Re: Vergara
[1999] QSC 50
•18 March 1999
IN THE SUPREME COURT
OF QUEENSLAND
O.S. No. 745 of 1999
Brisbane
Before the Hon. Justice Atkinson
[Re: Vergara]
RE: NORMITA MAGSINO VERGARA
REASONS FOR JUDGMENT - ATKINSON J
Judgment delivered on 18 March 1999
CATCHWORDS: TRUSTS - application to determine whether trust terminated - operation of the Superannuation Industry (Supervision) Act 1993 (Cth) s.101 and Superannuation (Resolution of Complaints) Act 1993 (Cth)
Counsel: R D Peterson for the applicant
J H Dalton for the first listed respondent
A L Philippides for the third listed respondent
P A Freeburn for the fourth listed respondent
Solicitors: Margaret Jones for the applicant
Corrs Chambers Westgarth for the first listed respondent
Mullins & Mullins for the second listed respondent
de Groot & Co for the third listed respondent
Diaz & Associates for the fourth listed respondent
P J Sheehy as the Executor of the estate of Peter Gordon Foley (deceased)
Hearing date: 10 March 1999
IN THE SUPREME COURT
OF QUEENSLAND
O.S. No. 745 of 1999
Brisbane
Before the Hon. Justice Atkinson
[Re: Vergara]
RE: NORMITA MAGSINO VERGARA
REASONS FOR JUDGMENT - ATKINSON J
Judgment delivered on 18 March 1999
The Court was asked in chambers for a number of declarations and orders including:
1.A declaration that the trust in respect of the superannuation and death benefits of Peter Gordon Foley (deceased) was terminated on 14 November 1997 in accordance with resolution no.526 of the Trustee of the Qantas Airways Limited Staff Superannuation Plan;
2.A declaration that resolution no.542 of the Trustee of the Qantas Airways Limited Staff Superannuation Plan of 23 February 1998 was invalid and/or contrary to the terms of the trust and the beneficial interests of the applicant, Normita Vergara;
3.A declaration that the Trustee of the Qantas Airways Limited Staff Superannuation Plan was bound to distribute the superannuation and death benefits entitlement of Peter Gordon Foley (deceased) on or about 14 November 1997 in the following respects:
i)Normita Magsino Vergara - 70 per cent;
ii)Sarah Catherine Foley - 10 per cent;
iii)Michael Gordon Foley - 10 per cent;
iv)Paul Foley - 10 per cent.
4.Further or in the alternative, the applicant requested an order that the Trustee of the Qantas Airways Limited Staff Superannuation Plan pay the superannuation and death benefits entitlement and interest on such sums of Peter Gordon Foley (deceased) in a similar fashion.
The resolution of this matter depends on the examination of the factual background, the statutory scheme and the Qantas Airways Limited Staff Superannuation Plan.
On 27 October 1996, Mr Foley, who was a member of the Qantas Airways Limited Staff Superannuation Plan, died. At the time of his death he was married to Maria Dolorosa Foley who is the mother of his three adult children, Sarah, Michael and Paul Foley. However, Mr and Mrs Foley had separated in September 1995, just over a year before his death. Shortly thereafter, Mr Foley met the applicant, Normita Vergara. It appears from her material that Ms Vergara and Mr Foley commenced residing in his rented accommodation at Ascot in February 1996. This is disputed by Michael Foley, one of the adult children, but receives some support from Mr Foley’s aunts who subsequently observed Ms Vergara living at the unit.
In March 1996, Ms Vergara became pregnant to Mr Foley. The rest of that year was a tumultuous one. Mr Foley received treatment including surgery for colon cancer. He was suspended from Qantas for unrelated reasons and subsequently re-instated the day before his death, and Ms Vergara says that she took six weeks off work to care for him after he came out of hospital, and that while she was at work her earnings went into the payment of household expenses and that she cared for him during her non-working hours. On 15 September 1996, Ms Vergara left work due to the imminent birth of her child.
