PUBLIC TRUSTEE OF WESTERN AUSTRALIA and VV
[2012] WASAT 170
•16 AUGUST 2012
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: PUBLIC TRUSTEE OF WESTERN AUSTRALIA and VV [2012] WASAT 170
MEMBER: JUSTICE J A CHANEY (PRESIDENT)
MR M ALLEN (SENIOR MEMBER)
MS S GILLETT (MEMBER)
HEARD: 10 AUGUST 2012
DELIVERED : 10 AUGUST 2012
PUBLISHED : 16 AUGUST 2012
FILE NO/S: GAA 2399 of 2012
BETWEEN: PUBLIC TRUSTEE OF WESTERN AUSTRALIA
Applicant
AND
VV
Represented Person
Catchwords:
Guardianship and administration - Self managed superannuation fund - Superannuation deed appointing legal personal representative as trustee where original trustee becomes incapable - Whether authority should be given to Public Trustee to exercise power as trustee of superannuation fund
Legislation:
Guardianship and Administration Act 1990 (WA), s 64, s 69, s 71(2), s 72, s 72(1)
Interpretation Act 1984 (WA), s 18
Public Trustee Act 1941 (WA), s 4(2)
Superannuation Industry (Supervision) Act 1993 (Cth), s 10, s 17A
Result:
Appointment as administrator varied to give authority to exercise power as trustee of superannuation fund
Category: A
Representation:
Counsel:
Applicant: Mr B Ashdown and Ms M Jarvis
Represented Person : No appearance
Solicitors:
Applicant: Public Trustee
Represented Person : No appearance
Case(s) referred to in decision(s):
Re The Full Board of The Guardianship and Administration Board [2003] WASCA 268
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
This application concerned whether specific authority should be given, under Pt B paragraph (h) of Sch 2 of the Guardianship and Administration Act 1990 (WA), to the Public Trustee, as plenary administrator, to exercise powers as trustee of a self managed superannuation fund of which the represented person is the only member. Although the relevant superannuation trust deed appointed an incapable trustee's legal personal representative as a substitute trustee of the superannuation fund, the Public Trustee was concerned that the appointment as plenary administrator did not authorise it to deal with trust property.
The Tribunal considered the proper construction of paragraph (h) and the particular circumstances of the case. It considered this to be a case where specific authority should be given even though it may not have been necessary having regard to the terms of the superannuation deed.
The application
On 27 February 2012 the Tribunal made an order appointing the Public Trustee as plenary administrator of the estate of the represented person, VV. The Tribunal also made orders revoking two enduring powers of attorney.
VV has a self managed superannuation fund (the fund) established by a superannuation trust deed dated 25 May 2007 (the superannuation deed). VV is the only member of the fund.
The fund was established to comply with the provisions of s 17A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act). The trustees of the fund (at least prior to VV becoming incapable of managing his affairs) were VV and his son JV.
The present application by the Public Trustee seeks amendment of the terms of its appointment so as to specify that it has authority to exercise the powers of a trustee under the superannuation deed. The only asset of the fund is land comprised in a number of lots. The Public Trustee has obtained a valuation of the lots. For reasons for which it is not necessary to traverse, the land has a number of disadvantages which are likely to make it difficult to sell. Notwithstanding that, an offer has been made to purchase all of the lots held within the fund for a price which comfortably exceeds an independent valuation of the land. It is that offer which has prompted the present application.
It is the view of the Public Trustee, and of JV as the other trustee of the fund, that it is in the best interests of VV that the offer for the land be accepted. We accept that is the case.
The question for determination in these proceedings is whether the Tribunal has the jurisdiction to make the order sought, and if so, whether the order sought should be made.
