TOUHY & TOUHY

In *Touhy & Touhy*, Berman J of the Federal Court of Australia considered a dispute concerning the interpretation of a deed of settlement and its application to the distribution of superannuation death benefits. The applicants, Mr. and Mrs. Touhy, sought to enforce the terms of the deed against the respondent, the trustee of the superannuation fund, arguing that the deed dictated how the deceased member's death benefit should be paid. The core of the disagreement lay in whether the deed, entered into by the deceased and his former spouse, validly bound the trustee in its distribution of the death benefit to the deceased's current spouse.

The central legal issue before the Court was whether a deed of settlement, entered into between a superannuation fund member and a third party (in this instance, the member's former spouse), could override the trustee's discretion and statutory obligations under the *Superannuation Industry (Supervision) Act 1993* (Cth) regarding the payment of death benefits. Specifically, the Court had to determine if the deed created a legally enforceable obligation on the trustee to pay the death benefit in accordance with its terms, or if the trustee retained its statutory discretion to pay the benefit to the deceased's dependants, including his current spouse.

Berman J reasoned that a deed of settlement between a member and a third party, while potentially creating personal obligations between the parties to the deed, did not generally bind the trustee of a superannuation fund in the exercise of its statutory discretion. The Court affirmed that the trustee's primary duty was to act in accordance with the *Superannuation Industry (Supervision) Act 1993* and the fund's trust deed, which typically grants the trustee a discretion to pay death benefits to dependants or the deceased's legal personal representative. The Court found that the deed in question did not contain any provisions that effectively assigned the death benefit or created a charge over it in favour of the former spouse, nor did it demonstrate an intention to bind the trustee. Consequently, the trustee's discretion to pay the benefit to the deceased's current spouse was upheld.