On 8 September 1996, 19 days before his death, Mr Foley filled out a Qantas Airways Limited Superannuation Plan Nomination of Beneficiary form saying:
“I understand that the trustee has the final responsibility for deciding who will receive my death benefit. In making that decision I wish the trustee to consider the following nominated beneficiaries:”
The beneficiaries nominated by him were the applicant, Ms Vergara, whom he nominated to receive 70 percent and his three adult children whom he nominated to receive 10 per cent each. On 18 October 1996 Mr Foley made a Will leaving his estate in the same proportions particularly noting that the infant soon to be born would be provided for by the percentage of his estate bequeathed to Ms Vergara. James Peter Vergara, the son of the applicant and Mr Foley, was born on 29 November 1996.
Since Mr Foley’s death, Ms Vergara has been in receipt of the supporting parent’s benefit and states that she wishes to reside in Australia permanently and devote her time to caring for her son. After Mr Foley’s death, she became aware that he intended to give her 70 per cent of the accrued benefits under his superannuation policy.
Clause 9.5 of the Qantas Airways Limited Staff Superannuation Plan allows a member to nominate a beneficiary. However that nomination is not determinative of the distribution of a death benefit paid by the Trustee under the Plan.
At the time of Mr Foley’s death, cl.9.1 of the Qantas Airways Limited Staff Superannuation Plan provided:
“A Death Benefit shall be paid by the Trustee in the exercise of an absolute discretion in such proportions as it shall think fit, to any one or more of the following persons:
a)the Nominated Beneficiary;
b)all or any of the Dependents of the deceased Member; or
d)the legal personal representative of the deceased Member.”
Clause 9.4 then provides that:
“Whether any person is entitled to a payment out of the Plan and the amount of such payment shall in every case be determined by the Trustee in accordance with the Rules. Such decision by the Trustee shall be final.”
However this provision is subject to the Superannuation Industry (Supervision) Act 1993 (“SIS Act”) and in particular s.101[1] thereof: see cll.1.2, 1.4 and 2.8. Section 101 of the SIS Act provides as follows:
[1]See Davis, N., “Superheated - Resolving Superannuation Complaints” (1994) 29 Taxation in Australia 191.
“101 Duty to establish arrangements for dealing with inquiries or complaints
(1)The trustee of a regulated superannuation fund . . . must take all reasonable steps to ensure that there are at all times in force arrangements under which:
(a)a person referred to in subsection (1A) has the right to make an inquiry or a complaint of the kind specified in that subsection in relation to that person; and
(b)an inquiry or complaint so made will be properly considered and dealt with within 90 days after it was made.
(1A)For the purposes of paragraph (1)(a):
(a)a beneficiary or former beneficiary of a regulated superannuation fund may make an inquiry into, or complaint about, the operation or management of the fund in relation to that person; and
(b)the executor or administrator of the estate of a former beneficiary of such a fund may make an inquiry into, or complaint about, the operation or management of such fund in relation to the former beneficiary; and
(c)without limiting the generality of paragraph (a) or (b), any person may make an inquiry into, or complaint about, a decision of the trustee of such a fund that relates to the payment of a death benefit if:
(i)the person has an interest in the death benefit; or
(ii)The person claims to be, or to be entitled to death benefits through, a person referred to in subparagraph (i).
...”.
Pursuant to that section, cl.2.6 of the Qantas Airways Limited Staff Superannuation Plan makes provision for dealing with disputes. It provides:
“The Trustee shall ensure that for so long as the Act requires there are in force arrangements within the Plan that enable the Trustee to deal with Member and beneficiary complaints and enquiries in a manner within the time provided by the Act. The Trustee shall ensure that to the extent required by the Act, any decision of a court or tribunal constituted by or under the Act shall be followed.”
Qantas Superannuation Limited has set up arrangements for dealing with such complaints.