After hearing submissions from counsel for the Public Trustee, and from JV, the Tribunal reserved its decision, but advised the parties that, in view of the urgency associated with the need to deal with the offer, it would publish orders as soon as it had formed a concluded view as to the appropriate outcome of the application, on the basis that written reasons would be provided as soon as possible thereafter. Shortly after the hearing the Tribunal concluded that the orders appointing the Public Trustee as administrator of the estate of VV should be amended so as to include an authorisation for the Public Trustee to exercise its powers as trustee of the fund. These are the reasons for that conclusion.
The SIS Act
A 'self managed superannuation fund' is a creature of the SIS Act. Section 17A(1) identifies the requirements necessary to qualify as a self managed superannuation fund where the fund has more than one member. Where, as in this case, the fund has only one member, the question as to whether or not it qualifies as a self managed superannuation fund is determined by s 17A(2), which provides:
(2)Subject to this section, a superannuation fund with only one member is a self managed superannuation fund if and only if:
(a)if the trustee of the fund is a body corporate:
(i)the member is the sole director of the body corporate; or
(ii)the member is one of only 2 directors of the body corporate, and the member and the other director are relatives; or
(iii)the member is one of only 2 directors of the body corporate, and the member is not an employee of the other director; and
(b)if the trustees of the fund are individuals:
(i)the member is one of only 2 trustees, of whom one is the member and the other is a relative of the member; or
(ii)the member is one of only 2 trustees, and the member is not an employee of the other trustee; and
(c)no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund;
(d)if the trustee of the fund is a body corporate—no director of the body corporate receives any remuneration from the fund or from any person (including the body corporate) for any duties or services performed by the director in relation to the fund.
Notwithstanding the apparently prescriptive requirements of s 17A(2), the SIS Act deals with the position where a member of the fund is under a legal disability. Section 17A(3) relevantly provides:
(3)A superannuation fund does not fail to satisfy the conditions specified in subsection (1) or (2) by reason only that:
…
(b)the legal personal representative of a member of the fund is a trustee of the fund or a director of a body corporate that is the trustee of the fund, in place of the member, during any period when:
(i)the member of the fund is under a legal disability; or
(ii)the legal personal representative has an enduring power of attorney in respect of the member of the fund; or
…
The expression 'legal personal representative' is defined in s 10 of the SIS Act as follows:
legal personal representative means the executor of the will or administrator of the estate of a deceased person, the trustee of the estate of a person under a legal disability or a person who holds an enduring power of attorney granted by a person.
The Australian Taxation Office has issued an interpretative decision referred to as ATO ID 2010/139 which concluded that:
… where a State or Territory administrative tribunal appoints an administrator to manage the estate of a person with a mental disability, that administrator will be a legal personal representative of that member who is under a legal disability. Consequently, under subparagraph 17A(3)(b)(i) the administrator can be appointed as a trustee of the superannuation fund in place of that member, enabling the fund to be an SMSF notwithstanding that one of the members is not a trustee of the superannuation fund.
The superannuation deed
As already mentioned, the superannuation deed appoints VV and JV as trustees of the fund. Rule 3.4.1(c) of the superannuation deed provides that a trustee will hold office until, 'being a natural person, [the trustee] dies or becomes incapable of performing his duties hereunder'.
Thus, at least from 27 February 2012 when the administration order was made, VV ceased to hold office as a trustee of the fund.
Rule 3.4.5 provides:
Where the office of Trustee becomes vacant due to the operation of rule 3.4.1(c) the Members' Legal Personal Representative shall act as Trustee until such time as the Members' benefits have been dealt with as prescribed by these Rules and the Act.
Rule 1.1 of the superannuation deed defines 'legal personal representative' as:
The executor of the will or administrator of the estate of a deceased member, the Trustee of the estate of a member under a legal disability, a person who holds an enduring power of attorney granted by a member or the parent or legal guardian of a member under the age of eighteen.
It can thus be seen that the superannuation deed is drawn in terms consistent with, and designed to comply with, the SIS Act so as to ensure that the fund enjoys the advantages extended to self managed superannuation funds in respect to taxation.
