the Superannuation Complaints Tribunal dated 20 February 2006 be set aside and, in lieu thereof, the respondent’s complaint to that Tribunal be dismissed.

2. The applicant pay the costs of the Superannuation Complaints Tribunal’s motion of 18 August 2006.

3. Otherwise, no order as to costs.

Background

Background to the litigation

The Fund was established by trust deed dated 24 March 1995 (‘the 1995 Trust Deed’). On 31 August 2000 it was altered to enable the Fund to pay an allocated pension, and the name of the Fund was changed (‘the 2000 Trust Deed’).BACKGROUNDParties The applicant was the trustee of the Fund. The respondent was the complainant to the Tribunal.Decisions under Review The applicant rejected the respondent’s claims that:·The applicant had acted in breach of trust by its alleged failure in March 2000 to action the respondent’s verbal requests to convert the investments in the Fund from certain ‘high risk, high tech’ shares to a more ‘secure portfolio’; and·the investment strategy of the Fund was unfair or unreasonable. Complaint On 8 June 2004 the respondent lodged a complaint with the Tribunal that the decision of the applicant was unfair or unreasonable because:‘The Fund’s failure to act as instructed and as required by law has resulted in my losing the equity in the fund, and has resulted in my being declared bankrupt.’Factual Chronology The Tribunal was satisfied as to the following factual chronology:·24 March 1930 – the respondent’s date of birth.·24 March 1995 – the Fund was established, with the respondent as the sole member. This was the respondent’s 65th birthday.·18 October 1999 – following an inquiry from the respondent, the applicant wrote to the respondent and advised that reg 7.04(1C) of the Superannuation Industry (Supervision) Regulations 1994 (‘the SIS Regulations’) restricted the acceptance of contributions by a superannuation fund in respect of members over age 70 and that, in accordance with this regulation, a regulated superannuation fund may accept contributions made in respect of a member who has reached age 70 only if the contributions are mandated employer contributions.·About February 2000 – the applicant’s Account Manager telephoned the respondent. In his letter to the applicant dated 29 April 2004, the respondent stated:‘[The Account Manager] telephoned me approximately mid to late February 2000 to advise that with my approaching 70th birthday, I had to convert [the Fund] to an allocated pension. We had at least three telephone conversations over the next two week period.In these conversations, I advised that I wanted the moneys invested in an allocated pension and further that it should be converted to a secure portfolio (actually detailing three specific funds - [named] (amounts at his discretion), with the balance of the portfolio also to be invested at his discretion).’The respondent alleged that he requested the Account Manager to convert the Fund to an allocated pension in a secure portfolio on his 70th birthday (i.e. 24 March 2000) and, as he was selling his business, he advised the Account Manager that he wanted to receive the minimum pension entitlements. In addition, the respondent alleged that:‘I advised [the Account Manager] that I was unable to travel to Melbourne to complete the necessary documentation due to recent ill health (heart problems) but he advised that this was unnecessary as he could do it all by telephone instruction.’·7 February 2000 – the respondent signed an Allocated Pension Application Form (‘the first application form’). The ‘Investment Strategy’ elected (by a tick) on the form was ‘Growth Equities’ and the form indicated (again by a tick) that the applicant would provide a tailored investment strategy. The respondent stated:‘I rang [the Account Manager] because time was of the essence … My 70th birthday was 24 March 2000. It was decided if I signed a form and sent it immediately, he would get it next morning and he would complete the application.’There is no evidence to confirm that the applicant (or the Account Manager) received this form.·16 March 2000 – the applicant alleged that on 16 March 2000 the respondent executed an Allocated Pension Application Form (‘the second application form’). The form appeared to have been signed by the respondent and the ‘Investment Strategy’ elected (by a tick) on the form was ‘Growth Equities’. The respondent stated: ‘This application is false, and I am sure was never meant, to be found.’

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

EDMONDS J
The applicant was the trustee of the Fund. The respondent was the complainant to the Tribunal.Decisions under Review The applicant rejected the respondent’s claims that:·The applicant had acted in breach of trust by its alleged failure in March 2000 to action the respondent’s verbal requests to convert the investments in the Fund from certain ‘high risk, high tech’ shares to a more ‘secure portfolio’; and·the investment strategy of the Fund was unfair or unreasonable. Complaint On 8 June 2004 the respondent lodged a complaint with the Tribunal that the decision of the applicant was unfair or unreasonable because:‘The Fund’s failure to act as instructed and as required by law has resulted in my losing the equity in the fund, and has resulted in my being declared bankrupt.’Factual Chronology The Tribunal was satisfied as to the following factual chronology:·24 March 1930 – the respondent’s date of birth.·24 March 1995 – the Fund was established, with the respondent as the sole member. This was the respondent’s 65th birthday.·18 October 1999 – following an inquiry from the respondent, the applicant wrote to the respondent and advised that reg 7.04(1C) of the Superannuation Industry (Supervision) Regulations 1994 (‘the SIS Regulations’) restricted the acceptance of contributions by a superannuation fund in respect of members over age 70 and that, in accordance with this regulation, a regulated superannuation fund may accept contributions made in respect of a member who has reached age 70 only if the contributions are mandated employer contributions.·About February 2000 – the applicant’s Account Manager telephoned the respondent. In his letter to the applicant dated 29 April 2004, the respondent stated:‘[The Account Manager] telephoned me approximately mid to late February 2000 to advise that with my approaching 70th birthday, I had to convert [the Fund] to an allocated pension. We had at least three telephone conversations over the next two week period.In these conversations, I advised that I wanted the moneys invested in an allocated pension and further that it should be converted to a secure portfolio (actually detailing three specific funds - [named] (amounts at his discretion), with the balance of the portfolio also to be invested at his discretion).’The respondent alleged that he requested the Account Manager to convert the Fund to an allocated pension in a secure portfolio on his 70th birthday (i.e. 24 March 2000) and, as he was selling his business, he advised the Account Manager that he wanted to receive the minimum pension entitlements. In addition, the respondent alleged that:‘I advised [the Account Manager] that I was unable to travel to Melbourne to complete the necessary documentation due to recent ill health (heart problems) but he advised that this was unnecessary as he could do it all by telephone instruction.’·7 February 2000 – the respondent signed an Allocated Pension Application Form (‘the first application form’). The ‘Investment Strategy’ elected (by a tick) on the form was ‘Growth Equities’ and the form indicated (again by a tick) that the applicant would provide a tailored investment strategy. The respondent stated:‘I rang [the Account Manager] because time was of the essence … My 70th birthday was 24 March 2000. It was decided if I signed a form and sent it immediately, he would get it next morning and he would complete the application.’There is no evidence to confirm that the applicant (or the Account Manager) received this form.·16 March 2000 – the applicant alleged that on 16 March 2000 the respondent executed an Allocated Pension Application Form (‘the second application form’). The form appeared to have been signed by the respondent and the ‘Investment Strategy’ elected (by a tick) on the form was ‘Growth Equities’. The respondent stated: ‘This application is false, and I am sure was never meant, to be found.’

Ratio Decidendi

Legal Principle Established

Established by: EDMONDS J

Full text does not contain this section.