On 9 April 1997, Qantas Superannuation Limited wrote to Ms Vergara’s solicitors saying that the potential claimants on Mr Foley’s superannuation appeared to be Ms Vergara, her son James, Mr Foley’s three adult children, Sarah, Michael and Paul, and his estranged wife, Maria Foley. Their claims would depend in part on their financial circumstances, employment prospects and in part on a resolution of a challenge to Mr Foley’s Will. It followed that the Trustee was not in a position as yet to determine the distribution of Mr Foley’s death benefit from the Plan. The applicant was then informed of the internal complaints procedure set up under cl.2.6 of the Qantas Airways Limited Staff Superannuation Plan and pursuant to s.101 of the SIS Act. The letter informed her:
“Because of the provisions of the Superannuation Industry (Supervision) legislation and the Superannuation (Resolution of Complaints) Act, the Trustee has established an internal complaints and resolution procedure. Under that procedure, the Trustee will give to each potential claimant 28 days’ notice of the Trustee’s decision with respect to the distribution of Mr Foley’s death benefit entitlements. Each potential beneficiary will be invited to request the Trustee, within that 28 day period, to reconsider its decision and make a further decision within 90 days. The Trustee will then provide each potential beneficiary a notice of its further determination and inform each potential beneficiary that they have a further 28 days to make a request to the Superannuation Complaints Tribunal to review the Trustee’s decision if they’re dissatisfied with that decision.
It follows that the Trustee will give to your client appropriate notice of any decision it makes and sufficient time to make further submissions to the Trustee if your client is in disagreement with the Trustee’s decision.”
From that time, Ms Vergara had actual notice that any decision to be made by the Trustee was subject to the internal complaints resolution procedure which might lead to the Trustee reconsidering its decision and making a further decision.
That the complaint must be the subject of a separate decision from the original decision of the Trustee is implicit in regulation 2.41B of the Regulations made under the SIS Act, which provides:
“The trustee must give to the person, at the time when the trustee makes a decision in relation to the complaint, details of the existence and (in outline terms) the functions of the Superannuation Complaints Tribunal.” (underlining added)
The Tribunal[2] is set up under the Superannuation (Resolution of Complaints) Act 1993 (“SRC Act”) which provides, inter alia, that a complaint can be made to the Tribunal only if the complainant has been given a written notice by the Trustee setting out the Trustee’s decision in relation to the complainant’s objection to the payment of a death benefit: see ss.14(3)(a), 15 and 19 of the SRC Act.
[2]It is irrelevant to the resolution of this dispute that in Wilkinson & Ors v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 152 ALR 332 the Full Court of the Federal Court held that to the extent that judicial powers have been conferred on the tribunal, the exercise of those judicial powers would be invalid; see also Maclean, D.M., “Status of the Superannuation Complaints Tribunal” (1998) 72 ALJ 772.
At the time of Mr Foley’s death, Mrs Foley had made an application relating to the distribution of property in the Family Court and subsequent to his death, the infant James Vergara made an application for family provision from Mr Foley’s estate.
On 1 May 1997, all potential claimants and their legal representatives attended a mediation conference and a hand-written document entitled “Heads of Agreement” was signed by the executor of Mr Foley’s estate, Mrs Foley, the three adult children, the applicant Ms Vergara and the next friend for her son James. These parties were all represented or appeared in the present matter in the Supreme Court. The Heads of Agreement provided as follows:
“By consent it is ordered in full and final settlement of the application for property settlement filed by Maria Dolorosa Foley and of the application for adequate provision for maintenance and support made on behalf of James Peter Vergara and any right to apply for adequate provision for the maintenance and support by Sarah Catherine Foley, Michael Gordon Foley, Paul Foley and Normita Vergara:
1.That the former matrimonial home situated at 1 Bracken Court Cashmere be transferred to Maria Dolorosa Foley subject to its present encumbrances.
2.That Maria Dolorosa Foley retain as her own property absolutely the Ford Festiva, the furniture at 1 Bracken Court and her jewellery.
3.That from the moneys paid to the executor by the trustees of Qantas Airways Limited Staff Superannuation Scheme (hereafter “the Trustee”) the following payments be made
3.1any remaining debts of the estate including moneys owing to Qantas staff credit union, arrears of rates on the matrimonial home, GM card, Myer card, Goss Downey Carne and Isabelle Winifred Foley and Yvonne Helen Paterson and Heather Barbara Paterson;
3.2the costs of Carne and Herd and the executor;
3.3the payment to Maria Dolorosa Foley of the sum of $122,000.00;
3.4the payment to Normita Vergara of the sum of $45,000.00;
3.5the payment to Yvonne Helen Paterson as next friend in trust for James Peter Vergara to used for his support and maintenance the sum of $150,000.00;
3.6the payment to Sarah Catherine Foley, Michael Gordon Foley and Paul Foley of the balance in equal shares;
4.That each party other than the Executor pay his or her own costs.