The effect of the SIS Act and the superannuation deed on the status of the Public Trustee
We accept that the Public Trustee meets the definition of legal personal representative for the purposes of the SIS Act and the superannuation deed. Because the Public Trustee enjoys that status, it became the trustee of the fund by operation of rule 3.4.5 of the superannuation deed.
Prior to VV's incapacity, the fund was a self managed superannuation fund by reason of s 17A(2)(b)(i) of the SIS Act. But for s 17A(3), upon VV ceasing to be a trustee by reason of his incapacity, the fund would no longer have met the requirements of s 17A(2). However, s 17A(3)(b)(i) overcomes that failure. In our view, it does so notwithstanding that the legal personal representative enjoys that status in a corporate capacity - see Public Trustee Act 1941 (WA), s 4(2).
Because the Public Trustee, by operation of rule 3.4.5 of the superannuation deed, is substituted as trustee of the fund in a way which preserves the fund's status as a self managed superannuation fund, the question arises as to whether any direction or authorisation by the Tribunal is necessary. In other words, it is arguable that, simply by virtue of its status as legal personal representative of VV, the Public Trustee gains authority to act as trustee of the fund through the operation of the superannuation deed and it is not necessary for it to rely on any authority specifically conferred on it by the Tribunal.
Counsel for the Public Trustee accepted that it may be that no further authority of the Tribunal is required, but conveyed the Public Trustee's concern that the position is uncertain and that it is therefore appropriate to seek the Tribunal's authorisation for it, as administrator of VV's estate, to exercise the powers of trustee of the fund. The uncertainty is said to arise from the proposition that 'the Public Trustee can only act as trustee of the fund in its capacity as (VV's) administrator and therefore his legal personal representative, provided that the Public Trustee has sufficient powers to act as trustee under the terms of its appointment as (VV's) administrator'. The Public Trustee points out, correctly, that s 69 of the Guardianship and Administration Act 1990 (WA) (GA Act), gives authority to an administrator to perform functions 'in respect of the estate of the represented person'. Property which a represented person holds on trust does not form part of the represented person's estate. It follows, the Public Trustee argues, that in order to deal with trust assets, it is appropriate, if not necessary, to seek authority from the Tribunal pursuant to s 72 of the GA Act.
Section 72(1) of the GA Act
Section 71(2) of the GA Act provides that where plenary functions are vested in an administrator, the administrator may perform any function that the represented person himself could perform 'in relation to the estate of the represented person'.
Section 72(1) of the GA Act provides that the Tribunal may give any direction, make any order or do any other thing provided for in Pt B of Sch 2.
Part B of Sch 2, paragraph (h) provides:
where a power is vested in a represented person in the character of a trustee or guardian, or the consent of a represented person to the exercise of a power is necessary in a similar character or as a check upon the undue exercise of the power, the State Administrative Tribunal may, upon the application of the administrator or any person interested in the exercise of the power or the giving of the consent, authorise the administrator to exercise the power or give the consent in such manner as the Tribunal may direct.
What can be immediately noticed in relation to paragraph (h) is that the exercise of the jurisdiction to invoke the paragraph arises 'where a power is vested in a represented person'. If that phrase is read strictly, it might be said that the giving of a direction under the paragraph in this case is no longer open. That is because, by operation of the superannuation deed, upon the incapacity of VV (which must be said to have arisen no later than the making of the administration order), VV's office as trustee of the fund had terminated. Therefore, by the time the present application was brought, no power was exercisable by VV as trustee of the fund.
Counsel for the Public Trustee argues that paragraph (h) should be construed more liberally. He submitted that the clause should be read to encompass a situation where the power, as in this case, is now vested in the represented person through his personal representative.
Another way in which paragraph (h) might be construed, is to read the words 'is vested' so as to encompass powers which were vested in the represented person at, or at least immediately before, the time that an administration order is made.