5.That the Executor be empowered on behalf of all dependants to advise the Trustee of this settlement and to draw a final form of Consent Order to give effect thereto.
6.That the application(s) filed in the Supreme Court of Queensland be cross vested to the Family Court and in the event that for any reason the application(s) are not transferred then the application is to be discontinued and a fresh application to be made in the Family Court.
7.That the terms of this settlement and the operation thereof are subject to and conditional upon the Trustee paying to the Executor or at his direction the full amount of the deceased’s benefit under the Qantas Airways Staff Superannuation Scheme.
Subject to sanction and approval by the Family Court of Australia.”
A copy of the Heads of Agreement was provided to the Trustee by Mr Sheehy, solicitor, who is the executor of the estate of Mr Foley.[3]
[3]Mr Sheehy assured the Court that he would distribute any moneys paid to him by the Trustees of the Qantas Airways Limited Staff Superannuation Plan in accordance with the Heads of Agreement.
In spite of this, on 14 November 1997, in resolution no.526 the directors of the Qantas Airways Limited Staff Superannuation Plan resolved as follows:
“Resolved: That after detailed and critical analysis of the matter the Board exercised its discretionary power under the Plan to distribute the Late Peter Gordon Foley’s Death Benefit as per his Nomination of Beneficiary.
In arriving at this decision the Trustees paid particular attention to his will and Nomination of Beneficiary in determining the dependants to which his death benefit should be distributed.
A letter advising of this decision will be issued to all parties who have expressed an interest in this matter.”
It appears that the death benefit is in the vicinity of $457,000. Mr Boesen deposed, on behalf of Qantas Superannuation Limited, that it was the Board’s general practice to give effect to the wishes of the member, as expressed in the member’s Nomination of Beneficiary form, in determining the payment of death benefits unless the information available to the Board cast doubt on the appropriateness of giving effect to the member’s wishes.
The solicitors for all the parties involved in the dispute before this Court were informed of the Trustee’s determination of 14 November 1997 by letter dated 18 November 1997. That letter however set out clearly that the decision was subject to reconsideration as had been earlier advised. The letter says:
“Under the provisions of the Superannuation Industry (Superannuation) Act and the Superannuation (Resolution of Complaints) Act, a beneficiary or a potential beneficiary is entitled to request the Trustee to reconsider its decision. However, the request must be made within 28 days of the Trustee making its decision. If a request is not made within 28 days, the entitlement to complain to the Trustee is forfeited as well as the potential right to have the Trustee’s decision referred to the Superannuation Complaints Tribunal for further consideration.
If you wish to request the Trustee to reconsider its decision, then you should direct your request in writing to:
Complaints and Enquiries Officer,
Qantas Superannuation Limited,
203 Coward Street,
MASCOT. NSW 2020including all relevant information and your reasons as why you believe the Trustee should vary its original decision.
The Trustee is obliged to wait 28 days before the payment of the benefit to allow the parties involved to consider its decision.”On 8 December 1997, Mrs Foley sent in a complaint requesting a reconsideration of the Trustee’s decision. She said she had been married to Mr Foley for 24 years and had been dependent upon him for that time. She had given up a successful career to be his wife and mother to his children, and that she had been his beneficiary for the past 24 years[4] and that had only changed 19 days prior to his death. On 10 December 1997, Mrs Foley was advised in the letter, which was copied to the solicitors for the parties involved in this dispute, that in accordance with s.101 of the SIS Act her complaint would be dealt with by the complaint dispute resolution procedures.
[4]The practical effect of superannuation in a marriage was said to be twofold by Fogarty and Murray JJ in Hauff and Hauff (1986) FLC ¶ 91-747 at p.75, 441:
“In the majority of cases it represents a form of saving by the parties during the course of their marriage to which each of them is treated as having made either a direct or indirect contribution.
The second aspect in most cases is that it represents a future financial resource and a future protection against the uncertainties of life and a nest-egg for the retirement of both parties (and not merely the contributor) if their marriage continued to that point.”
On 10 December 1997, the solicitors acting for the infant son of the applicant and Mr Foley wrote to Qantas Superannuation Limited requesting the Trustee to reconsider its decision so as to make some provision for the infant. Qantas subsequently received further information from Mrs Foley about the financial support provided to her by Mr Foley prior to his death, her current debts and her future financial prospects; Ms Vergara in favour of the original decision being maintained including new information about her financial situation and her health; and from the solicitors for the infant son.
On 23 February 1998, taking into account all the submissions it had received, the Trustee in resolution no.542 decided as follows:
“Resolved: That, after detailed and critical analysis of Board Paper Agenda Item 10 and its supporting documents the Board changed its previous resolution (No. 526) and, based on the additional information received, decided that the Death benefit be paid in full to the Estate of the late Mr Foley.”
On 24 February 1998, all the interested parties were informed of the decision. It appears that there has been no distribution of the superannuation funds pending a determination in this Court.
It appears from an examination of the factual background the statutory scheme and the superannuation plan itself, that the decision made on 14 November 1997 was always subject to review and that it could not be considered as a final decision vesting the property of the trust in the beneficiaries. As was submitted by Ms Dalton of counsel, on behalf of Qantas, the power to distribute or pay a death benefit under the plan should be construed as being limited by the statutory scheme. That is, the statutory scheme operates so that any initial resolution of a Trustee to distribute the death benefit is not effective to vest property but only to create a right contingent upon there being no successful complaint.
In other words, the trust property had not yet vested in the beneficiaries and so the rule in Saunders v Vautier,[5] approved and applied by the Full Court of this Court in Queen Street Hotels Pty Ltd v Byrne,[6] has no application. Since the applicant was not absolutely and indivisibly entitled to an aliquot share of the trust fund, she was not entitled to terminate the trust so far as it concerns her share and call for payment of that share to her: cf The Whakatane Paper Mills v Public Trustee.[7] In any event, where there is more than one beneficiary, the rule in Saunders v Vautier only applies if the beneficiaries are unanimous in wishing to end the trust. It is clear from the material in this case that, of the four potential beneficiaries of the decision of 14 November 1997, only the applicant wishes to end the trust.
[5](1841) 4 Beav. 115; 49 ER 282 Cf Re Kirkland (A Bankrupt); Official Trustee in Bankruptcy v Kirkland (unreported, Federal Court of Australia, Heerey J, 25 July 1997).
[6][1980] ACLC 40-611.
[7](1939) 39 NSWSR 426 at 440.
In any event, even if this were not the case, the Court should deny the applicant the equitable remedies she seeks on discretionary grounds, being that the applicant knew of and participated in the review procedure, the applicant has never received any distribution, there is no evidence that she has changed her position in reliance on any proposed distribution, and the applicant signed a settlement agreement of various claims between the parties the effect of which she now seeks to avoid.
As was submitted by Mr Freeburn of counsel on behalf of Mrs Foley, it is implied in the settlement agreement that each party agrees to do all that is necessary on his or her part for the carrying out of this settlement agreement[8] or, expressed in a different way, each party agrees, by implication, to do all such things as are necessary on his or her part to enable the other party to have the benefit of the contract.[9]
[8]Mackay v Dick (1881) 6 App.Cas. 251 at 263; Secured Income Real Estate Ltd v St Martin’s Investments Pty Ltd (1979) 144 CLR 596 at 607.
[9]Butt v McDonald (1896) 7 QLJ 68 at 70-71.
There is no suggestion of any failure by the Trustee to exercise the discretion in good faith upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred so as to justify interference by the Court with the Trustee’s exercise of discretion.[10]
[10]Karger v Paul [1984] VR 161 at 164.
I therefore deny the relief sought by the originating summons and will hear argument as to costs.
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