The provisions of the GA Act are designed to serve the best interests of those who lack capacity to manage their own affairs or to look after their own health and safety. The legislation is designed to conserve the property and financial resources of a disabled person. - see Re The Full Board of The Guardianship and Administration Board [2003] WASCA 268. It is, in that sense, beneficial legislation. A construction of a provision of the Act which would promote the purpose or object of the Act is to be preferred to a construction that would not promote that purpose or object - Interpretation Act 1984 (WA), s 18. The interpretation of paragraph (h) based on a strict reading, as explained above, would limit the scope for directions under that paragraph very significantly. Authority could only be given where powers of a trustee vested in a represented person survive the incapacity of the represented person. It is only after the Tribunal declares a person unable, by reason of mental disability, to make reasonable judgments in respect of matters relating to his estate, that that person becomes a 'represented person' - see GA Act, s 64. There is no reason to assume that the legislature intended to limit the power to grant authority or make directions only to those situations where incapacity did not terminate the represented person's powers under a trust. It may be, of course, that a trust deed contains provisions which make it unnecessary for the Tribunal to exercise its power to give directions under paragraph (h). For example, a trust deed might provide that co-trustees exercise powers in place of the incapable trustee. Each case must, of course, be considered having regard to its own circumstances.
We consider, however, that paragraph (h) should be construed more widely than a strict literal reading. We consider that the power of the Tribunal to give authority to an administrator under paragraph (h) arises where there is a power vested in the represented person in the character of a trustee or a guardian at, or immediately before, the appointment of an administrator for the represented person, or where, as here, the power is vested in the represented person through his legal personal representative.
Should authority be given
It is clearly in the interest of the represented person that the Public Trustee exercises the powers of trustee of the fund so as to preserve its status as a self managed superannuation fund. Whether or not it is strictly necessary, it is prudent that the Public Trustee satisfies itself that it will not exceed the authority given to it by its appointment as plenary administrator by seeking the express authority of the Tribunal to act as trustee of the fund. We consider that, in those circumstances, it is appropriate that the orders appointing the Public Trustee as plenary administrator be amended so as to specify that authority under paragraph (h) of Pt B of Sch 2 of the GA Act.
The question as to whether the Tribunal ought to give authority under paragraph (h) will always turn on the particular circumstances of the case. The provisions of the relevant trust deed, the nature of the trust, the identity of the beneficiaries, the nature of the trust property and the character and extent of the powers in respect of which authority is sought, will all be significant considerations in the exercise of discretion as to whether authority should be granted. In this case, the Public Trustee, as the legal personal representative of VV, assumes the role of trustee by virtue of the provisions of the superannuation deed. The fund exists for the sole benefit of the represented person. The exercise of power by the Public Trustee which has prompted the present application is very clearly in the represented person's financial interest. In those circumstances, we consider that a clear case where the grant of authority under paragraph (h) of Pt B of Sch 2 is appropriate.
Consequently, the Tribunal made the following order:
1.The Public Trustee of 553 Hay Street, Perth, Western Australia is appointed plenary administrator of the estate of the represented person with all the powers and duties conferred by the Act.
2.The enduring power of attorney dated 25 March 2008 by which VV appointed PV to be his attorney, is revoked.
3.The enduring power of attorney dated 7 May 2009 by which VV appointed PV and JV to be his attorneys is revoked.
4.The administrator is to apply or expend moneys of the represented person, whether income or capital, for the maintenance, necessities, comforts and benefits of the represented person or the spouse of the represented person, in such manner and to such extent as the administrator, having regard to the circumstances and the value of the estate of that person, considers proper and reasonable.
5.Pursuant to paragraph (h) of Pt B of Sch 2 of the Guardianship and Administration Act 1990 (WA), the administrator is authorised to exercise its powers as a trustee of the VV Superannuation Fund (the Fund) in a manner consistent with the terms of the deed which establishes the Fund and the requirements of the Superannuation Industry (Supervision) Act 1993 (Cth).
6.This order is to be reviewed by 27 February 2017.
I certify that this and the preceding [33] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J A CHANEY, PRESIDENT
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